Tags: 12 battered | bruised | stocks | rally

Barron's: 12 Battered Stocks Poised to Rally

Barron's: 12 Battered Stocks Poised to Rally
(Ricardo Reitmeyer | Dreamstime.com)

By    |   Friday, 20 November 2020 12:47 PM

Barron’s for the fourth time this year has searched for what it calls a dirty dozen beaten up stocks that could bounce.

“The are only a couple of criteria for our list. The stocks have to be down. They also have to be generating free cash flow and have below average debt. No one, including Barron’s, wants to buy value traps—stocks that are cheap and stay cheap for a reason, such as weak demand or too much debt,” Barron’s said.

“Keeping it simple yields a big advantage. We aren’t thinking about the election or Covid-19 or complicated stock factors to generate our list,” Barron’s said.

Here are the stocks:

Six returning names:

  • ConocoPhillips (COP)
  • EOG Resources (EOG)
  • Biogen (BIIB)
  • Huntington Ingalls (HII)
  • Curtiss-Wright (CW)
  • Cboe Global Markets (CBOE)

The six new members of the dozen include:

  • Ford Motor (F)
  • Acuity Brands (AYI)
  • Armstrong Worldwide Industries (AWI)
  • Omnicom (OMC)
  • Aerojet Rocketdyne (AJRD)
  • Intel (INTC).

The new names are down about 23% year to date on average. The entire dozen stocks are down about 30%.

However, as winter approaches, U.S. equity investors are weighing brightening prospects for a COVID-19 vaccine against a resurgence of the pandemic across the United States.

Several market strategists have predicted significant gains in U.S. stocks in 2021, as long as Congress passes further fiscal stimulus and a vaccine becomes widely available in the first half. But the path for stocks could be bumpy while investors await those developments, they explained to Reuters.

"We anticipate a vaccine becoming partially available this year, but that still leaves a gap," said Colin Moore, global chief investment officer at Columbia Threadneedle Investments.

Further signs the pandemic is growing more severe could stir volatility in U.S. stocks. The Cboe Volatility Index, known as Wall Street's "fear gauge," fell sharply after the U.S. presidential election but has leveled off and remains above its long-term average near 20. VIX futures also reflect elevated expectations for market gyrations throughout the first half of 2021.

Questions about more stimulus have fed volatility expectations, investors said. Two U.S. Senate runoff elections in Georgia scheduled for January could decide which political party controls that chamber and hence the scope of further pandemic relief.

"The big event risk in 2021 might be that's just completely off the table," said Derek Devens, senior portfolio manager of Neuberger Berman's options group, referring to further stimulus. "That would be a pretty negative event for the market."

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Barron’s for the fourth time this year has searched for what it calls a dirty dozen beaten up stocks that could bounce.
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Friday, 20 November 2020 12:47 PM
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