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3000 or Bust! + Stock of the Week

Hello TipRanks Members,

(Please remember that after today’s market commentary I share my “Stock of the Week”.)

The breakout to new highs has already taken place this week with more gains likely on the way. Once we took out the January high of 2872, then 2900 fell soon afterwards. Sure we may flirt under every now and then… but that is just part of the markets typical “2 steps forward, 1 step back” dance.

What was the catalyst for the breakout? 

We discussed this in previous commentaries. All the economic positives were already in place including Q2 GDP growing at a robust +4.2% clip. Plus we just enjoyed another strong earnings season. The key was for more investors to start believing that trade talks would come to a peaceful conclusion. And yes, the odds of that outcome do keep improving.

What happens now?

Barring some unforeseen negative event, stocks should cruise up to 3000 on the S&P 500 without much fuss. Once there it will find pretty stubborn resistance followed by an extended consolidation period to digest recent gains. And yes, that could morph into a 3-5% pullback, which is quite natural. Then probably settle in around 3000 at year’s end which would be a healthy 12% return on the year for the S&P.

Long term investors don’t mind such short term market antics. We just align ourselves with the prevailing winds, which continue to blow our portfolios to new heights.

Stock of the Week: MasTec (MTZ)

Construction is one of the best growth trends late in the economic cycle. That is because capacity utilization continues to increase leading to a demand for more capacity which necessitates more construction. In the case of MasTec, we are talking about the demand for more infrastructure including broadband, electric grid and oil & gas pipelines.

Earnings growth has been exceptional with current year estimates pointing to 25% year over year results. Yet even with that in place shares are actually down on the year. Why? All the NAFTA trade talks have put a cramp in the shares of MTZ and their peers. That outlook got a big boost this week with shares coming back to life.

Don’t worry, the upside party is not over yet. Even with this week’s gains in hand, analysts still have a $62.75 price target which is more than 40% above Friday’s close. Here are the other positives in place from a TipRanks perspective:

  • Strong Buy consensus with some 5 star analysts constructing sound arguments. More details.
  • The Best Performing Investors also are powered up with positive sentiment on shares. More details.
  • The Bloggers are providing a pipeline of praise on MTZ. More details.

These are going to be volatile shares. So don’t get on board if you ever get queasy when a stock falls 3-5% for no good reason. But if you are a value investor who appreciates the upside potential, then this might be a good move for you.

Start your research on MasTec here.

Wishing you a world of investment success!


Steve Reitmeister
Editor in Chief
www.TipRanks.com

Disclaimer: In general, I own the stocks that I highlight in commentary. When you think about it…why would you ever take advice from an investment professional who wasn’t willing to put his money where his mouth is?

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