Rotation or not, certain stocks are screeching higher as we head into August. Strong earnings, economic tailwinds and positive sentiment are driving some of the hottest stocks to new heights and seeing them trade at or near 52-week highs. These are not the usual suspects and don’t include the “Magnificent 7” stocks that previously drove the market rally.
It will take some digging on the part of investors, but it is possible to uncover some stocks that are outperforming right now amid the market volatility and rotation out of mega-cap technology stocks. Finding these less obvious names can help to insulate a portfolio from losses and ensure that one benefits from the sea change that’s taking place in the market.
What are the hottest stocks right now? Here are three top picks.
Lennar (LEN)
Homebuilder Lennar’s (NYSE:LEN) stock has been on fire since the company posted financial results in late June that beat Wall Street forecasts. Over the past month, LEN stock has risen 24% as the benchmark S&P 500 index has declined 1%. Lennar’s share price has now gained 42% over the last year. The run in the company’s stock comes as interest rates remain elevated, challenging the U.S. housing market.
Owing largely to sales incentives, Lennar was able to report fiscal second-quarter EPS of $3.45 and $8.80 billion in revenue. That was better than consensus analyst forecasts that had called for EPS of $3.23 and revenue of $8.50 billion. Lennar said it delivered 19,690 homes to customers in the quarter, up 15% from a year earlier. Lennar also reported 21,293 new orders, up 19% year-over-year.
Imagine how Lennar and its stock will perform once lower interest rates drive a turnaround in the housing market.
Howmet Aerospace (HWM)
Howmet Aerospace (NYSE:HWM) is leading industrial stocks higher. The aerospace company that primarily manufactures components for jet engines has seen its stock vault 21% higher in the past month, bringing its year-to-date gain to 75%. The shares got a rocket boost after the company reported Q2 financial results that topped Wall Street forecasts, sending its stock up 13% in a single trading session.
Howmet Aerospace hit a homerun with EPS of 67 cents and revenue of $1.90 billion. Wall Street had earnings of 60 cents a share and sales of $1.80 billion penciled in for the company. Howmet also lifted its forward guidance, saying it now expects EPS of $2.55 and sales of $7.40 billion. That’s up from previous guidance that called for EPS of $2.35 on sales of $7.30 billion.
Howmet is exactly the type of blue-chip stock investors appear to be looking for as they shift capital out of tech securities.
MicroStrategy (MSTR)
If there’s a selloff in technology stocks going on, someone forgot to tell MicroStrategy (NASDAQ:MSTR). The software company turned Bitcoin (BTC-USD) acquirer has seen its share price rise 17% in the last month while the Nasdaq Composite index has fallen 4%. MicroStrategy stock has also continued to rise as the price of Bitcoin has slumped. After briefly touching $70,000, the price of BTC quickly retreated to $66,000 and is down 10% from an all-time high of $74,ooo reached in March of this year.
The rally in MSTR stock appears to have been given a boost by the mid-July announcement that the company is splitting its stock on a 10-for-1 basis. The company, which is now the largest corporate holder of Bitcoin in the world, said its shares will begin trading on a split adjusted basis August 8. The stock split comes as MicroStrategy stock has risen 266% over the last 12 months to trade at $1,604.07 per share, with no signs of a slowdown.
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.
