U.S. equities are climbing to new highs on Friday, as a number of hot stocks are pushing the Nasdaq Composite past the 6,300 level for the first time. That includes Amazon.com, Inc. (NASDAQ:AMZN), which has crossed the $1,000-per-share threshold once more.
All it took to active the buyers was a weaker-than-expected payrolls report this morning, raising hopes the Federal Reserve will be forced to slow its rate-hike pace.
But it’s not all champagne and lollipops.
Crude oil remains a mess, pushing down energy stocks. Bank stocks remain weak as Treasury bonds are oddly well-bid, pushing down long-term interest rates and weighing on net interest margin hopes.
The result is a combination of broad market price strength combined with narrow breadth measures, creating an odd environment of both strength and weakness for investors to contend with.
In a survey of the situation, here are three hot stocks to chase … and three frigid stocks to flee.
Hot Stocks to Chase: Boeing (BA)
Boeing Co (NYSE:BA) shares are breaking up and out of a month-long consolidation near $185, pushing to new highs above $190.
Boeing is enjoying some positive vibes from the analyst front. The company was recently initiated with a “Buy” rating from analysts at Berenbreg with a $202 price target. Barclays raised its price target to $190, noting that recent concerns about near-term valuation pressures seem to have faded.
Boeing’s last earnings report was a mixed bag. Back on April 26, BA announced earnings of $2.01 per share that beat estimates by a dime, but revenues were off 7.3% year-over-year and missed expectations. Next up is its Q2 report, on July 26 before the bell, where analysts will be looking for $2.34 per share on revenues of $23.25 billion.
Frigid Stocks to Flee: Exxon Mobil (XOM)
Exxon Mobil Corporation (NYSE:XOM) shares have finally fallen below critical support at the $80 level going back to September. From a technical perspective, the bulls face a decline back to early 2016 lows when energy stocks were first recovering from crude oil, falling all the way down to $26.05 a barrel.
Helping XOM lower has been a May 24 downgrade from Moody’s, which lowered its outlook to “Negative” from “Stable” on weak credit measures.
The company will next report results on July 28, with analysts looking for earnings of 94 cents per share on revenues of $66.3 billion.
Hot Stocks to Chase: Caterpillar (CAT)
Caterpillar Inc. (NYSE:CAT) shares are lifting up and over late April levels, pushing into clear air after breaking over the 2014 high near $100 back in April and May. The company has benefited from a belief that a rebound in global economic growth as well as commodity prices (with U.S. drilling activity picking up) will increase heavy equipment orders.
Again, the analyst community is piping up here, too, as CAT was upgraded by Bank of America Merrill Lynch analysts on May 11 following a beat-and-raise earnings report featuring strong forward guidance.
Caterpillar will next report results on July 25 before the bell. Analysts are looking for earnings of $1.15 per share on revenues of $10.8 billion.
Frigid Stocks to Flee: Bank of America (BAC)
Bank of America Corp (NYSE:BAC) shares didn’t get any help today, as the weak jobs report makes it less likely that the Federal Reserve will raise rates this summer.
BAC stock continues to languish below their 50-day moving average and are testing critical support near $22.50. This traces out a head-and-shoulders reversal pattern that, on a breakdown, suggests a downside target some 20%-plus lower around the $18 level.
Financial stocks in general have been weighed down by evidence of slowing loan growth, recent management warnings about softness in trading revenue, and headwinds from lower long-term interest rates. Bank of America in specific isn’t getting much benefit of the doubt, even after a top- and bottom-line beat on April 18.
The company will next report results on July 18 before the bell.
Hot Stocks to Chase: Apple (AAPL)
Apple Inc. (NASDAQ:AAPL) is on the move and looks set for a breakout above its May highs ahead of its WWDC developers’ conference on Monday. Watch for the release of iOS 11 and a possible Siri-enabled speaker product. The hype is building for the release of the iPhone 8 later this year.
Investors also continue to be excited about the very impressive growth in App Store revenue as Apple’s focus shifts from growing the iPhone user base to milking its broad market share penetration. Last quarter, App Store revenue increased 40% year-over-year.
Apple will next report results on July 25 after the close, with analysts looking for earnings of $1.57 per share on revenues of $44.9 billion.
Frigid Stocks to Flee: Disney (DIS)
Walt Disney Co (NYSE:DIS) shares are threatening to break down out of a two-month consolidation range near $108 — which was a reprieve from the 7% decline from its late April high — on worries over the health of its media business amid competitive pressures and subscriber losses.
Shares have been under pressure since reporting quarterly results on May 9, with the top line disappointing. Much of the blame comes from its deteriorating ESPN unit, which had to cut a swath of high-priced on-air talent to help with inflated costs amid declining subscribers.
DIS also was recently downgraded by Macquarie analysts as sentiment continues to sour.
The company will next report results on August 8 after the close. Analysts are looking for earnings of $1.60 per share on revenues of $14.7 billion.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
