These stocks are buys even if earnings take a hit, Trivariate says
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Trivariate Research suggests that investors’ success in today’s market could partly hinge on their handling of stocks with high leverage. This is because they are more likely to be able to sell the stock most at risk to an economy heading into recession. Trivariate Research suggested that the old mantra of buying cheap stocks and selling them when they’re expensive might change in the future, especially for cyclicals whose excess profits can vastly increase income statements and balances for long periods. Cyclical stocks’ performance tends to change with the economic expansion and contraction. Trivariate stated that earnings in cyclical industries declined between one-third and one-half during the worst troughs. However, strong growth was achieved after these peaks. The research firm identified several stocks with earnings that might fall 33% but remain affordable and have a “relatively appealing risk-reward ratio.” Below are five examples of these stocks. Source: Trivariate Research. The list includes names that fall under oil and natural gas, semiconductors or metals. According to the firm, these are the most likely sectors to see an increase in earnings this year. Occidental Petroleum topped the list, after Warren Buffett announced that he bought more than 100,000,000 shares of the company. Occidental Petroleum is up 118.2% thus far in 2018, despite stock prices having slid throughout the year and briefly being plunged into a bearish trend Friday. In 2022, energy was the sector with the highest performance. Marathon Oil made it to the list. This year, shares in the Houston-based exploration firm have grown 66%. Applied Materials, the biggest stock by market capital, is named. The shares have fallen 32% over the past year. Trivariate also had Freeport McMoRan (Lennar Corp.) and Freeport McMoRan (Freeport McMoRan). In 2022, the respective numbers are down by 35.9% & 13%.
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