5 Rocket Stocks Worth Buying This Week
But Europe is still a bit of a red herring for the market's motives. While most eyes are turned to the carnage taking place on EU equity markets, there are a few signals that things aren't quite what they seem.
The first is what's going on in the Russell 2000, a small-cap index of 2,000 U.S. stocks. Because the R2K is a small-cap index, it has a lot less exposure to Europe than larger multi-national driven indices such as the S&P 500. But the Russell has been underperforming the S&P since February; that suggests that the market lag isn't EU-driven at all. Instead, it's a matter of investors just looking to flip the "risk switch" into off mode.
The other factor is earnings. In spite of the anxiety that's ramping up in the market right now, U.S. stocks are beating analyst estimates by the greatest margin since back in 2006. Of the 95 S&P 500 components that have reported their numbers so far this quarter, 85% have posted positive earnings surprise. And with 177 companies set to report their earnings numbers to Wall Street this week, EU drama could easy be overshadowed by corporations piling money onto their record-high piles of cash.
So to take advantage of the fundamental disconnect that's taking place in the broad market right now, we're turning to a new set of Rocket Stocks.
For the uninitiated, "Rocket Stocks" are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows.
In the last 149 weeks, our weekly list of five plays has outperformed the S&P 500 by 80.34%.