U.S. equities are rebounding meekly on Wednesday, with the Dow Jones Industrial Average finding support at its 50-day moving average. News flow remains light as the staff shakeup at the White House moves into the rearview mirror and investors look ahead to the start of the Jackson Hole central bank symposium later this week.
Breadth remains a challenge, however, with an increasing number of stocks succumbing to downside pressure: Just 64% of the stocks in the S&P 500 Index are in uptrends versus a high of near 80% back in March. The Russell 2000 Small-cap Index and the Dow Jones Transportation Index are both falling deeper below their 200-day moving averages.
The dichotomy is creating some interesting opportunities for investors, both on the long- and the short-side. Here’s a look at four hot stocks making new highs along with four making new lows:
Hot Stocks: Alibaba (BABA)
Chinese online ecommerce giant Alibaba Group Holding Ltd (NYSE:BABA) is enjoying another near 3% gain on Tuesday, extending a parabolic rise out of its late December low that has seen shares nearly double.
Analysts at UBS believes shares can push to the $200-a-share level on solid management execution and the marriage of content and data driving higher engagement and monetization across its platform. Runway includes an expanding ecosystem via logistics, media consumption, international commerce and cloud computing.
BABA will next report results on Nov. 16 before the bell. Analysts are looking for earnings of 84 cents per share on revenues of $7.7 billion. The stock enjoyed an upgrade to overweight from analysts at Atlantic Equities.
Hot Stocks: Fiat Chrysler Automobiles (FCAU)
Fiat Chrysler Automobiles NV (NYSE:FCAU) shares have been surging over the past two weeks, up more than 20% to test above the $15-a-share level for the first time. FCAU has been the center of some intense media focus amid reports that Chinese automakers — including Great Wall — are considering an acquisition in whole or in part (Jeep, most likely). Management seems to be spooked amid reports an overhaul plan is in the works that could involve spinning off Maserati and Alfa Romeo.
FCAU will next report results on Oct. 26. Analysts are looking for earnings of 47 cents per share on revenues of $27.5 billion.
Hot Stocks: HP Inc (HPQ)
HP Inc (NYSE:HPQ) shares are surging higher on Thursday, rising to a four-month high, after reporting better-than-expected results. The tech heavyweight reported earnings of 43 cents per share on a 9.8% year-over-year increase in revenues to $13.1 billion. HPQ’s forward guidance was raised as well in the wake of a 12% annual gain in personal systems sales and a 6% rise in printing revenue.
HPQ will next report results on Nov. 22 after the close. The report continues a run of positive earnings surprises for the company. Back in May, earnings of 40 cents per share beat estimates by a penny on a 7% rise in revenues.
Hot Stocks: Liberty Media (FWONA)
Liberty Media Corporation – Series A Liberty Formula One (NASDAQ:FWONA) shares are breaking to new highs this week, exiting a long sideways range near $33 that’s been in place all year representing levels that were first touched back in late 2013.
Part of the Liberty Media sphere, FWONA is just one part of a number of relevant tickers including LSXMA, LSXMB, LSXMK, BATRK, and FWONK. FWONA are the class A shares, carrying voting rights in the management of the Formula One Group and its stream of licensing revenue.
Barclays initiated coverage of the company back in May with an equal weight rating, while Pivotal Research Group believes the market is significantly undervaluing the F1 asset with its unique mix of global reach, affluent audience and sustained competition.
Hot Stocks: Schlumberger (SLB)
Schlumberger Limited. (NYSE:SLB) keeps dribbling to new lows on Thursday, returning to lows not seen since early 2016 down nearly 30% from the highs set in January. It has been nothing but bad news for the energy sector lately, as falling Organization of the Petroleum Exporting Countries production freeze compliance mixes with steady increases in U.S. shale output and ongoing woes in U.S. gasoline demand. The global oversupply situation isn’t going anywhere, it seems.
SLB will next report results on Oct. 20 before the bell. Analysts are looking for earnings of 42 cents per share on revenues of $7.9 billion. When the company last reported on July 21, earnings of 35 cents per share beat estimates by 5 cents on a 4.2% rise in revenues.
Hot Stocks: J.M. Smucker (SJM)
Bad news in the jam business? Seems so, with J M Smucker Co (NYSE:SJM) shares down nearly 10% after reporting results before the open on Thursday. Earnings of $1.51 missed estimates by 11 cents on a 3.7% drop in revenue year-over-year. This followed a 1.3% drop in revenue reported on June 8, suggesting persistent top-line pressure.
Lower volume and the price mix weighed on several categories, notably coffee (Folgers) and oils. SJM management lowered their forward guidance to a range of $7.75 to $7.95 for the fiscal year vs. the $7.95 analysts were expecting.
Hot Stocks: Cheesecake Factory (CAKE)
Cheesecake Factory Inc (NASDAQ:CAKE) shares are down 0.6% in mid-day trading on Thursday — capping a 38% decline — returning to lows not seen since October 2014. CAKE has struggled recently with a pullback in comp-store sales growth, something noted by Barclays analysts earlier this month. They highlighted the company’s historic positioning towards higher-end consumers at higher-end malls, a demographic that is increasingly under pressure it seems.
CAKE will next report results on Nov. 1 after the close. Analysts are looking for earnings of 61 cents per share on revenues of $578.23 million. The company reported earnings of 78 cents per share — 2 cents ahead of estimates — on a 2% rise in revenues of Aug. 2. But forward guidance disappointed.
Hot Stocks: Regal Entertainment Group (RGC)
It’s a hard slog in the movie business these days, as summer 2017 has been a disappointment and price pressure is intensifying with the $9.95 unlimited plan touted by MoviePass. Regal Entertainment Group (NYSE:RGC) shares are down nearly 40% from the highs set in April as investors realize there are structural problems in the industry that aren’t going away anytime soon. Recent negative guidance from competitor AMC Entertainment Holdings Inc (NYSE:AMC) didn’t help either.
RGC will next report results on Oct. 25 after the close. Analysts are looking for earnings of 13 cents per share on revenues of $771.74 million. When the company last reported on July 26, earnings of 16 cents per share missed estimates by a penny on a 2.8% drop in revenue.
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.
