With Independence Day behind us, traders are looking ahead to what July will bring to Wall Street. Washington remains preoccupied with the healthcare reform effort moving through the Senate. The Federal Reserve is on hold until September. And the second-quarter earnings season will begin in earnest in another week.
Based on market seasonality, July tends to mark the beginning of a period of market volatility that runs through the beginning of October. With stocks overdue for a correction, and the Nasdaq 100 moving below is 50-day moving average in a big way for the first time since late last year, the stage seems to be set for an increase in trading volume and price unevenness.
No wonder then that, historically, the best-performing areas of the market in July — smack dab in middle of the summertime doldrums — tend to be “defensive” areas like consumer staples, utilities and healthcare stocks.
And actual defense stocks — the ones that make missiles and ships and guns — look ready to roll higher here as well amid simmering tensions with North Korea. Read on for seven stocks to watch for long-side plays.
Stocks to Buy: Bristol Myers Squibb (BMY)
Drug maker Bristol-Myers Squibb Co (NYSE:BMY) looks ready to push out of its nearly year-long sideways consolidation with a push to overhead resistance near $60 which would be worth roughly a 10% gain from here. Shares have moved up and over both the 50-week and 200-week moving averages.
Shares fell 40% from their 2016 summer high into a post-election low earlier this year on fear the Trump Administration would come down harshly on drug prices. Possible executive action has been delayed, suggesting any eventual action will be watered down.
The company will next report results on July 27 before the bell. Analysts are looking for earnings of 73 cents per share on revenues of $5.1 billion. When the company last reported results on April 27, earnings of 84 cents per share beat estimates by 10 cents on a 12.3% jump in revenue.
Stocks to Buy: Leucadia National Corp. (LUK)
Leucadia National Corp. (NYSE:LUK), a consolidated holding company with operations in industries from investment banking to beef packing and energy drilling, has enjoyed an impressive 90%+ rally off of its early 2016 low.
Shares are now contending with late 2013/early 2014 highs and could eventually push to its 2011 highs near $35 — which would be worth a 30% gain from here.
The company will next report results on Aug. 3 after the close. Analysts are looking for earnings of 30 cents per share on revenues of $2.7 billion. When it last reported results on April 27, earnings of 37 cents per share beat estimates by 14 cents on a 10% rise in revenues.
Stocks to Buy: Companhia de Seneamento (SBS)
Companhia de Saneamento Basico (ADR) (NYSE:SBS), a Brazilian water utility, is on an upswing with its year-long consolidation range centered on $9.50. The cool off period capped more than a tripling off of its September 2015 low of $3.33.
Watch, at the least, for a return to its recent high near $11, which would be worth a 13% gain from here.
Back in May, the company reported a 7.6% year-over-year increase in earnings. Profitability has been accelerating rapidly on an annual basis, growing from $338 million in 2014 to $906 million in 2016.
Stocks to Buy: Raytheon (RTN)
Shares of defense contractor and missile developer Raytheon Company (NYSE:RTN) have surged up and out of a three-month consolidation range to continue a massive uptrend that’s been in place since 2011, which shares rising more than fourfold. The consistency has been impressive: Shareholders haven’t suffered the indignity of a drop below the 200-day moving average since the summer of 2015.
The company will next report results on July 27 before the bell. Analysts are looking for earnings of $1.75 per share on revenues of $6.2 billion.
The company last reported on April 27 with earnings of $1.73 per share beating estimates by 13 cents on a 3.4% rise in revenue from the year ago period.
Stocks to Buy: Huntington Ingalls Industries (HII)
One of the few defense stocks offering a modicum of value, shares of shipbuilder Huntington Ingalls Industries Inc (NYSE:HII) Look ready to break up and out of a six-month downtrend after finding support at its 200-day moving average and moving over its 50-day moving average.
Watch for a return to its March high, which would be worth a 13% gain from here.
The company will next report results on August 3 before the bell. Analysts are looking for earnings of $2.69 per share on revenues of $1.8 billion. When results were last reported on May 4, earnings of $2.56 per share missed estimates by 15 cents on a 2.2% drop in revenue.
Stocks to Buy: Boeing (BA)
Boeing Co (NYSE:BA) shares continue to tear higher, crossing back over the $200-a-share level capping a 60% gain from its pre-election low. The breakout ended a long sideways consolidation going back to 2013.
Strong aircraft sales, along with indications of increased military spending from the Trump Administration, are driving the gains.
The company will next report results on July 26 before the bell. Analysts are looking for earnings of $2.33 per share on revenues of $23.11 billion.
When the company last reported results on April 26, earnings of $2.01 beat estimates by 10 cents despite a 7.3% drop in revenue.
Stocks to Buy: United Technologies (UTX)
Shares of United Technologies Corporation (NYSE:UTX), a holding company classified into the aerospace/defense industry because of its Pratt & Whitney aircraft engine division, look ready to break up and out of a three-month consolidation pattern.
Shares have gained 27% from their pre-election low. The company was recently in the spotlight after President Donald Trump, on the campaign trail, criticized its Carrier air conditioning division for offshoring production; a decision the company partially reversed.
The company will next report results on July 26 before the bell. Analysts are looking for earnings of $1.77 per share on revenues of $15.2 billion. When the company last reported on April 26, earnings of $1.48 beat estimates by nine cents on a 3.4% rise in revenues.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. A two-week and four-week free trial offer has been extended to Investorplace readers.