The Zacks Analyst Blog Highlights: Micron Technology, Meritor, RH, Ultra Clean Holdings And Corcept Therapeutics

For Immediate Release

Chicago, IL – November 10, 2017 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Micron Technology Inc. (NASDAQ:MU) , Meritor Inc. (NYSE:MTOR) , RH (NYSE:RH) , Ultra Clean Holdings Inc. (NASDAQ:UCTT) and Corcept Therapeutics Inc. (NASDAQ:CORT) .

Here are highlights from Thursday’s Analyst Blog:

5 Stocks that Doubled in 2017 and Can Keep Soaring Higher

U.S. stock markets are now hitting all-time highs on a daily basis. Stocks have mostly rallied since last year’s election, with a booming U.S. economy, supportive monetary policy and robust corporate earnings being the key triggers. Expectations that the Trump administration’s proposed tax and regulatory reforms will help companies’ and consumers, have given investors further reasons to put their money in stocks.

Continuing their seemingly unstoppable march, all three major indexes crept further into record territories Wednesday. The Dow Jones industrial average inched up more than 6 points heading into the close, to 23,563.36, while the tech-heavy Nasdaq composite eked out a gain of 0.3%, to 6,789.12. Not to be left behind, the S&P 500 advanced 0.1%, to an all-time closing high of 2,594.38.

As a matter of fact, yesterday’s settlements marked Dow's 59th closing record this year, the Nasdaq's 64th, and the S&P 500's 53rd. The session also marked the 27th time in 2017 all three benchmarks hit closing records on the same day.

What's Sending Indexes to a String of Records?

It’s fairly simple -- investors have driven up equities on evidence of economic growth.

As per the Commerce Department’s first estimate, the U.S. economy expanded at a 3% pace in the third quarter. This represents a marginal decline from the annualized growth rate of 3.1% in the April to June period, the strongest performance since the first quarter of 2015. Moreover, the latest figure represents the best back-to-back quarters of at least 3% growth since 2014.

Further, the October payroll report showed that the domestic labor market bounced back from the effects of hurricanes, while jobless rate ticked down to a 17-year low of 4.1%. A positive read on orders for U.S. durable goods also point to a strengthening economy. Investors should also know that the Consumer Confidence Index rose to 125.9 in October – the most since December 2000.

The Federal Reserve’s quantitative easing programs, initiated in December 2008, has also played a major role in stimulating the U.S. economy. Apart from rescuing it from the ravages of the 2007-09 financial crisis that was marked with stock market downturns, foreclosures and prolonged unemployment, the boost in cheap liquidity from the rather unconventional monetary policy drove up stock and property markets, while bringing down bond yields.

Meanwhile, President Trump’s proposals to overhaul the tax law and make it business friendly, added to the positive sentiment and powered stocks higher.

Finally, strong earnings reports from corporate biggies, which has helped support high valuations, boosted sentiments. Following two successful quarters of earnings numbers, U.S. companies posted all-time record earnings in the third quarter. As of Nov 8, we had received Q3 results from 436 S&P 500 members that combined account for 90.3% of the index’s total market capitalization. Total earnings for these companies are up 6.8% from the same period last year on 6.2% higher revenues, with 73.4% beating EPS estimates and 67% beating revenue estimates.

Has the Market Depleted Its Strength?

Even as Fed prepares to end its stimulus campaign, it will likely take quite some time to impact the economy. This means that the U.S. economy still has some time to benefit from cheap liquidity and low rates, which will continue to catalyze and extend the eight-year bull run.

Fed officials have also made clear that they plan to decline balance sheet rates slowly and predictably enough to avoid hurting the expansion or killing the bull market. Thus, one can rule out the detrimental impact of a rapid unwinding on the financial markets.

And finally, withdrawing the quantitative easing stimulus is actually a by-product of rising economic growth and optimism. The expected 'policy normalization' simply indicates that the economy is ready for the tap to be turned off. Though higher interest rates raise the cost of debt capital, an expanding economy supersedes low-borrowing costs in the grand scheme of things.

And fortunately, economic strength would also buoy the overall stock market.

Even in terms of ‘valuation,’ the S&P 500 stock index is currently trading at around 20 times its projected earnings over the next one year, considerably lower than the price-to-earnings ratio of almost 30 at the end of the tech-induced 13-year bull run back in 2000.

Therefore, while it is understandable for investors to worry about going after a market where all the major indexes are regularly notching up new milestones, we believe the world's largest economy may have more leg to run.

Spectacular Performers

The strong stock rally does not necessarily indicate that all scrips would be wise picks. While there have been some remarkable stock performers so far, this year, such stocks may tumble after their growth trajectory hits the highest point. Thus, it is imperative to select companies that are still seeing strong momentum and are likely to grow faster than what has been predicted by the market, in the rest of 2017.

With the help of the Zacks Investment Research

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Written By: Zacks Investment Research