The chase for yield just got somewhat simpler.
Five stocks with plentiful profits are far outpacing the S&P 500 for 2019, demonstrating that not exclusively would they be able to pay out high profits, they can likewise create healthy gains for investors.
While the S&P is up somewhat more than 9 percent for the year, shares of Coty, Philip Morris, Western Digital, Exxon Mobil and General Motors — all of which have profits yielding somewhere around 4 percent — are up by double digits.
Also: Market watchers disclose to CNBC that two of these five stocks have much more runway ahead.
Mark Tepper, president and CEO of Strategic Wealth Partners, enjoys the prospects for GM, taking note of that profit stocks have for the most part outperformed nondividend stocks each year since 1927, and with just about 40 percent less instability.
“When I look at all these companies and try to determine which has the most potential upside, you really need to look for positive catalysts, and, in my opinion, GM has more positive catalysts than the rest of the group,” he said Thursday on “Trading Nation.” “GM has a huge opportunity right now to get their financials moving in the right direction by making good, strategic decisions, which, for them, is really a ‘less is more’ approach: fewer vehicles, fewer countries.”
Tepper noticed a couple of GM’s strategic moves, including the organization’s turn far from less gainful cars and toward increasingly well known trucks and SUVs, both of which have seen higher deals in the U.S. and China in recent years.
“Even though, overall, auto demand is slowing, GM should be able to grow both the top and the bottom lines by focusing on raising prices and also their higher-margin vehicles in two locations: North America and China,” he said.
Instinet Chief Market Technician Frank Cappelleri sees more upside for Western Digital, a computer hardware and data storage play that has seen some vicious trading throughout the years.
“Looking back at WDC, it dropped about 70 percent from its high last March, and now, even after the bounce, it’s still 120 percent away from those levels. So the question is, of course, can this bounce continue? And I think the answer is yes,” Cappelleri said on “Trading Nation.”
The technical expert clarified that WDC’s 2014 and 2016 collapses were drastic to the point that they created month to month oversold readings in the relative strength index, a momentum indicator.
“That’s pretty rare,” he said Thursday. “A lot of bad things have to happen over a long period of time for that to occur. [The] stock was able to regroup near its breakout point from the previous years in the mid-$30s, and then we saw a substantial rally from there. So I think, now, the stock’s still coming back, but, again, after the 70 percent decline, [the] monthly RSI again became oversold. So, because of that, I think you could be in the early stages of WDC coming back. It may take a while, but I see further upside ahead.”
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