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What the Market Wants: Slow Market Growth Continues: Consider BCOR, JBLU, PRU

Posted on the 11 November 2013 by Phil's Stock World @philstockworld

Today, the markets barely moved all day; the bond markets were closed for Armistice Day; and there were no scheduled government reports. Volume was nearly negligible, so it’s very difficult to draw any conclusions from today. 

However, last week delivered slow market growth despite individual days that were quite volatile with alternating up and down action. The SPY was down more than 1.25% on Thursday, but it rebounded, up 1.35% Friday, to close the week up. Large-cap Value, up 0.74% and Small-cap value, up 0.54%, led the way. Mid-cap Growth trailed at -0.36%.   

Market Stats

Economic statistics were generally favorable last the week including advance GDP for Q3, up 2.8% on Friday, well above estimates.  Obviously, the congressional gridlock related to the budget and debt cap final decisions continue to keep investors cautious—it’s difficult to formulate near- and mid-term outlooks.  Nonetheless, more money continues to flow into equities, moving the market to slightly higher highs on a weekly basis.

As we reported last week, valuations as a whole are a bit above norm; we continue to find overlooked stocks that can keep your portfolio growing.  Hedging opportunities are very similar to last week’s with VIX related derivatives and ultra-short ETFs. It is very unlikely that the domestic situation will show much improvement through the holidays, but a possible Iranian nuclear agreement could move global markets significantly.

Stay cautious and consider the stocks 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):

Blucora, Inc. (BCOR) –Technology

  • Trading for 42x current earnings estimates and 11x forward earnings estimates
  • Huge positive earnings surprise in last three quarters
  • Analysts have revised earnings estimates up for next quarter in last 7 days
  • 850% projected EPS growth for current quarter, 18% next year, 17.5% over the next 5 years

JetBlue Airways Corporation (JBLU)—Industrials

  • Trading for 20x current earnings and 9x forward earnings estimates
  • Analysts have revised EPS estimates up in last 30 days
  • 120% projected EPS growth for the current quarter, 22.5% this year, 22% over the next 5 years

Prudential Financial, Inc (PRU)—Financials

  • Trading for 9X forward earnings estimates
  • Analysts revised EPS estimates up in last 7 days
  • 29% projected EPS growth for the current quarter, 51% this year, 14% over the next 5 years