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Buy 5 Surging Old Economy Stocks to Tap Market Rally
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U.S. stock markets have rebounded from last week’s devastations. The Wall Street rally, which started in January 2023, saw a significant change in July 2024. The rally was predominantly driven by the technology sector. An unprecedented adoption of generative artificial intelligence (AI) technology globally was the prime factor.
Companies that have extensive applications of AI in their final products have become multi-baggers in the past 18 months. Stock prices of some of these companies have skyrocketed 200-300% during this period.
Meanwhile, market participants have other sectors to look into. As expectations for a rate cut in September reached 100%, investors’ preferences shifted from these extremely overvalued AI stocks to the rate-sensitive cyclical stocks.
Aside from technology stocks, several old economy stocks from sectors such as industrials, finance, auto, materials and consumer defensive have popped in the past six months. Investing in these untapped stocks with a favorable Zacks Rank should lead to profits.
Our Top Picks
We have narrowed our search to five old economy stocks that have provided more returns than the market’s benchmark — the S&P 500 Index — in the past six months. Despite this, these stocks have solid near-term potential.
Moreover, these stocks have seen positive earnings estimate revisions in the last 30 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past six months.
Image Source: Zacks Investment Research
Newmont Corp. (NEM - Free Report) is making notable progress with its growth projects, including the Tanami expansion. The acquisition of Newcrest has also created an industry-leading portfolio with a multi-decade gold and copper production profile in the most favorable mining jurisdictions globally. The combination of NEM and Newcrest is expected to deliver significant value for shareholders and generate meaningful synergies.
NEM also focuses on improving operational efficiency and returning value to shareholders. Higher gold prices will also drive NEM’s performance. Strong demand from central banks, a dovish Fed interest rate outlook and a surge in safe-haven demand triggered by geopolitical tensions have contributed to a rally in gold prices.
Zacks Rank #1 Newmont has an expected revenue and earnings growth rate of 42.5% and 71.4%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter and current-year earnings have improved 7.9% and 14.5%, respectively, over the last 60 days.
Image Source: Zacks Investment Research
The stock price has jumped 45.5% in the past six months. Despite this huge price appreciation, the average price target of brokerage firms represents an increase of 10.6% from the last closing price of $47.71. The brokerage target price is currently in the range of $42.70-$59.
GE Aerospace (GE - Free Report) has been witnessing strength in its Aerospace business, driven by robust demand for commercial engines and services. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel auger well for GE.
GE’s portfolio reshaping actions are likely to unlock values for its shareholders. GE remains committed to making investments to boost growth and provide better services to its customers. For 2024, GE expects organic revenues to grow at least in the low-double-digit range from the year-ago levels.
Zacks Rank #1 GE Aerospace has an expected earnings growth rate of 47.7% for the current year. Although its revenue growth rate is negative for the current year, it is 14% for next year. The Zacks Consensus Estimate for current-quarter and current-year earnings have improved 7.8% and 4.3%, respectively, over the last 60 days.
Image Source: Zacks Investment Research
The stock price has surged 18.9% in the past six months. The average price target of brokerage firms represents an increase of 21.6% from the last closing price of $165.61. The brokerage target price is currently in the range of $180-$215.
Pfizer Inc. (PFE - Free Report) expects better non-COVID operational revenue growth in the future quarters, driven by its in-line products like Vyndaqel and Prevnar, new launches like Abrysvo, Velsipity, Penbraya and newly acquired products, including those acquired from Seagen. Huge profits from its COVID products strengthened PFE’s cash position. The funds are being used to make acquisitions, increase dividends, buy back shares and reduce debt.
PFE has committed significant resources toward the development of treatments in the fields of oncology, internal medicine, rare diseases, immunology, inflammation, vaccines and hospitals. For the near future, PFE has drafted a robust mRNA strategy where it is investing in mRNA technology and collaborations
Zacks Rank #2 Pfizer has an expected revenue and earnings growth rate of 5.3% and 39.7%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter and current-year earnings have improved 8.8% and 8%, respectively, over the last 60 days.
Image Source: Zacks Investment Research
The stock price has risen 4.4% in the past six months. The average price target of brokerage firms represents an increase of 14.8% from the last closing price of $28.76. The brokerage target price is currently in the range of $27-$45.
The Progressive Corp. (PGR - Free Report) continues to gain on higher premiums, given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses. Focus on becoming a one-stop insurance destination, catering to customers opting for a combination of home and auto insurance, augurs well for PGR’s growth.
Policies in force and retention ratio should remain healthy. Competitive pricing to retain current customers and address their needs with new offerings should continue to drive policy life expectancy.
Zacks Rank #2 The Progressive has an expected revenue and earnings growth rate of 19.5% and 96.7%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter and current-year earnings have improved 13.7% and 4%, respectively, over the last 60 days.
Image Source: Zacks Investment Research
The stock price has climbed 19.5% in the past six months. The average price target of brokerage firms represents an increase of 12.1% from the last closing price of $218.36. The brokerage target price is currently in the range of $197-$296.
Boston Scientific Corp. (BSX - Free Report) is seeing strength across target markets despite macroeconomic concerns, currency headwinds and related cost inflation. Strong worldwide demand for its Electrophysiology and Structural Heart lines, traction in the United States and outside for BSX’s next-generation WATCHMAN FLX and FLX Pro, as well as contribution from accretive acquisitions are important drivers.
The Pain and Brain franchisees of BSX are expected to gain solid traction in 2024 banking on the strong execution of core growth strategies. The Electrophysiology arm continues to gain momentum on the sustained adoption of FARAPULSE PFA. BSX’s 2024 guidance indicates strong growth over 2023
Zacks Rank #2 Boston Scientific has an expected revenue and earnings growth rate of 14.2% and 17.1%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter and current-year earnings have improved 1.8% and 3.5%, respectively, over the last 60 days.
Image Source: Zacks Investment Research
The stock price has advanced 15.4% in the past six months. The average price target of brokerage firms represents an increase of 19.2% from the last closing price of $75.55. The brokerage target price is currently in the range of $78-$100.
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Buy 5 Surging Old Economy Stocks to Tap Market Rally
U.S. stock markets have rebounded from last week’s devastations. The Wall Street rally, which started in January 2023, saw a significant change in July 2024. The rally was predominantly driven by the technology sector. An unprecedented adoption of generative artificial intelligence (AI) technology globally was the prime factor.
Companies that have extensive applications of AI in their final products have become multi-baggers in the past 18 months. Stock prices of some of these companies have skyrocketed 200-300% during this period.
Meanwhile, market participants have other sectors to look into. As expectations for a rate cut in September reached 100%, investors’ preferences shifted from these extremely overvalued AI stocks to the rate-sensitive cyclical stocks.
Aside from technology stocks, several old economy stocks from sectors such as industrials, finance, auto, materials and consumer defensive have popped in the past six months. Investing in these untapped stocks with a favorable Zacks Rank should lead to profits.
Our Top Picks
We have narrowed our search to five old economy stocks that have provided more returns than the market’s benchmark — the S&P 500 Index — in the past six months. Despite this, these stocks have solid near-term potential.
Moreover, these stocks have seen positive earnings estimate revisions in the last 30 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past six months.
Image Source: Zacks Investment Research
Newmont Corp. (NEM - Free Report) is making notable progress with its growth projects, including the Tanami expansion. The acquisition of Newcrest has also created an industry-leading portfolio with a multi-decade gold and copper production profile in the most favorable mining jurisdictions globally. The combination of NEM and Newcrest is expected to deliver significant value for shareholders and generate meaningful synergies.
NEM also focuses on improving operational efficiency and returning value to shareholders. Higher gold prices will also drive NEM’s performance. Strong demand from central banks, a dovish Fed interest rate outlook and a surge in safe-haven demand triggered by geopolitical tensions have contributed to a rally in gold prices.
Zacks Rank #1 Newmont has an expected revenue and earnings growth rate of 42.5% and 71.4%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter and current-year earnings have improved 7.9% and 14.5%, respectively, over the last 60 days.
Image Source: Zacks Investment Research
The stock price has jumped 45.5% in the past six months. Despite this huge price appreciation, the average price target of brokerage firms represents an increase of 10.6% from the last closing price of $47.71. The brokerage target price is currently in the range of $42.70-$59.
GE Aerospace (GE - Free Report) has been witnessing strength in its Aerospace business, driven by robust demand for commercial engines and services. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel auger well for GE.
GE’s portfolio reshaping actions are likely to unlock values for its shareholders. GE remains committed to making investments to boost growth and provide better services to its customers. For 2024, GE expects organic revenues to grow at least in the low-double-digit range from the year-ago levels.
Zacks Rank #1 GE Aerospace has an expected earnings growth rate of 47.7% for the current year. Although its revenue growth rate is negative for the current year, it is 14% for next year. The Zacks Consensus Estimate for current-quarter and current-year earnings have improved 7.8% and 4.3%, respectively, over the last 60 days.
Image Source: Zacks Investment Research
The stock price has surged 18.9% in the past six months. The average price target of brokerage firms represents an increase of 21.6% from the last closing price of $165.61. The brokerage target price is currently in the range of $180-$215.
Pfizer Inc. (PFE - Free Report) expects better non-COVID operational revenue growth in the future quarters, driven by its in-line products like Vyndaqel and Prevnar, new launches like Abrysvo, Velsipity, Penbraya and newly acquired products, including those acquired from Seagen. Huge profits from its COVID products strengthened PFE’s cash position. The funds are being used to make acquisitions, increase dividends, buy back shares and reduce debt.
PFE has committed significant resources toward the development of treatments in the fields of oncology, internal medicine, rare diseases, immunology, inflammation, vaccines and hospitals. For the near future, PFE has drafted a robust mRNA strategy where it is investing in mRNA technology and collaborations
Zacks Rank #2 Pfizer has an expected revenue and earnings growth rate of 5.3% and 39.7%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter and current-year earnings have improved 8.8% and 8%, respectively, over the last 60 days.
Image Source: Zacks Investment Research
The stock price has risen 4.4% in the past six months. The average price target of brokerage firms represents an increase of 14.8% from the last closing price of $28.76. The brokerage target price is currently in the range of $27-$45.
The Progressive Corp. (PGR - Free Report) continues to gain on higher premiums, given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses. Focus on becoming a one-stop insurance destination, catering to customers opting for a combination of home and auto insurance, augurs well for PGR’s growth.
Policies in force and retention ratio should remain healthy. Competitive pricing to retain current customers and address their needs with new offerings should continue to drive policy life expectancy.
Zacks Rank #2 The Progressive has an expected revenue and earnings growth rate of 19.5% and 96.7%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter and current-year earnings have improved 13.7% and 4%, respectively, over the last 60 days.
Image Source: Zacks Investment Research
The stock price has climbed 19.5% in the past six months. The average price target of brokerage firms represents an increase of 12.1% from the last closing price of $218.36. The brokerage target price is currently in the range of $197-$296.
Boston Scientific Corp. (BSX - Free Report) is seeing strength across target markets despite macroeconomic concerns, currency headwinds and related cost inflation. Strong worldwide demand for its Electrophysiology and Structural Heart lines, traction in the United States and outside for BSX’s next-generation WATCHMAN FLX and FLX Pro, as well as contribution from accretive acquisitions are important drivers.
The Pain and Brain franchisees of BSX are expected to gain solid traction in 2024 banking on the strong execution of core growth strategies. The Electrophysiology arm continues to gain momentum on the sustained adoption of FARAPULSE PFA. BSX’s 2024 guidance indicates strong growth over 2023
Zacks Rank #2 Boston Scientific has an expected revenue and earnings growth rate of 14.2% and 17.1%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter and current-year earnings have improved 1.8% and 3.5%, respectively, over the last 60 days.
Image Source: Zacks Investment Research
The stock price has advanced 15.4% in the past six months. The average price target of brokerage firms represents an increase of 19.2% from the last closing price of $75.55. The brokerage target price is currently in the range of $78-$100.