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5 Rock-Solid Stocks to Buy in November

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The election month begins with apprehensions of heightened volatility and a drop in oil prices that is weighing on investors' mind. The Federal Bureau of Investigation (FBI), in the meantime, is looking into the uncovered emails by Hillary Clinton. It's not surprising that the stocks are oscillating between slight gains and losses.

However, things are expected to brighten up post the polls. Upbeat consumer spending data throw light on the improvement in the economy, while earnings recession is expected to end soon. Historically, November marks the beginning to the best six months for the equity market. Given such trends, it will be prudent to select stocks that have the capacity to brave all odds and are also projected to rise in the near term.

Election Uncertainty Looms

The U.S. presidential campaigns have hogged much of the limelight before the vote on Nov 8. The race between Democrat Hillary Clinton and Republican Donald Trump of late has heightened volatility (read more: Portfolio Strategy for 2016 Presidential Election ).

New developments including FBI's probe into Clinton's emails rattled investors. Clinton is being investigated on her use of a private server and handling of classified information while she was the state secretary. This could weigh on her chances of securing the presidential seat. In the process, it may upset the projections as Clinton continues to hold a lead over Trump.

Such apprehensions have dragged down stocks, while it drove the CBOE Volatility Index to an almost two-week high. Even in the currency market, we saw increased volatility in the U.S. dollar and Mexican peso currency pair on Oct 28. Foreign fund managers have also taken money out of U.S. stocks in seven out of the past eight weeks and have also opted to stay away still the election.

Oil Prices Slump

Investors are also grappling with the decline in oil prices. Thanks to the negative sentiments surrounding the proposed production cut by oil producing nations, domestic crude prices fell to a five-week low on Oct 31. The WTI crude settled down 3.8% lower at $46.86 a barrel, the steepest fall since Sep 27.

Unless an agreement is reached among the Organization of the Petroleum Exporting Countries, Azerbaijan, Brazil, Kazakhstan, Mexico, Oman and Russia, all have refused to freeze production levels. Adding to the bearish sentiment, the U.S. Energy Information Administration reported an increase in oil output in the U.S. by 0.6% to 8.7 million barrels in August from the prior month.

Markets May Take Off Post Election

The markets, despite the aforementioned headwinds, are expected to take off, especially after the polls. The traditional fourth-quarter rally is expected to take precedence, while the U.S. economy rose at the fastest pace in two years in the third quarter (read more: 4 Stocks to Gain from Strong Q3 GDP Expansion ).

To top it, consumers are more confident about the economy and are willing to stretch their wallets a little further. Thanks to Thanksgiving, Black Friday and Cyber Monday holidays, spending is expected to increase this month. In fact, surveys have found that consumers are splurging on other weekend days.

According to ComScore, more than $5 billion was spent last year during the above mentioned holidays. But, throw in the weekend days and the spending went up to $7.2 billion. Lest we forget, Americans have already increased their spending in September by the largest amount in three months. Improvement in employment opportunities and low gasoline prices are cited to be the reasons for this uptick in spending levels.

As the economy looks solid, earnings are expected to come in better than expected, while a Fed rate hike in the near term should be looked at positively. Total third-quarter earnings from 291 S&P 500 members reported so far are up 2.2% from the same period last year on 1.3% higher revenues, with 73.5% beating EPS estimates and 57.4% coming ahead of revenue estimates (read more: An End to the Earnings Recession ).

History Says Buy Stocks Now: 5 Solid Picks

Even though uncertainty may linger till the polls, solid underlying fundamentals could eventually help the broader markets strengthen this month. According to the Stock Trader's Almanac, the Dow has registered average gains of 7.4% in the November-April period, way more than the 0.4% return in May-October. Same can also be said about the other major two indices, the S&P 500 and the Nasdaq.

This calls for investing in stocks with solid fundamentals to hedge initial gyrations in the stock market. Such stocks also boast strong growth trends, which should get a boost once the broader market recognizes their full potential.

We have selected five such stocks that boast a VGM score of 'A'. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. Such stocks also flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

CoreLogic, Inc.CLGX provides property information, analytics, and data-enabled services. The company has price/earnings to growth ratio (PEG) of 1.69, compared with 1.72 for the industry. This shows that the company is undervalued, which means it's trading in line with the growth rate and the stock price will increase.

The company's expected earnings growth rate for the current year is 27%. Likewise, the Zacks Consensus Estimate for its current year earnings climbed 4% over the last 60 days.

Capella Education Co.CPLA operates as an online postsecondary education services company. The company has a PEG of 2.45, compared with 3.43 for the industry.

The company's expected earnings growth rate for the current year is 9%. Moreover, the Zacks Consensus Estimate for its current year earnings jumped 5.3% over the last 60 days.

Dick's Sporting Goods Inc.DKS operates as a sporting goods retailer. The company has a PEG of 1.48, compared with 1.58 for the industry.

The company's expected earnings growth rate for the current year is 5.9%. Also, the Zacks Consensus Estimate for its current year earnings increased 0.3% over the last 60 days.

Francesca's Holdings CorporationFRAN operates a chain of retail boutiques. The company has a PEG of 1.15, compared with 1.41 for the industry.

The company's projected earnings growth rate for the current year is 8.9%. Also, the Zacks Consensus Estimate for its current year earnings surged 13.6% over the last 60 days.

ManpowerGroup Inc.MAN provides workforce solutions and services. The company has a PEG of 1.24, compared with the industry's 1.47.

The company's expected earnings growth rate for the current year is 8.6%. Furthermore, the Zacks Consensus Estimate for its current year earnings rose 4% over the last 60 days.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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