With U.S. stocks rallying to fresh record highs this year, many individual stocks are doing the same. But it hasn’t been a good year for everyone.
Take the large-cap S&P 500, which has already eclipsed last year’s 16% return with five months left to go. All but about 12% of the benchmark’s constituents are up for the year.
Among the 60 or so laggards, some will finish strong while others will slip further off the pace. Investors looking for names with comeback potential have some solid choices. Let’s look at some of the stocks that have the fundamentals, technicals, or both to make a late-year run.
Is it a Good Time to Buy Walmart Stock?
Anytime Walmart (NYSE: WMT) has gone into correction mode over the last five years it has proven to be a good time to buy. The current downturn has been no exception.
After posting 20%+ returns the last two years, the retail giant is off to a slow start this year. It sits a mere $10 or so from its December 2020 record high of $153.66 and will likely trend higher has it has since March.
Profits derived from its U.S. and international stores as well as Sam’s Club warehouses are expected to climb in the current fiscal year building off last year’s strong 11% EPS growth. Walmart’s relevance in the pandemic economy by virtue of its discount prices and vast services should help it control share in the retail market for the foreseeable future.
This means that investors will be seeing strong results ahead. While recent investments in e-commerce and Indian online retailer Flipkart could continue to weigh on near-term earnings, eventually the market will gain a greater appreciation for WalMart’s elevated growth profile as a result of the initiatives. That makes the current share price a good bargain given what is to come.
What Does Electonic Arts’ Stock Chart Pattern Show?
Video game maker Electronic Arts (NASDAQ:EA) has taken a breather this year after a fantastic 2020. The market seems to have put the stock on pause to re-evaluate where the fast-growing company goes from here.
The technical analysis is pointing to much more upside and new all-time highs in the coming months. Following a prolonged stretch of sideways consolidation, Electronic Arts looks ready to resume its prior uptrend. In the past two weeks, a pair of bullish continuation diamond patterns have formed on the daily chart. If the recent breakouts hold, the stock could be on its way to $170 in the next six to eight months.
The fundamental story also remains strong. While Electronic Arts has benefitted from people spending more time at home, worldwide interest in video games has only been accelerated by the pandemic. Gaming was one of the hottest growth industries heading into the quarantine days and it is poised to remain hot for several years to come.
According to a recent study by Global Industry Analysts (GIA), the global video game market will approach $300 billion by 2027 nearly doubling from last year’s size. Electronic Arts’ strong game portfolio, innovation history, and engaged user base, have it on cruise control to participate in this growth. So, with the EA gaming console currently on pause, investors have a chance to jump in before the next round of action begins.
Does Incyte Stock Have Good Growth Prospects?
Incyte (NASDAQ:INCY) is another S&P laggard that has the potential to eventually become a leader. The biotech company finds itself near the bottom of the pack down 10% year-to-date (following a flat 2020). What can finally ignite Incyte?
Like many drug companies, Incyte is working on treatments for COVID-19. It has already received FDA emergency use authorization for baricitinib in combination with remdesivir as a COVID-19 therapy for hospitalized patients. It is also evaluating another drug, ruxollitinib, as a COVID-19 treatment. The studies have thus far been underwhelming, but as we’ve seen with other biotechs, a stock’s fortunes can change in a heartbeat with one favorable trial result.
Beyond its COVID pipeline, Incyte has a strong lineup of drug candidates that are currently in late-stage trials. Its most promising programs are in oncology, immunology, rheumatology, and dermatology.
In the near term, Incyte could be headed to $90 if the technical analysts have their way. That’s because last week a symmetrical continuation triangle formed suggesting the stock has broken out of a consolidation period. The bullish pattern could send Inctye back to $90 level over the next couple weeks.
So, while the market is largely tuned into Incyte’s COVID-19 prospects, there is a much bigger underlying growth story here. Like its large cap biotech peers, this stock carries a lot of risk, but long-term investors with the risk tolerance may want to take a shot on the company’s diversified drug pipeline.
Before you consider Incyte, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Incyte wasn't on the list.
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