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The Fed decision to leave rates unchanged yesterday still led to a late selloff and a sea of red in today’s trading session with the S&P 500 and Nasdaq down over -1% respectively.
The current target range for the federal funds rate remains at 5.25%-5.50% but Fed Chair Jerome Powell’s belief that a soft landing is not the expectation left investors assuming that more rate hikes are ahead causing markets to fall.
Certainly, investors may keep getting their watch list together for stocks that serve as buy-the-dip candidates or have the potential to propel past temporary headwinds.
This points us to highly ranked Zacks stocks that have an “A” Zacks Style Scores grade for Momentum and should remain attractive.
Image Source: St Louis FED
Technology Stocks with Strong Momentum
The trend of earnings estimate revisions has largely improved for the broader technology sector this year and with the Nasdaq still up over +20% YTD many investors will be looking for buy the dip prospects among tech stocks.
Big tech conglomerates may come to the forefront of investors' minds but Asure Software ASUR and Axcelis Technologies ACLS shouldn’t be overlooked with both sporting a Zacks Rank #1 (Strong Buy).
Asure Software also belongs to the top-rated Zacks Internet-Delivery Services Industry which is currently in the top 2% of over 250 Zacks industries. Providing web-based workforce management solutions, in the last 60 days Asure Software’s fiscal 2023 and FY24 earnings estimates have soared 35% and 45% respectively. Plus, Asure Software’s stock trades at $8 a share and at a reasonable forward earnings multiple amid intriguing bottom line expansion.
Image Source: Zacks Investment Research
Similarly, Axcelis Technologies is benefitting from a strong business environment with its Zacks Electronics-Manufacturing Machinery Industry in the top 35 percentile. Providing ion implantation equipment in the fabrication of semiconductors, Axcelis Technologies FY23 earnings estimates are up 7% over the last two months and FY24 EPS estimates have jumped 9%.
More impressive is that Axcelis Technologies' earnings are now expected to climb 28% this year and leap another 16% in FY24 to $8.13 per share making ACLS an attractive buy-the-dip candidate.
Image Source: Zacks Investment Research
Energy Stocks with Strong Momentum
With the potential for crude oil prices hitting $100 a barrel still a possibility, Vermilion Energy’s VET stock is compelling in terms of momentum and sports a Zacks Rank #1 (Strong Buy). Furthermore, the resurgence of inflationary fears potentially alludes to the possibility of higher commodity prices outside of oil making alternative energy player REX American Resources REX attractive with a Zacks Rank #2 (Buy).