Stock ideas for the rest of the year

Here are some stock screener opportunities among growth, value, and income.

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Key takeaways

  • At the moment, risks of recession and a stock decline appear low.
  • A screener can help you quickly identify investing candidates.
  • Growth, value, and income opportunities may be found in these stock screens.
 

The S&P 500 hit 3,000 for the first time ever in July (see S&P 500 reaches new record chart). Yet government bonds and gold were the top performing assets last quarter. Some investors perceive a rotation into these assets as a potential signal for weakness in stocks.

However, several factors have helped sustain the long-term momentum for the stock market—primarily earnings strength and companies buying up their own shares with robust cash flow. Additionally, the US and other major economies appear to be firmly in the late stage of the business cycle, with low near-term risk of a recession.

If you are seeking new stock ideas, one tool to consider is preset expert strategies in Fidelity's Stock Screener. Here, we feature 3 preset expert screens, plus top results for each.

Finding growth in a slow growth world

An enduring risk to the stock market rally is the slow pace of global growth. Indeed, the International Monetary Fund recently cut its global GDP growth forecast 0.1% for both 2019 (3.2%) and 2020 (3.5%), due largely to the effects of international trade wars and the uncertainty surrounding Brexit.

But that doesn’t mean you can’t find individual investments that offer strong growth potential.

A screen focused on growth on Fidelity.com from Zacks Investment Research is Big Buys/Best Bargains, which attempts to find global stocks with above-line growth rates and below-line valuations. These are stocks on the Zacks Buy Recommendation list, and this screen further filters by stocks with projected growth rates above the median growth rate for the market, as well as below market valuations based on price-to-book and price-to-sales ratios.

As of July 25, 2019, here are the top 10 results of this screen, sorted by highest market capitalization:

  • Sony (SNE)
  • Cigna (CI)
  • American International Group (AIG)
  • Energy Transfer (ET)
  • Travelers Companies (TRV)
  • China Unicom (CHU)
  • Credit Suisse (CS)
  • Centene (CNC)
  • Hartford Financial Services Group (HIG)
  • Loews (L)

As with any screen, it's worth analyzing the components to get a sense of what the screen is producing. For example, several of the screen results on this list are based abroad, where the dynamics of a specific country may introduce unique risks and factors to consider.

Moreover, a screen should serve as a jumping off point for further research. If you think a stock on the list is of interest, look deeper into its fundamentals and other characteristics to determine if it aligns with your investment objectives, risk constraints, and liquidity requirements.

Looking for value

With stocks trading near record highs, it may be particularly important to seek value in new investments. A screen from Zacks Investment Research that focuses acutely on value is the Large-Cap Value screen, which attempts to identify large-cap stocks that are outperforming the market and still have attractive valuations.

As of July 25, 2019, here are the full results of this screen, sorted by highest market capitalization:

  • Celgene (CELG)
  • Delta Air Lines (DAL)
  • Energy Transfer (ET)
  • United Airlines (UAL)
  • Everest RE Group (RE)
  • Cabot Oil & Gas (COG)
  • Voya Financial (VOYA)
  • Alaska Air Group (ALK)

As was the case with the previous screen, you should dig deeper into any of the results that peak your interest. For example, airlines are a popular search result for this screen. Critical factors to assess for the airline industry include your outlook for a key input cost like oil (for instance, at $72 per barrel for Brent crude oil, that accounts for 24% of an airline’s operating costs, according to the International Air Transport Association) along with global air traffic demand.

Income

If you are an income-oriented individual stock investor, there are screens that can match your objectives on Fidelity.com. The goal of the High Dividend Yielding Unit Trusts screen, for instance, is to find investments with greater than average income, as well as the potential for strong earnings per share growth rates. Unit trust funds are a particular type of investment structure which typically represents an ownership unit in a pooled investment or limited partnership or master limited partnership interest. Partnerships are considered pass-through entities for tax purposes and therefore have special tax considerations.

The screen filters for unit trusts with a historical dividend yield of 5% or higher, a minimum historical and projected EPS growth rate of no less than 5%, a price of $5 or more, and a minimum average daily trading volume of 50,000 shares.

As of July 25, 2019, here are the top 10 results of this screen, sorted by highest market capitalization:

  • Energy Transfer (ET)
  • MPLX (MPLX)
  • Cheniere Energy Partners (CQP)
  • Magellan Midstream (MMP)
  • Andeavor Logistics (ANDX)
  • Phillips 66 Partners (PSXP)
  • Black Stone (BSM)
  • Extended Stay America (STAY)
  • BP Midstream Partners (BPMP)
  • Hess Midstream Partners (HESM)

A notable characteristic of this screen is that the results are unit trust funds that typically invest in natural resources like oil, gas, and other commodities. Unit trusts like these can offer higher dividends, but a drawback is that they may have enhanced risk of loss. Additionally, some of the search results are small-cap companies, which can carry different risk and trading characteristics compared with larger companies. As always, be sure to do additional research.

Due diligence

As noted, more research is needed to determine if any of these investments are right for your specific strategy. You should fully understand the risks involved, and each investing opportunity should be considered within the context of a well-diversified investment strategy that conforms to your specific time horizon, objectives, and risk parameters.

Next steps to consider

Find new investing ideas and get up-to-the-minute market data.

Learn what you need to know before trading the market.

Learn more about thematic investing.

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