As we enter the second half of the year, certain stocks look primed for success. Earnings season is underway and many well-known companies have outperformed, igniting a rally in their share price. Other companies have different catalysts driving their stock to new heights.
With the market rally of the last 18 months only now starting to broaden out, there are plenty of opportunities for investors searching for stocks of quality companies at reasonable prices and valuations. With the current market rally looking likely to continue through year’s end, now would be a good time to take positions in stocks that have momentum.
Here are three unstoppable stocks set for second-half success.
General Motors (GM)
General Motors (NYSE:GM) just announced strong second-quarter financial results that included record sales. The Detroit automaker issued EPS of $3.06 versus $2.75 which was expected on Wall Street. Revenue for the April through June quarter totaled $47.97 billion compared to $45.46 billion that was the consensus forecast of analysts. GM said its revenue was a new quarterly record, having risen 7.2% from $44.75 billion a year ago.
General Motors said that its North American division earned $4.43 billion U.S. in Q2, up nearly 40% from a year earlier, driven largely by truck sales. The unit reported a profit margin of 10.9%. In terms of guidance, GM said that it expects full-year earnings of $9.50 to $10.50 a share. That’s up from previous guidance of $9 to $10 a share. In addition to its Q2 numbers, GM said it’s suspending production of its Cruise Origin self-driving vehicle.
GM stock has risen 30% this year but still trades at only five times future earnings estimates.
American Express (AXP)
American Express (NYSE:AXP) managed to report solid Q2 financial results despite signs of a slowing economy and fluctuating consumer spending. The credit card giant announced EPS of $4.15, which soundly beat Wall Street forecasts that had called for a profit of $3.26. The company’s profit was up 39% from a year earlier. Revenue in the quarter totaled $16.30 billion, which slightly missed consensus estimates of $16.60 billion. Still, sales were up 9% year-over-year and at a record level.
The sales miss was attributed to a dip in consumer spending during the quarter as the U.S. economy showed signs of a slowdown. However, American Express’ financial results have held up better than other credit card companies after the pandemic as it caters to more affluent consumers and is the preferred business card of corporations. American Express also raised its forward earnings guidance.
The company now expects full-year earnings of $13.30 to $13.80 per share, up from a previous outlook that called for EPS of $12.65 to $13.15. American Express reiterated its previous revenue guidance that calls for growth of 9% to 11% this year. AXP stock has gained nearly 50% over the past 12 months.
Darden Restaurants (DRI)
The stock of Darden Restaurants (NYSE:DRI) could get a boost from its acquisition of Tex-Mex chain Chuy’s Holdings (NASDAQ:CHUY), which it is buying for $605 million in cash. Once the deal is finalized, Chuy’s will join Darden’s restaurant portfolio that also includes Olive Garden and the LongHorn Steakhouse. The acquisition is supported by Chuy’s board of directors and is expected to close in this year’s second half.
Management said they were attracted to Chuy’s because the restaurant chain has both a strong track record and future growth potential. Chuy’s posted annual revenue of $450 million in its most recent fiscal year. Headquartered in Austin, Texas, Chuy was founded in 1982 and currently has 101 restaurants in 15 states. Darden is buying all outstanding shares of Chuy’s for $37.50 per share, representing a 48% premium to where Chuy’s stock had been trading prior to the acquisition being announced.
DRI stock is down 14% year-to-date but looks poised for a rebound. The shares currently trade for 16 times future earnings estimates and offer a quarterly dividend that yields 4%.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
