The indices have enjoyed some smooth sailing. However, on the individual stock front, the currents have been a bit harder to maneuver. The large gyrations have led to a lot of active stocks popping up on investors’ radars.
Trading volumes have exploded, whether that’s due to epic short squeezes, additions to new indices or large accumulations of great businesses. Reopening trades and a big beatdown in high-growth tech stocks have also led to a lot of activity.
Put simply, even though the S&P 500 continues to hover near its highs and while the CBOE VIX Index is at non-panic levels, doesn’t mean there aren’t some intense rotations taking place under the surface.
Will that lead to an opportunity for investors? For some stocks, it already has. For others, that opportunity may be on the way. Let’s look at a few active stocks that have been popping up most recently:
- Generac (NYSE:GNRC)
- Penn National Gaming (NASDAQ:PENN)
- NXP Semiconductors (NASDAQ:NXPI)
- ViacomCBS (NASDAQ:VIAC)
- Nike (NYSE:NKE)
- Boeing (NYSE:BA)
- Applied Materials (NASDAQ:AMAT)
Active Stocks to Watch: Generac (GNRC)
Let’s start with a wave of S&P 500 inclusions, which includes Generac holdings but also includes the next two stocks on this list.
Of course, getting tossed into such a powerful index would naturally incite a wave of trading volume. S&P 500 fund managers by default have to gain exposure, which means gobbling up shares of Generac and others that are now in the index.
But even before that inclusion, Generac has been on a monstrous run.
Over the last year, shares are up about 280% and are up 72% over the last six months. Even just this year, Generac stock has gained more than 30%.
The addition to the S&P 500 certainly helps, but the stock hasn’t run that hard for months on end in anticipation that it would be included in the index. As demand for generators holds firm and as infrastructure stocks continue to run, Generac has been busy.
Let’s see if this stock can maintain its momentum.
Penn National Gaming (PENN)
If you don’t know Penn National Gaming at this point, you have done a good job at avoiding the headlines. This stock bottomed at $3.75 roughly a year ago. That was at the height of the novel coronavirus selloff. Penn was hit disproportionately hard compared to the rest of the market and its peers.
Shares fell about 90% in the span of one month, as investors feared a liquidity event. To fear that liquidity situation was reasonable. The company had just made a large investment in Barstool Sports, while current liabilities outweighed current assets.
However, that can all be fixed with a little balance sheet help — and that’s what Penn National Gaming did. In fact, it has raised capital several times since March 2020, putting its balance sheet in a fine position, all while the stock has surged to a recent high of $142.
The stock being added to the S&P 500 has investors believing in the company’s long-term prospects, while the reopening trade has given the stock short-term momentum. The casino operator will increasingly lean on online sports betting and its growing stake in Barstool Sports to drive growth. If it can do that, perhaps Penn stock can continue rallying.
NXP Semiconductors (NXPI)
Last but not least of our S&P 500 additions is NXP Semiconductors. Investors may remember this name best from its proposed tie-up with Qualcomm (NASDAQ:QCOM).
Qualcomm tried to gobble up NXP Semiconductors in 2016. However, the near-$40 billion acquisition went stale after regulators wouldn’t give it the green light. It’s not that regulators didn’t approve the deal — it’s that they didn’t give any indication one way or the other.
Specifically, Chinese regulators went mum on the deal, failing to approve or deny it. Finally, the two companies walked away from the deal.
So where does that leave NXP Semi? Actually, the company is in a good position. Shares recently chugged to new all-time highs, topping out at just under $210 a share. Analysts predict a strong year in 2021, with revenue forecast to grow more than 21% and earnings estimates calling for more than 50% growth.
Not bad for a stock that trades at roughly 20 times this year’s earnings expectations.
ViacomCBS has investors feeling sick if they owned this name coming into 2020 and puked it up sometime in the first half of that year.
The stock traded at a dirt cheap valuation, at just a couple of times earnings. It had sluggish growth but solid assets, while streaming trends were gaining momentum. There was a nice dividend too. Still, there was no love for the stock, as shares melted from a high above $50 in the summer of 2019 down to the low-$30s in February 2020 — before the Covid-19 selloff began.
Ultimately, shares bottomed near $10 before surging higher.
Viacom shares recently slammed into $100, giving bottom-fishers the coveted 10-bagger in about a year. Now though, the stock is quickly down more than 33% in just a few days. The move comes after the company announced it will raise $3 billion.
The company is still mired in sluggish growth, with estimates calling for a 3% decline in earnings this year and a 5% gain next year. However, that $3 billion can be used to fuel longer-term growth in streaming. And after a 10-bagger in the stock price, it’s wise for the company to raise some funds.
Think of it like this: Would you rather have a company raise funds at $10 to survive or at $100 to drive growth?
One of the higher quality companies out there, Nike is a premier retailer with operations all over the globe. Yet, this stock is struggling to gain upside momentum lately.
Shares topped out in December, temporarily spiking higher on earnings. After a few months of consolidation, Nike again reported earnings in March. The results were okay, but not enough to send the stock to new highs. More recently, negative political news with China are also weighing on Nike. To long-term investors though, this is likely a buying opportunity.
As a retailer, Nike saw a painful pinch when the coronavirus swept through the world. However, with its geographical diversity and its direct-to-consumer business model, it was able to recover more quickly than most of its peers.
Nike is set for a strong recovery year. After all, consumer spending remains strong, stimulus checks are making the rounds and sports are set to get back into action. Analysts expect back-to-back years of double-digit revenue growth and for earnings to almost double vs. 2020.
Down about 15% from the highs, Nike is worth a closer look.
Boeing belongs on this list of active stocks to watch, as it continues to see more trading volume accumulate throughout the days and weeks.
This stock has been all over the map, as controversy has followed it at seemingly every step of the way. At one point, Boeing was a dependable cash-flow generator with a strong dividend and share buyback plan.
After two crashes of its 737 MAX, a management change and issues with several flight agencies (like the FAA and the EASA), Boeing is finally getting back on track. Of course, a global pandemic that rattled the travel industry didn’t help.
With its 737 MAX receiving the green light and the world reopening though, Boeing stock has been coming back to life. While it’s up considerably from the lows, shares are still down almost 50% from the highs.
Although it will take time, Boeing and Airbus essentially have a duopoly on the large aircraft market. In the long term, this company should be just fine. The recent trading volume reflects investors piling in as the news continues to improve.
Applied Materials (AMAT)
Last but not least is Applied Materials. This one continues to see strong trading volume as investors and funds continue to accumulate the stock.
Applied Materials is an incredibly well-run company and the stock shows just how well management has positioned its business. Shares are up 163% over the past 12 months and 106% over the past six.
Demand for the company’s products remains robust — as consensus expectations for this year would suggest. Analysts expect 25% revenue growth and 43% earnings growth. While those growth rates are expected to slow next year, analysts still believe there will be more growth. It hardly matters. Applied Materials trades at a reasonable enough valuation — at less than 20 times this year’s earnings estimates — that it doesn’t need insane growth every year to justify the stock price.
During the company’s latest earnings release, Applied Materials announced a fresh $7.5 billion share repurchase plan. For a company with a market capitalization just over $100 billion, that’s no small sum.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
View more information: https://investorplace.com/2021/03/7-of-the-most-active-stocks-on-the-market-and-why/