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Mid Caps Rally in 2019: 5 Picks That Still Have Momentum

Wall Street started 2019 with a lot of vigor, quickly erasing the loss it suffered in 2018. The momentum is continuing barring some short-term fluctuations. The U.S. economy is in good shape with a robust labor market, higher consumer spending and better-than-expected corporate profits. The U.S. GDP in the first three quarters of 2019 also surpassed expectations despite the fact that the economy is growing for the historically longest span of 11th years.

Positive development on the U.S.-China trade war front and a 75-basis point cut in the benchmark interest rate in three tranches by the Fed also boosted investors’ sentiment. Consequently, the major stock indexes ---- the Dow, the S&P 500 and the Nasdaq Composite ---- have gained 20.1%, 24.5% and 28.7%, respectively, year to date. Notably, aside from these three large-cap centric indexes, the S&P 400 Mid-cap Index (SP400) has also rallied 20.7% year to date.

Expectation of a Partial Trade Deal

On Nov 15, White House Economic Advisor Larry Kudlow said that the United States and China were close to a deal. Per Kudlow, the current negotiations are ‘’very constructive.’’

Moreover, on Nov 16, Chinese Ministry of Commerce also confirmed that vice premier Liu He had a telephonic discussion with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer about a phase-one trade deal. The two sides agreed to remain in close contact to find out an amicable solution.

This was preceded by President Donald Trump’s speech at the Economic Club of New York on Nov 12, wherein a U.S.-China trade deal was suggested “could happen soon.” Trump added that a phase one agreement is “close.”

However, on Nov 13, The Wall Street Journal reported that the deadlock in the trade-related negotiation prevails, regarding the withdrawal of U.S. tariffs on Chinese goods and China’s earlier commitment to purchase $50-billion agricultural products from the United States. The Chinese administration has also been resisting requests from the White House to curb the forceful transfer of intellectual properties as well as enforcement mechanisms.

Why Mid-Cap Stocks?

Investment in mid-cap stocks is often recognized as a good portfolio diversification strategy. These stocks combine attractive attributes of both small and large-cap stocks. If the trade deal breaks down, mid-cap stocks will be less susceptible to losses than their large-cap counterparts owing to less international exposure.

However, if the trade deal finally sees the light of the day, these stocks will gain higher than small caps due to established management teams, a broad distribution network, brand recognition and ready access to capital markets.

Our Top Picks

We have been able to narrow down our search to five mid-cap stocks, which have skyrocketed in 2019 and still hold potential. All five stocks are currently priced below $15, making them affordable to general investors. Finally, each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows price performance of our five picks year to date.

Navient Corp. NAVI provides education loan management and business processing solutions for education, healthcare, and government clients at the federal, state, and local levels in the United States. It operates in three segments: Federal Education Loans, Consumer Lending, and Business Processing.

The Zacks Rank #1 company has an expected earnings growth rate of 20.1% for the current year. The Zacks Consensus Estimate for the current year has moved 2.9% north over the last 30 days. Year to date, the stock has soared 61.9%.

Amkor Technology Inc. AMKR provides outsourced semiconductor packaging and test services in the United States and internationally. It offers turnkey packaging and test services, including semiconductor wafer bumps, wafer probes, wafer back-grinds, package design, packaging, and test and drop shipment services.

Although the company has a negative expected earnings growth rate for the current year, the Zacks Consensus Estimate for the year climbed 166.7% over the last 30 days. Moreover, Amkor has a projected earnings growth rate of 100% for the next year. Year to date, this Zacks #1 Ranked stock has jumped 98.1%.

Frontline Ltd. FRO is a shipping company engaged in the seaborne transportation of crude oil and oil products worldwide. It owns and operates oil and product tankers. As of Aug 13, 2019, It owned and operated 63 vessels with an aggregate capacity of approximately 12.2 million deadweight tons. It is also involved in the charter, purchase, and sale of vessels.

The Zacks Rank #1 company has an expected earnings growth rate of 835.7% for the current year. The Zacks Consensus Estimate for the current year has moved 102% north over the last 30 days. Year to date, the stock has jumped 90.8%.

Newmark Group Inc. NMRK provides commercial real estate services in the United States and internationally. It offers services and products, which includes, investment sales, debt and structured finance and loan sales, agency leasing, property management, valuation and advisory and loan servicing.

The Zacks Rank #2 company has an expected earnings growth rate of 9.2% for the current year. The Zacks Consensus Estimate for the current year has moved 1.2% north over the last 30 days. Year to date, the stock has surged 56.2%.

Vector Group Ltd. VGR manufactures and sells cigarettes in the United States in 109 combinations under the Pyramid, EAGLE 20's, Grand Prix, Liggett Select, Eve, and USA brand names, as well as various partner and private label brands. It operates in two segments, Tobacco and Real Estate.

The Zacks Rank #2 company has an expected earnings growth rate of 18.2% for the current year. The Zacks Consensus Estimate for the current year has moved 20.4% north over the last 30 days. Year to date, the stock has climbed 30.3%.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.5% per year. So be sure to give these hand-picked 7 your immediate attention.

See them now >>


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Frontline Ltd. (FRO): Free Stock Analysis Report

Amkor Technology, Inc. (AMKR): Free Stock Analysis Report

Navient Corporation (NAVI): Free Stock Analysis Report

Vector Group Ltd. (VGR): Free Stock Analysis Report

Newmark Group, Inc. (NMRK): Free Stock Analysis Report

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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.

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