Today we’re going to play a game…
It’s called “What Correction?”
But before I get to the rules, you should know that global growth took another knee to the groin this week as heavy-equipment maker Caterpillar cut its sales outlook and slashed 5,000 jobs.
The reason?
Anemic conditions in worldwide energy, mining and construction, the company says. As you’d probably expect, Caterpillar shareholders weren’t too thrilled with the news. By Thursday’s close, the stock was down more than 6% on the day. If you bought Caterpillar on January 1st, you’d now be sitting on losses of more than 26%.
But Caterpillar’s not the only casualty. The major averages are limping into the fourth quarter after their recent licking. And I’ve been pretty down lately on the stock market, commodities, and their respective prospects heading into the last few months of 2015.
But today is different. You have my big-picture view on commodities. And you already know where I think stocks might be headed over the next several weeks.
So now, let’s play our little game of “What Correction?”
Here’s how it goes: I’m going to highlight three different potential trades that are completely ignoring the market’s bearish action. If you looked at these stocks in a vacuum—without peeking at the major averages—you wouldn’t have any idea the market was struggling.
And once you get a load of these names, you’ll be wondering… What Correction?
First up is Nike Inc. (NYSE:NKE).
Nike is a Dow component. The Dow is down more than 9% year-to-date. Out of the thirty Dow Industrial names, there’s only one I’d even think about buying right now—and it’s Nike.
The king of sneakers and athletic wear soared to new highs after the market closed yesterday. Nike reported bang-up earnings, beating sales estimates and even reporting better than expected results in China.
So why is Nike winning while every other stock is sucking wind? Simple. Everyone’s dressing like they’re about to go (or just came from) the gym. Are people working out more? I doubt it. But they like dressing the part. That’s why Nike is posting all-time highs while the other 29 Dow industrials can’t keep their breath…
Next up is Facebook (NASDAQ:FB), the company everyone loves to hate.
People complain about Facebook every day. They hate that the social networking site takes up a majority of their time. They can’t stand what their friends post on their walls. But no one’s deleting their account now, are they?
It’s safe to say that Facebook controls social media. Twitter stock is in the gutter. LinkedIn has been stuck in a downtrend all year. In the land of clicks, Facebook is king. And its share price reflects that. Take a look at this chart:
The tech-laden Nasdaq Composite has been the strongest of the major averages this year. But it just dipped back into negative territory yesterday afternoon thanks in part to a weakening biotech sector.
But Facebook? It didn’t get the memo. While the rest of the market struggled Thursday, Facebook shares pushed higher. It’s now up more than 21% year-to-date. Can you see a correction in Facebook shares? I can’t…
Last but not least, we have Starbucks Corp. (NASDAQ:SBUX).
Earlier this week, a study was released highlighting just how bad Starbucks employees have it these days…
“About a year ago the company promised it would end practices like last minute scheduling or having the same employee close a location one night and return early in the morning to open it,” Yahoo! Finance explains. “The report says nearly a quarter of employees say those practices are still in place.”
Do Starbucks shares care about this revelation? I don’t think so. Sorry about your crappy job, kid—now get me my pumpkin spice latte!
Starbucks stock is up more than 43% so far this year. Sure, it took a small dive in August during the market’s initial breakdown. But it’s back in the game now and steaming back toward its highs…
All three of these plays are solid opportunities as the market continues to chop along…
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