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Dec. 20, 2016, 8:04 a.m. EST

How you can bottom-feed for stocks left behind in the Trump rally

Twenty companies have 12-month upside potential of more than 20%, according to analysts

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By Philip van Doorn, MarketWatch


Zoltan Major / Shutterstock.com
You might find better opportunities for long-term gains with stocks that haven’t been part of the broad rally since Donald Trump was elected.

We recently pointed out that the S&P 500 Index is trading at its highest level to trailing earnings in nearly 13 years, and its highest level to trailing sales in almost 16 years.

Those valuations, together with the broad increase in U.S. stocks since Donald Trump’s election, mean you might be better off considering shares that have been left behind by the rally.

Here’s a look at how strong the rally has been:


FactSet

The S&P Composite 1500 Index has returned 7.1% since Nov. 8 (Election Day). You can see on the chart that the three indices that make up the S&P 1500 have had varied performance, with small-cap stocks faring the best.

There are so many factors at play, with uncertainties still lingering as Trump doesn’t take over for another five weeks.

Investors expect a lowering of the corporate tax rate to boost profits for many U.S. companies. Then there are expectations that deregulation of the banking and energy industries will accelerate U.S. GDP growth and put more people to work when the unemployment rate is already low, at 4.6%. The GDP growth rate (3.2% during the third quarter) will probably increase if Trump gets his way with a massive infrastructure-spending bill.

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Investors already believe upward pressure on wages will lead to inflation, which has pushed the yield on 10-year U.S. Treasury bills /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y 0.00%  to about 2.5% from 1.88% on Election Day.

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Rising interest rates means a strengthening dollar, considering that many central banks around the world are keeping short-term rates near or below zero, as the Federal Reserve is raising rates. A stronger dollar can hurt sales of larger companies that rely heavily on exports or on sales in foreign markets. This helps explain the great outperformance of small-cap stocks during the Trump rally.

Stocks left behind during the Trump rally

We thought it would be useful to take a broad look at the entire S&P 1500 to identify stocks that have declined as most of the market has risen since Trump was elected. From Nov. 8 through Dec. 13, shares of 187 S&P 1500 companies declined. Among this group, 41 were health-care companies, showing just how much of a political beating companies took as politicians bashed them over pricing, and the Affordable Care Act was thrown into play by Trump.

Among the 187 stocks declining since Nov. 8, 65 were down at least 5% and 34 of those had majority “buy” or equivalent ratings among at least three analysts polled by FactSet.

Among those 34, 20 have implied 12-month upside potential of more than 20%, based on consensus price targets:

Company Ticker Industry Closing price - Nov. 13 Consensus price target Implied 12-month upside potential
Flotek Industries Inc. /zigman2/quotes/200116711/composite FTK Oilfield Services/ Equipment $10.27 $17.33 69%
Nektar Therapeutics /zigman2/quotes/206715615/composite NKTR Biotechnology $12.24 $19.83 62%
Alexion Pharmaceuticals Inc. /zigman2/quotes/206262068/composite ALXN Biotechnology $110.01 $170.28 55%
Mallinckrodt PLC /zigman2/quotes/209283217/composite MNK Pharmaceuticals $53.04 $81.40 53%
Salesforce.com Inc. /zigman2/quotes/200515854/composite CRM Software $71.61 $95.14 33%
Centene Corp. /zigman2/quotes/208900023/composite CNC Managed Health Care $57.02 $75.69 33%
Activision Blizzard Inc. /zigman2/quotes/200717283/composite ATVI Recreational Products $37.32 $48.90 31%
Synchronoss Technologies Inc. /zigman2/quotes/203882576/composite SNCR Internet Software/ Services $41.23 $53.57 30%
Royal Gold Inc. /zigman2/quotes/203440759/composite RGLD Precious Metals $69.29 $88.69 28%
Cerner Corp. /zigman2/quotes/209885277/composite CERN Health Industry Services $48.21 $60.82 26%
Newell Brands Inc. /zigman2/quotes/209507510/composite NWL Home Furnishings $47.30 $58.73 24%
Ultimate Software Group Inc. Misc. Commercial Services $193.82 $240.00 24%
Calavo Growers Inc. /zigman2/quotes/207207265/composite CVGW Food: Specialty/ Candy $57.55 $71.17 24%
Providence Service Corp. /zigman2/quotes/203661569/composite PRSC Misc. Commercial Services $37.74 $46.67 24%
Hill-Rom Holdings Inc. /zigman2/quotes/200618216/composite HRC Medical Specialties $55.91 $68.75 23%
Eli Lilly and Co. /zigman2/quotes/200106384/composite LLY Pharmaceuticals $68.64 $84.29 23%
HMS Holdings Corp. /zigman2/quotes/200443609/composite HMSY Health Industry Services $18.55 $22.63 22%
Newmont Mining Corp. /zigman2/quotes/205356474/composite NEM Precious Metals $33.87 $41.21 22%
American Tower Corp. /zigman2/quotes/200890312/composite AMT Real Estate Investment Trusts $106.13 $128.78 21%
Molson Coors Brewing Co. Class B /zigman2/quotes/205165133/composite TAP Beverages: Alcoholic $99.83 $120.73 21%
Source: FactSet

Here’s a summary of analysts’ ratings for the group, along with total returns since Trump’s election and for all of 2016:

Company Ticker Share ‘buy’ ratings Share neutral ratings Share ‘sell’ ratings Total return - Nov. 8 through Dec. 13 Total return - 2016, through Dec. 13
Flotek Industries Inc. /zigman2/quotes/200116711/composite FTK 100% 0% 0% -7% -5%
Nektar Therapeutics /zigman2/quotes/206715615/composite NKTR 100% 0% 0% -6% -21%
Alexion Pharmaceuticals Inc. /zigman2/quotes/206262068/composite ALXN 76% 24% 0% -8% -42%
Mallinckrodt PLC /zigman2/quotes/209283217/composite MNK 89% 11% 0% -8% -24%
Salesforce.com Inc. /zigman2/quotes/200515854/composite CRM 94% 4% 2% -6% -7%
Centene Corp. /zigman2/quotes/208900023/composite CNC 68% 32% 0% -15% 0%
Activision Blizzard Inc. /zigman2/quotes/200717283/composite ATVI 83% 17% 0% -9% 1%
Synchronoss Technologies Inc. /zigman2/quotes/203882576/composite SNCR 87% 13% 0% -8% 10%
Royal Gold Inc. /zigman2/quotes/203440759/composite RGLD 80% 20% 0% -8% 87%
Cerner Corp. /zigman2/quotes/209885277/composite CERN 56% 37% 7% -8% -20%
Newell Brands Inc. /zigman2/quotes/209507510/composite NWL 94% 6% 0% -6% 6%
Ultimate Software Group Inc. 71% 29% 0% -6% 2%
Calavo Growers Inc. /zigman2/quotes/207207265/composite CVGW 83% 17% 0% -5% 12%
Providence Service Corp. /zigman2/quotes/203661569/composite PRSC 67% 33% 0% -8% -21%
Hill-Rom Holdings Inc. /zigman2/quotes/200618216/composite HRC 71% 29% 0% -6% 20%
Eli Lilly and Co. /zigman2/quotes/200106384/composite LLY 70% 30% 0% -7% -15%
HMS Holdings Corp. /zigman2/quotes/200443609/composite HMSY 80% 20% 0% -13% 51%
Newmont Mining Corp. /zigman2/quotes/205356474/composite NEM 60% 40% 0% -6% 78%
American Tower Corp. /zigman2/quotes/200890312/composite AMT 90% 10% 0% -8% 16%
Molson Coors Brewing Co. Class B /zigman2/quotes/205165133/composite TAP 79% 21% 0% -5% 10%
Source: FactSet

The idea of presenting this list is to bring to your attention stocks you may have never considered. Maybe chasing stocks that have performed well isn’t the only way for you to generate ideas. If you are interested in any of the companies listed here, you need to do your own research and form opinions on the companies’ prospects for long-term success, hopefully with the assistance of your broker or investment adviser.

/zigman2/quotes/211347051/realtime
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
0.66
0.00 0.00%
Volume: 0.00
May 29, 2020 5:00p
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/zigman2/quotes/200116711/composite
US : U.S.: NYSE
$ 0.98
-0.0066 -0.67%
Volume: 187,976
May 29, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$70.01 million
Rev. per Employee
$651,183
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/zigman2/quotes/206715615/composite
US : U.S.: Nasdaq
$ 21.70
-0.51 -2.30%
Volume: 1.48M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.86 billion
Rev. per Employee
$1.93M
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/zigman2/quotes/206262068/composite
US : U.S.: Nasdaq
$ 119.90
+5.48 +4.79%
Volume: 4.17M
May 29, 2020 4:00p
P/E Ratio
11.29
Dividend Yield
N/A
Market Cap
$26.48 billion
Rev. per Employee
$1.56M
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/zigman2/quotes/209283217/composite
US : U.S.: NYSE
$ 2.82
-0.07 -2.42%
Volume: 3.44M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$238.16 million
Rev. per Employee
$869,081
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/zigman2/quotes/200515854/composite
US : U.S.: NYSE
$ 174.79
-6.31 -3.48%
Volume: 19.65M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$157.21 billion
Rev. per Employee
$379,486
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/zigman2/quotes/208900023/composite
US : U.S.: NYSE
$ 66.25
-0.65 -0.97%
Volume: 5.28M
May 29, 2020 4:00p
P/E Ratio
33.39
Dividend Yield
N/A
Market Cap
$38.37 billion
Rev. per Employee
$1.27M
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/zigman2/quotes/200717283/composite
US : U.S.: Nasdaq
$ 71.98
+1.76 +2.51%
Volume: 11.44M
May 29, 2020 4:00p
P/E Ratio
35.52
Dividend Yield
0.57%
Market Cap
$55.46 billion
Rev. per Employee
$756,869
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/zigman2/quotes/203882576/composite
US : U.S.: Nasdaq
$ 2.73
+0.09 +3.22%
Volume: 512,169
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$121.38 million
Rev. per Employee
$228,179
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/zigman2/quotes/203440759/composite
US : U.S.: Nasdaq
$ 133.20
+1.54 +1.17%
Volume: 962,974
May 29, 2020 4:00p
P/E Ratio
49.43
Dividend Yield
0.84%
Market Cap
$8.74 billion
Rev. per Employee
$18.69M
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/zigman2/quotes/209885277/composite
US : U.S.: Nasdaq
$ 72.90
+2.03 +2.86%
Volume: 3.78M
May 29, 2020 4:00p
P/E Ratio
45.33
Dividend Yield
0.99%
Market Cap
$22.19 billion
Rev. per Employee
$183,778
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/zigman2/quotes/209507510/composite
US : U.S.: Nasdaq
$ 13.15
-0.43 -3.17%
Volume: 6.02M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
7.00%
Market Cap
$5.58 billion
Rev. per Employee
$233,268
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/zigman2/quotes/207207265/composite
US : U.S.: Nasdaq
$ 58.51
-2.91 -4.74%
Volume: 134,105
May 29, 2020 4:00p
P/E Ratio
33.00
Dividend Yield
1.88%
Market Cap
$1.03 billion
Rev. per Employee
$368,869
loading...
/zigman2/quotes/203661569/composite
US : U.S.: Nasdaq
$ 80.50
+2.39 +3.06%
Volume: 95,384
May 29, 2020 4:00p
P/E Ratio
109.06
Dividend Yield
N/A
Market Cap
$1.04 billion
Rev. per Employee
$346,241
loading...
/zigman2/quotes/200618216/composite
US : U.S.: NYSE
$ 101.67
-1.50 -1.45%
Volume: 724,259
May 29, 2020 4:00p
P/E Ratio
46.53
Dividend Yield
0.87%
Market Cap
$6.77 billion
Rev. per Employee
$286,180
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/zigman2/quotes/200106384/composite
US : U.S.: NYSE
$ 152.95
+2.30 +1.53%
Volume: 9.47M
May 29, 2020 4:00p
P/E Ratio
25.33
Dividend Yield
1.94%
Market Cap
$146.38 billion
Rev. per Employee
$634,842
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/zigman2/quotes/200443609/composite
US : U.S.: Nasdaq
$ 31.24
-0.31 -0.98%
Volume: 908,053
May 29, 2020 4:00p
P/E Ratio
34.36
Dividend Yield
N/A
Market Cap
$2.76 billion
Rev. per Employee
$239,316
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/zigman2/quotes/205356474/composite
US : U.S.: NYSE
$ 58.47
-0.25 -0.43%
Volume: 23.79M
May 29, 2020 4:00p
P/E Ratio
13.53
Dividend Yield
1.71%
Market Cap
$46.93 billion
Rev. per Employee
$300,083
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/zigman2/quotes/200890312/composite
US : U.S.: NYSE
$ 258.17
+0.05 +0.02%
Volume: 2.14M
May 29, 2020 3:59p
P/E Ratio
60.45
Dividend Yield
1.60%
Market Cap
$114.45 billion
Rev. per Employee
$1.48M
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/zigman2/quotes/205165133/composite
US : U.S.: NYSE
$ 37.96
-0.39 -1.02%
Volume: 3.55M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$8.22 billion
Rev. per Employee
$606,738
loading...
/zigman2/quotes/200116711/composite
US : U.S.: NYSE
$ 0.98
-0.0066 -0.67%
Volume: 187,976
May 29, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$70.01 million
Rev. per Employee
$651,183
loading...
/zigman2/quotes/206715615/composite
US : U.S.: Nasdaq
$ 21.70
-0.51 -2.30%
Volume: 1.48M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.86 billion
Rev. per Employee
$1.93M
loading...
/zigman2/quotes/206262068/composite
US : U.S.: Nasdaq
$ 119.90
+5.48 +4.79%
Volume: 4.17M
May 29, 2020 4:00p
P/E Ratio
11.29
Dividend Yield
N/A
Market Cap
$26.48 billion
Rev. per Employee
$1.56M
loading...
/zigman2/quotes/209283217/composite
US : U.S.: NYSE
$ 2.82
-0.07 -2.42%
Volume: 3.44M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$238.16 million
Rev. per Employee
$869,081
loading...
/zigman2/quotes/200515854/composite
US : U.S.: NYSE
$ 174.79
-6.31 -3.48%
Volume: 19.65M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$157.21 billion
Rev. per Employee
$379,486
loading...
/zigman2/quotes/208900023/composite
US : U.S.: NYSE
$ 66.25
-0.65 -0.97%
Volume: 5.28M
May 29, 2020 4:00p
P/E Ratio
33.39
Dividend Yield
N/A
Market Cap
$38.37 billion
Rev. per Employee
$1.27M
loading...
/zigman2/quotes/200717283/composite
US : U.S.: Nasdaq
$ 71.98
+1.76 +2.51%
Volume: 11.44M
May 29, 2020 4:00p
P/E Ratio
35.52
Dividend Yield
0.57%
Market Cap
$55.46 billion
Rev. per Employee
$756,869
loading...
/zigman2/quotes/203882576/composite
US : U.S.: Nasdaq
$ 2.73
+0.09 +3.22%
Volume: 512,169
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$121.38 million
Rev. per Employee
$228,179
loading...
/zigman2/quotes/203440759/composite
US : U.S.: Nasdaq
$ 133.20
+1.54 +1.17%
Volume: 962,974
May 29, 2020 4:00p
P/E Ratio
49.43
Dividend Yield
0.84%
Market Cap
$8.74 billion
Rev. per Employee
$18.69M
loading...
/zigman2/quotes/209885277/composite
US : U.S.: Nasdaq
$ 72.90
+2.03 +2.86%
Volume: 3.78M
May 29, 2020 4:00p
P/E Ratio
45.33
Dividend Yield
0.99%
Market Cap
$22.19 billion
Rev. per Employee
$183,778
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/zigman2/quotes/209507510/composite
US : U.S.: Nasdaq
$ 13.15
-0.43 -3.17%
Volume: 6.02M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
7.00%
Market Cap
$5.58 billion
Rev. per Employee
$233,268
loading...
/zigman2/quotes/207207265/composite
US : U.S.: Nasdaq
$ 58.51
-2.91 -4.74%
Volume: 134,105
May 29, 2020 4:00p
P/E Ratio
33.00
Dividend Yield
1.88%
Market Cap
$1.03 billion
Rev. per Employee
$368,869
loading...
/zigman2/quotes/203661569/composite
US : U.S.: Nasdaq
$ 80.50
+2.39 +3.06%
Volume: 95,384
May 29, 2020 4:00p
P/E Ratio
109.06
Dividend Yield
N/A
Market Cap
$1.04 billion
Rev. per Employee
$346,241
loading...
/zigman2/quotes/200618216/composite
US : U.S.: NYSE
$ 101.67
-1.50 -1.45%
Volume: 724,259
May 29, 2020 4:00p
P/E Ratio
46.53
Dividend Yield
0.87%
Market Cap
$6.77 billion
Rev. per Employee
$286,180
loading...
/zigman2/quotes/200106384/composite
US : U.S.: NYSE
$ 152.95
+2.30 +1.53%
Volume: 9.47M
May 29, 2020 4:00p
P/E Ratio
25.33
Dividend Yield
1.94%
Market Cap
$146.38 billion
Rev. per Employee
$634,842
loading...
/zigman2/quotes/200443609/composite
US : U.S.: Nasdaq
$ 31.24
-0.31 -0.98%
Volume: 908,053
May 29, 2020 4:00p
P/E Ratio
34.36
Dividend Yield
N/A
Market Cap
$2.76 billion
Rev. per Employee
$239,316
loading...
/zigman2/quotes/205356474/composite
US : U.S.: NYSE
$ 58.47
-0.25 -0.43%
Volume: 23.79M
May 29, 2020 4:00p
P/E Ratio
13.53
Dividend Yield
1.71%
Market Cap
$46.93 billion
Rev. per Employee
$300,083
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/zigman2/quotes/200890312/composite
US : U.S.: NYSE
$ 258.17
+0.05 +0.02%
Volume: 2.14M
May 29, 2020 3:59p
P/E Ratio
60.45
Dividend Yield
1.60%
Market Cap
$114.45 billion
Rev. per Employee
$1.48M
loading...
/zigman2/quotes/205165133/composite
US : U.S.: NYSE
$ 37.96
-0.39 -1.02%
Volume: 3.55M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$8.22 billion
Rev. per Employee
$606,738
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Philip van Doorn covers various investment and industry topics. He has previously worked as a senior analyst at TheStreet.com. He also has experience in community banking and as a credit analyst at the Federal Home Loan Bank of New York.

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