The post-election rally is suffering a small setback in Monday’s trading. But worry not, bulls — this looks like a temporary pause on the way to higher prices.
A combination of hopes of an aggressive dose of fiscal stimulus from President-Elect Donald Trump and the seasonal tailwinds of this time of the year seem unbeatable. The buying is being sustained by rotation out of bonds — which have been hammered on rising inflation and economic growth expectations — into areas best positioned to take advantage of the new administration: materials, financials, transports, retailers, and industrials.
Besides, the bears just don’t have much to stand on at the moment. Earnings and economic growth fundamentals have improved and look solid. And the Federal Reserve’s expected December interest rate hike has now been fully priced in.
And seasonality suggests no letup to the buying either. Jeff Hirsch from the Stock Trader’s Almanac notes that December is the single best month of the year for the S&P 500 and the second-best month for the Dow Jones Industrial Average since 1950, averaging gains of 1.6% for both. It’s also the top month of the year for the Russell 2000.
Here’s a look at five stocks ready to lead the charge higher.
Big Stock Charts to Watch in December: AT&T (T)
AT&T Inc. (NYSE:T) shares are blasting up and over their 200-day moving average as telecom stocks enjoy an oversold rebound.
The entire telecom sector — as well as other yield-sensitives like utilities and real estate investment trusts (REITs) — have been hammered lower in recent months as long-term interest rates have drifted higher. But now, as interest rates stabilize somewhat and investors refocus on the tailwinds of the DirecTV and Time Warner Inc. (NYSE:TWX) acquisitions, some buying interest is returning.
AT&T will next report results in late January. Analysts are looking for earnings of 66 cents per share on revenues of $42.2 billion.
Edge Pro subscribers are enjoying a 130% gain in their Dec $39 T calls.
Big Stock Charts to Watch in December: Intel (INTC)
Intel Corporation (NASDAQ:INTC) shares are rising off of trendline support going back to the August 2015 low. Shares have been enjoying a steady rise on bullish interest over the company’s moves into new technology areas like autonomous driving, artificial intelligence and more.
The stock suffered a pullback in October following the release of light forward guidance despite a strong quarterly earnings beat. INTC posted 80 cents per share in profits to easily get past expectations for 73 cents, and revenues of $15.78 billion were enough to clear the bar, too. However, its Q4 estimate of $15.7 billion in sales came up about $170 million short.
That said, its guidance miss largely is a factor of costs as the company starts up a next-gen manufacturing processor.
Intel will next report results in mid-January. Analysts are looking for earnings of 75 cents per share on revenues of $15.7 billion.
Big Stock Charts to Watch in December: Exxon Mobil (XOM)
Exxon Mobil Corporation (NYSE:XOM), which was off slightly on Monday, still has rebounded off recent lows along with the entire energy sector thanks to fresh headlines concerning a possible OPEC/Russia production freeze deal coming together later this month — something that has been teased in various ways since February.
The latest is that the Russians and Iranians have agreed to coordinate actions in the energy market, putting pressure on Saudi Arabia to honor its rough commitment to cut production at an informal meeting in September.
Today’s action reflects some brewing pessimism, however.
Exxon Mobil will next report results near the end of January. Analysts are looking for earnings of 77 cents per share on revenues of $66.6 billion. Edge Pro subscribers are holding a position in the Dec $87.50 XOM calls.
Big Stock Charts to Watch in December: Verizon (VZ)
Verizon Communications Inc. (NYSE:VZ) shares are challenging their 200-day moving average for the first time since early October, up nearly 11% from their recent low.
Like the move in T, Verizon’s rebound is being driven by a combination of oversold technicals, some stabilization in interest rates, and optimism over consolidation in the telecom industry.
To this, I would add nascent optimism over the smartphone refresh cycle heading into 2017, with Apple Inc.’s (NASDAQ:AAPL) iPhone 8 expected to drive iPhone 6-like demand thanks to an expected new form factor.
Verizon will next report results in late January. Analysts are looking for earnings of 90 cents per share on revenues of $32.2 billion.
Big Stock Charts to Watch in December: Disney (DIS)
Walt Disney Co (NYSE:DIS) shares look ready to push over the $100 level for the first time since July. The company is over its fall lull, when the company was briefly connected with a potential Twitter Inc (NYSE:TWTR) buyout.
Shares benefited from an analyst upgrade by Deutsche Bank on Nov. 16 on increased confidence in its 2017-18 outlook as concerns over weakening performance in its cable networks and consumer products businesses fade somewhat. The result is an expected 15% valuation upside over the next 12 months, in their view.
Disney will next report results in early February. Analysts are looking for earnings of $1.51 per share on revenues of $15.4 billion.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
