As investors and traders, we need to pay attention to what stocks are showing relative strength to the overall market. For example, the stocks that showed strength during the selloff over the past few trading sessions give us a clue that they could be in for some big moves in the coming weeks. Some of these stocks were even green during the biggest down days of the market, which is an impressive feat given the wide range and speed of the recent price action.
Although relative strength is typically used in more short-term trading, long-term investors can also benefit by recognizing stocks that are strong, since it means that they are finding buyers in weak tape. Below, we are going to look at 3 stocks showing relative strength during the recent selloff. These 3 stocks have a good chance to perform well in the coming weeks and also might be great companies to own over the long-term.
The first stock on our list has been breaking out during the market selloff but has cooled off a bit during Friday’s trading. The fantasy sports and sports betting company has benefitted from some positive news lately and could be worth a look for investors that are intrigued by the burgeoning sports betting industry. First, the stock started heading higher on news that sports legend Michael Jordan has officially joined the company’s board of directors. DraftKings also received analyst upgrades this week as more states look like they are ready to legalize online sports betting
If more of the country does eventually legalize online sports betting, DraftKings could see a rapid increase in customers that will lead to strong top-line growth. The company recently went public back in April via a SPAC reverse merger and the stock is up 15% in September so far. You also have the fact that the NFL season is starting this weekend, which could lead to a record weekend for the company. There was an 86.2% surge in sports betting in July thanks to the resumption of the NBA, and the NFL could provide a similar boost. DraftKings was able to deliver strong Q2 revenue figures even with the NBA and MLB halted due to the pandemic and ended the quarter with $1.2 billion in cash on its balance sheet.
Another stock that has been strong during the recent volatility is the transportation and logistics company FedEx. I mentioned that FedEx stock was looking good back in August and it has performed well since then. The company has been a big beneficiary of the increase in e-commerce demand during the pandemic and looks like it could be headed to all-time highs in the coming months. Business to consumer shipments are in high demand at this time and FedEx impressed during the worst months of the recession.
The company reports its FY 21 Q1 earnings next Tuesday and could deliver a positive quarter for investors. Elevated e-commerce volumes should be around for the rest of the year and the company could also benefit from vaccine deliveries in the near future. There’s also the fact that the holidays are just around the corner, which is usually a high-volume time of year for delivery companies. Keep FedEx on your watch list and consider adding shares after you spend some time analyzing the earnings report when it is released next week.
Uber Technologies Inc (NYSE:UBER)
One of the more surprising stocks that have been showing strength over the past few trading sessions is ridesharing company Uber. It’s a business that has been hit hard by the pandemic and recent negative headlines. A labor dispute in the state of California could completely change the company’s business model as it will be required to classify its drivers as employees instead of independent contractors. However, the enforcement of the law has been delayed and there’s a chance that Uber might be exempt which is likely what sent shares higher this week.
There’s also the company’s Uber Freight business that seems to be doing well for many of the same demand reasons we mentioned for FedEx. The fact that Uber was able to compensate for lost rideshare revenue with its Uber Eats food delivery service during arguably the toughest time in the company’s history is another positive. We are already seeing early signs of a recovery in ridesharing markets which is great news for Uber bulls. Make sure you keep an eye on this stock going forward as it could be a nice long-term investment.
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7 Transportation Stocks You Can’t Ignore
There is a situation developing in the U.S. that will drive revenue and profits for the transportation industry for many years to come. It started to develop with the pandemic, began to grow when the recession was less than expected, and was later compounded by an economic rebound that is much stronger than expected.
When the pandemic struck and lock-downs took effect manufacturers shuttered their plants and supply chains dried up. When Congress sent out the stimulus checks it sparked a round of consumer spending that has wiped products off of shelves. Now, with inventories across industries reportedly down high-single to low-double digits from the previous year, there is a need for 1) manufacturing to meet demand and rebuild inventory and 2) transportation/shipping that is growing by the day.
We have compiled a list of 7 transportation stocks that can't be ignored,
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