Signs of a reversal in 2 US stocks
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Glencore: excellent performance, higher dividend
Glencore, one of the world’s largest diversified mining companies, released its H1 earnings report yesterday, which showed strong results. The company exceeded analysts’ expectations across all key financial lines, and a significant improvement is also evident on an annual basis. Higher commodity prices greatly contributed to this performance, and Glencore also took advantage of the trading opportunities created by the war in Iran. In light of this, management has increased the dividend and announced a share buyback program. For now, we are keeping the stock on our Equity Top Pick List.
Uber: Steady growth wasn't enough this time
Investors have slightly reassessed Uber’s investment case following the Q2 earnings report. Although the company continues to grow rapidly, the widespread adoption of self-driving technology can only yield positive results in the long term—and it requires significant capex. In addition, the acquisition of Delivery Hero will also cost a substantial amount, leaving less money available for share buybacks and potentially resulting in more modest cash generation. In our view, however, it is better for the company to reinvest the money into its operations rather than use it for share buybacks. As a result, shareholders should expect a longer-term investment horizon when it comes to Uber.
Markets are approaching record highs; however, high-quality turnaround opportunities remain scarce. The broader market continues to exhibit limited potential, with index performance largely driven by companies that have already delivered exceptional results. Last week, we observed notable reversals among airline stocks, and now another sector is joining the trend. Southwest Airlines’ price action distinguished itself from peers, and SLB Limited (formerly Schlumberger) is now signaling a potential turnaround within the oil sector.
Best rated US stocks based on momentum ranking
Compelling technical picture:
Southwest Airlines (daily): A few days ago, the share price broke out of its correction range. As it reached a new high, it opened up room for further upward movement. Any dip can be used as a buying opportunity. Breaking above $37.50 suggests a target price of around $50. $34.38 is the support level, which should not fall in order for the long position to be maintained.
SLB Limited(daily): A long-term decline may turn around in the coming days. Rising above 37.5 is a strong weapon on the long side, and after a period of accumulation, the buying side has become more active. At the same time, the decisive downward trend line has been broken, and after retesting it, the multi-month high has been broken. Based on this pattern, the short-term outlook is around 43.75, but we may see even higher levels, with a target price of around 50 also possible.
List of stocks with a chance of a turnaround in the coming weeks
Most popular US stocks
The momentum model supports the creation of a technical based stock list that helps to find shorter-term trading opportunities. The model can be used to identify stocks that show reversal signals following more sustained falls/underperformance. We examine one-year, six-month, three-month, one-month and five-day momentum values, which are used to rank the stocks under consideration. The higher a stock is ranked in the order, the better it technically performs relative to the others. The change in the ranking over time is used to determine the life cycle of the stock.
- In the first table, we collect the stocks that show the most attractive picture compared to the others in a given week based on momentum factors, of which those are also presented in a separate chart where a favourable situation can be identified based on additional technical analysis tools.
- In the second table, we list the stocks that are already worthy of being placed in watchlist status. They are not among the best performers, but they have the potential to improve and signal a turnaround in a few days or weeks.
- In the third table, we have also collected the more popular stocks to help identify their position in the momentum order.
The report shows the results of a technical - quantitative based stock screening, which does not examine the fundamental background/value of the companies. For this reason, risk management/position sizing rules should be designed accordingly.
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