Finding Great Deals on Great Stocks in the New Bull Market

[Zacks | Our Research. Your Success.] WeekendWisdom Tactics that Work in Good Markets and Bad [Ben Rains - Editor] Finding Great Deals on Great Stocks in the New Bull Market By: Ben Rains June 24, 2023 --------------------------------------------------------------- The stock market has been roaring higher in the first half of 2023 with the Nasdaq and more recently the S&P 500 in new bull markets. The U.S. economy is looking resilient despite lingering inflation and other concerns — and the recession everyone was calling for is not on the immediate horizon. Better still, the stock market is loaded with wonderful opportunities for investors with both near-term and long-term outlooks as areas outside of mega-cap technology finally start to participate in the comeback. Even some of those soaring tech stocks aren't trading at those ridiculous levels one might assume based on the headlines. Yet many investors who stayed on the sidelines hoping and praying for a ‘better opportunity’ to buy in at that 'perfect moment' might still believe they missed the boat. Fortunately for everyone, it is hardly too late to join the stock market rally. There are still tons of great stocks from large-cap household names, to growth-focused upstarts, trading at levels that might look like true bargains five years or five months from now. Forget Exact Timing and Stay Exposed While many investors waited and waited in 2023, the market climbed higher and higher. The S&P 500 is currently trading close to its 52-week highs, with it up over 17% during the last 12 months and around 15% YTD. Zooming out, the S&P 500 has surged 40% over the past three years and 60% in the last five, which includes the rapid Covid selloff and the 2022 tumble. The 2023 rally and recent stock market history showcase why most investors must attempt to throw out the mindset that they have to buy stocks at exactly the right point. Flawless timing is a rarity, even for the biggest hedge funds and the most world-renowned investors. And those who hesitate in the market can get left behind rather quickly. The first-half run should also serve as a wonderful example of why investors with long-term horizons might want to do their best to stay constantly exposed to the market at all times through stocks and/or ETFs, no matter what is going on in the U.S. or around the world. Some investors might have genuine concerns about 'chasing' some of the big tech names as we head into July. Thankfully, the broader stock market appears far from overheated, even when digging into some of the mega-cap tech names that have fueled the rally. On top of that, hundreds of S&P 500 stocks have not only underperformed the benchmark so far this year, but they are still in the red. All in, investors might want to start (or keep) buying stocks for the second half of 2023 and beyond because there are tons of deals out there right now. Stay the Course The S&P 500 and the Nasdaq float near 52-week highs as we close out the first half. The fantastic run came as enough forward-looking investors decided that enough of the near-term headwinds were already priced in last year, especially for mega-cap tech. But if you think back to the early days of 2023, you will remember talking heads and legitimate money managers alike banging the table about a recession, fading earnings, and beyond—and why the market is in big trouble this year. Fast forward six months and the earnings picture is holding up well. That major U.S. recession also doesn't appear to be on the horizon at the moment with the unemployment rate near historic lows and consumers still spending on luxuries such as travel. Even U.S. housing starts are rebounding. The Fed also appears to be all but done raising interest rates, even if Jay Powell and Co. remain a bit more hawkish over the next six months than Wall Street might have hoped. The moral of the story is to keep an even keel and stay exposed to the market during the good times and the bad because the overarching narratives are often wrong or mistimed. Economic forecasts and price targets are changing all of the time, and nearly every major player on Wall Street has raised their 2023 outlooks for the market and the economy. Far From Overheated Many investors big and small are starting to call for a pullback from the likes of Nvidia, Tesla, Meta, Apple, and a few other mega-cap tech stocks. Some profit-taking in the coming weeks would likely be warranted to shake off some of the froth. However, it is worth hammering home the fact that even many of these mega-cap tech stocks appear far from supercharged in terms of valuation levels. Nvidia's forward 12-month PEG ratio sits at 2.6 vs. the Zacks Tech Sector's 1.9, which puts it 20% below its own 10-year median and at a 50% discount to its peaks - even as the chip titan skyrockets to fresh all-time highs. Continued . . . [Alert: One Semiconductor Stock Stands to Gain the Most]( We're sitting on an +800% gain in the giant Nvidia. But now Zacks has named a different semiconductor stock that has the most upside of all. Our just-released Special Report, One Semiconductor Stock Stands to Gain the Most, spotlights a stock that's only a fraction of the size of Nvidia. You can buy shares at a stunning bargain price of under $10. But... flush with patents, this company is poised for a huge year with strong earnings growth and an expanding customer base. Your cost to download our urgent recommendation (and more) is only $1- no further obligation. Hurry - the deadline is midnight Sunday, June 25. [See this time-sensitive stock now »]( Despite all the hand wringing about tech trading like it's the Dot-com era, there are multiple large-cap tech stocks with proven businesses churning out double-digit revenue growth, huge margins, and massive profits still 30% or more below their all-time highs. The Nasdaq itself trades about 15% beneath its records even though it has surged around 30% YTD. The S&P 500's 15% rally in 2023 leaves it nearly 10% below its highs. On the valuation front, the benchmark is trading at an 18% discount to its peaks in terms of forward earnings. If you start to dig into individual market/Zacks sectors from retail and consumer discretionary, to energy and basic materials, things begin to look flat-out cheap. The opportunities across finance, transportation, and other pockets of the economy appear highly enticing as well. The Zacks Retail-Wholesale sector, for example, is trading a 33% discount to its own 10-year highs when it comes to forward earnings and below its own median. It is hard to say the stock market is in totally blind euphoria at these levels. Opportunities Galore After a very top-heavy rally, we are finally seeing other areas of the market start to rebound. The percentage of stocks trading above their 200-day moving average is at roughly 50% vs. around 40% in late May. For reference, the percentage of stocks trading above their 200-day moving average hit roughly 90% in the early days of 2021. The same market breadth indicator was at around 17% at the end of the third quarter of 2022, which is right around when the S&P 500 bottomed. Money is coming off the sidelines as investors big and small look for ways to capitalize on a rally that many missed out on — thus far. At the moment, roughly 280 S&P 500 stocks are still in the red in 2023, including giants across retail, health care, energy, utilities, and other pillars of the economy. Outside of these areas, there are dozens of great stocks sitting at highly attractive levels, including big tech names that have underperformed so far this year. There is also growing sentiment that any significant mega-cap tech pullback might be gobbled up rather quickly. Funds and investors that failed to benefit from the last tech rally just can't afford to get left behind again. Zacks' Top Chip Stock to Buy Now According to Fortune Business Insights, the overall global semiconductor market is in the process of a growth explosion from $452 billion in 2021 to $803.2 billion by 2028. Now is a great time to get in. But where should you start your search for the chip stock with the greatest upside? Zacks is sitting on an Nvidia recommendation that has shot well past +800%.¹ But we named a different manufacturer as having the most promising growth prospects of 45 public companies in the electronics-semiconductor industry. Get details of this recommendation right now in Zacks timely Special Report: One Semiconductor Stock Stands to Gain the Most. It's a little-known small cap, only a fraction of the size of Nvidia and, as of now, still priced under $10 per share. Flush with 18 U.S. patents plus 5 pending, and 3 international patents plus 2 pending, it's poised for a huge year with strong earnings growth and an expanding customer base. One of its divisions is making a major move, and the addition of a new software model is creating another new revenue stream. Your cost for this Special Report? Exactly $1. With that same dollar, you'll get 30-day access to all long-term picks from all of Zacks' long-term portfolios. And there's not a cent of further obligation to buy anything more. Today, you can easily find out the name of our super semiconductor stock and get urgent details about its prospects for extreme gain. But the timing won't be this perfect for long. That's why we established a deadline for downloading this Special Report: Midnight Sunday, June 25. [Tap now for One Semiconductor Stock Stands to Gain the Most »]( Thanks and good trading, [Ben Rains - signature] Ben Rains Ben is a Zacks Rank expert, noted for applying the algorithms and strategies that help individual investors achieve success. Focusing on technology companies, consumer-facing stocks, and beyond, he invites you to [download Zacks' Special Report on a semiconductor stock with exceptional potential.]( ¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. This free resource is being sent by [Zacks.com](). We look for investment resources and inform you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms of Service". Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. 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