What the Market Wants: Will 2014 Resume Last Year's Growth?
Despite a positive Factory Orders report of 1.8% compared to an expected 1.6% and last month’s drop of 0.5%, the market opened up briefly; however, light volume gave way to selling pressure caused by a slightly negative ISM Services Report of 53.0, less than last month’s 53.9 and an expected 54.8 reading. All major markets closed slightly lower, making for the third consecutive low-volume, negative market day to open 2014.
There’s not much new economic data expected tomorrow, but on Wednesday things pick up with the ADP Employment Report, followed on Thursday with the Initial Jobless Claims and Retail Sales for December and the Non-farm Employment report for December on Friday. ADP employment is expected to off a bit from last month’s more robust report, but the remaining releases are not expected to be much changed. Positive surprises Wednesday through Friday could get the market rolling for the year with more volume as well. If the news is bad, the markets will likely repeat the first three days of the year, perhaps a tad worse on higher volume.
Positive news from Congress could certainly move the market. Unfortunately, negative news would exacerbate the opening three-day trend.
Nonetheless, sounding like a broken record, we still find attractive stocks to buy even in this slow moving market. We will continue to recommend building positions in undervalued growth companies such as those shown below.
3 Stock Ideas for this Market
I selected the following stocks from a custom search looking for undervalued growth stocks with recent upward analyst revisions in MyStockFinder (*all data below from Yahoo! Finance):
Microsemi Corporation (MSCC) –Technology
- Trading for 10x forward earnings estimates
- 14% projected EPS growth next quarter, 25% next year, 12% over next 5 years
- Solid balance sheet
Maiden Holdings, Ltd. (MHLD)—Financials
- Trading for 7x forward earnings estimates
- Rapidly growing 4% dividend
- 300% projected EPS for the current quarter, 20% next quarter, 75% this year
Tesoro Corporation (TSO)—Energy
- Trading for 9x forward earnings estimates
- Analysts have revised EPS estimates up in last 30 days
- 95% projected EPS growth for next year