At many points in September, investors heard about the S&P 500 hitting a record high. But at several points in that month, the index pulled back instead of moving higher. This is called a resistance level, a technical point where buying activity weakens, leaving room for sellers to come in.
You're well aware of this price movement if you’re invested in an exchange-traded fund (ETF) such as the SPDR S&P 500 ETF Trust (NYSEARCA: SPY). The SPY is up just 0.29% in the 30 days ending October 1.
But if you’re investing in individual stocks, this choppy price action can be an opportunity to look for stocks with strong fundamentals that are being overlooked by investors. These are the stocks that have the best opportunity for strong gains. To find this group of stocks, we used the MarketBeat stock screener to find S&P 500 stocks trading within 30% of their 52-week low with a forecast for at least 10% upside in earnings in the next 12 months.
A Breakout Stock in a Breakout Sector
SLB Inc. (NYSE: SLB), formerly known as Schlumberger, is an oilfield services company. The company’s revenue and earnings are less sensitive to the price of crude oil but highly sensitive to CAPEX spending. In the last year, many of the major oil companies have been making up for years of underspending as the price of oil has moved higher.
That’s reflected in the company’s last four quarters, in which they reported year-over-year double-digit revenue and earnings growth. The price of oil is likely to continue climbing in 2025 regardless of the outcome of November’s election, which makes SLB stock and its 2.5% dividend yield attractive, particularly with the stock trading near two-year lows.
The SLB analyst forecast on MarketBeat gives the stock a consensus price target of $65.29, which gives investors the potential for 48.5% upside from the stock’s closing price on October 1, 2024.
This Lithium Stock Is a Solid Play as China Stocks Soar
China stocks are making a strong recovery as the Chinese government has unleashed a wave of stimulus programs to boost the country’s struggling economy. If you believe in the economy’s recovery, it bodes well for electric vehicle (EV) sales.
However, many investors may still feel that it’s too risky to buy China stocks. A company that is adjacent to China stocks is Albemarle Corp. (NYSE: ALB). The lithium miner’s stock is down over 34% in 2024 as the price of lithium has declined as has the company’s free cash flow.
Albemarle’s turnaround may not be immediate, which explains the consensus Hold rating on the stock. However, ALB stock looks to be forming a bottom around $72. And the Albermarle analyst forecasts on MarketBeat give the stock a $117.10 price target which is 26% higher than its price on October 2. And investors get a dividend that the company has been increasing for 30 consecutive years.
Despite Supply Chain Concerns, This Undervalued Medical Stock Is Worth a Look
McKesson Corp. (NYSE: MCK) is one of the undervalued medical stocks in the S&P 500. The company is a global leader in healthcare that partners with care providers, pharmacies, and manufacturers to deliver the right medicines, products and healthcare services to the right patients at the right time.
MCK stock is up 7.6% in 2024 but is down approximately 14.7% in the last three months. The company last reported earnings in August and missed on the top line. One issue affecting the company is delays in getting GLP-1 drugs. Demand simply outpaces supply.
To be fair, this issue is likely to get worse if the port strike lasts for any length of time. That could weigh on MCK stock in the short term.
However, analysts are still forecasting a 10% increase in the company’s earnings. They also give the stock a consensus Moderate Buy rating with a price target of over $613, which is more than 24% above its current price. Investors also get a dividend that has increased at an average rate of 11% in the last three years. The company may increase the payout now that it is done buying back its shares.