As we head into July, it’s time to think about what stocks will perform well in the second half of 2021. The last six months have been dominated by energy stocks, financial stocks, and real estate stocks with a lot of back and forth between growth and value. Going forward, many sectors and industries could see increased volatility, as investors await a clear message on inflation before picking new stocks to buy or sell.
That’s why I am focusing on individual securities that currently exhibit characteristics that could drive their prices higher in the second half of the year. These characteristics include companies that have strong growth potential and are trading at an attractive valuation. Plus, these stocks are also showing bullish momentum.
So, I ran a screen in our database for stocks that were rated a “Buy” or “Strong Buy” in our POWR Ratings system that also had strong grades in the Growth, Value, Momentum, and Sentiment components. Three of the top stocks in this screen include
- Vale (NYSE:VALE)
- ArcelorMittal (NYSE:MT)
- Newell Brands Inc. (NASDAQ:NWL)
Stocks to Buy: Vale (VALE)
VALE is the world’s largest producer of iron ore, iron ore pellets and nickel. It supplies its iron ore and iron ore pellets to the steel industry. A growing global population and rapidly moving urbanization are expected to fuel steel demand for years. This certainly bodes well for the company. VALE also produces manganese ore, ferroalloys, metallurgical and thermal coal, and copper.
The company has a logistics network that integrates mines, railroads, ports, and ships. This has provided an edge for the company in the iron ore market as it significantly lowers costs. The firm has been currently gaining from a rally in iron prices. The metal reached an all-time high in May as demand in China is massive right now due to supply concerns.
The country, which accounts for half of the world’s steel, is spending more on infrastructure. So, the price of iron is expected to remain high for the foreseeable future. VALE should also benefit from strong demand for nickel, as the metal is used in electric vehicle batteries. Plus, copper prices have also rebounded due to robust demand in China.
The company has an overall grade of A, which translates into a “Strong Buy” rating in our POWR Ratings system. The company has strong grades across the board highlighted by a Growth Grade of A. Analysts expect sales to soar 115.5% and earnings to surge 508.7% year over year this quarter. VALE also has a Quality Grade of A due to its rock-solid balance sheet. The company has a current ratio of 2.0 and a debt-to-equity ratio of 0.5.
We also provide grades Value, Momentum, Stability, and Sentiment Grades for VALE which you can find here. VALE is ranked No. 2 in the Industrial – Metal industry. You can find other top stocks in this industry by clicking here.
MT is the world’s leading steel and mining company. It has a presence in over 60 countries, where its products are mainly sold to customers in the automotive, general, and packaging industries. The company also produces wire rods, rebar, billets, blooms and wire drawing, and tubular products.
MT has been benefiting from an increase in demand for steel as the economy has been opening up. Since its products serve two critical infrastructure industries — construction and transport — MT should also benefit from any future infrastructure bill. The firm has also been focused on cost reduction and revealed a $1-billion fixed cost reduction program that it expects to complete by the end of next year.
The company is expanding its automotive steel line of products by launching a new generation of advanced high-strength steel. MT has an overall grade of A, which is a “Strong Buy” in our POWR Ratings system. Like VALE, MT has a Growth Grade of A, driven by its massive growth potential. Earnings are forecasted to soar over 1,100% year over year in this quarter.
MT also has a Value Grade of B as its stock appears undervalued. It has a trailing P/E of 12.3 and a tiny forward P/E of 5.2. MT also has a high upside potential based on an average of analyst price targets. It is currently trading 27% below its average price target.
For the rest of MT’s grades (Momentum, Stability, Sentiment, and Quality), click here. MT is the No. 10 ranked stock in the A-rated Steel industry. For more top stocks in this industry, make sure to visit this link.
Stocks to Buy: Newell Brands Inc. (NWL)
NWL is a global manufacturer and marketer of consumer and commercial products. Some of its well-known brands include Paper Mate, Sharpie, Dymo, EXPO, Parker, Elmer’s, Oster, Rubbermaid, Sunbeam and FoodSaver. Its products cater to indoor and outdoor organizations and include food and home storage products, stationery, power tool accessories, and household staples.
The company has seen strong demand for its products, especially in its Home Fragrances and Home Appliances businesses. Unlike many other businesses, NWL has not experienced any supply chain issues, which combined with healthy consumer demand has certainly benefited the company. The firm has also capitalized on the shift to digital shopping as its e-commerce business accounted for more than half of total sales in the first quarter.
The company’s Project FUEL plan has resulted in enhanced productivity, improved pricing, and other cost-cutting initiatives. These efforts have so far aided revenues. NWL is also working on increasing efficiency in its manufacturing plants, and procurement and distribution centers. Going forward, the company is well-positioned to gain from its booming online channel.
NWL has an overall grade of B and a “Buy” rating in our POWR Ratings system. It has a Growth Grade of A as it’s expected to grow sales 21% and earnings 50% year over year this quarter. NWL also has a Momentum Grade of B, as its stock is up 25% year to date. To access all of NWL’s grades (Value, Stability, Sentiment, and Quality), click here.
NWL is ranked No. 21 in the A-rated Home Improvement & Goods industry. For more top stocks in this industry, click here.
On the date of publication, David Cohne 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.
David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a Consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.
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