Jay Powell and the Fed gave the green light to the bulls on Wednesday when the world’s most important central bank signaled the possibility of three rate cuts in 2024. The 10-year U.S. Treasury is back below 4% (3.92%) after sitting at 5% in late October as Wall Street rapidly prices in lower rates.The Fed’s newfound dovishness finally confirms what the bulls have been saying and doing for a large chunk of 2023 and certainly since the end of October. The S&P 500 appears on the cusp of summiting a new peak by the end of 2023 or early 2024.All of this strength came before we even entered the official Santa Claus rally period, which includes the final five trading days of the year and the first two trading days of the new year.There will likely be some selling and choppiness in the weeks and months ahead. Still, more money is poised to flow into stocks in 2024 as the calculus on cash and bonds changes and investors grow increasingly nervous about missing out again.
DocuSign, Inc. (DOCU)DocuSign crushed our Q3 FY24 EPS estimate on December 7 and raised its guidance to help it land a Zacks Rank #1 (Strong Buy) right now. DOCU stock has soared 30% in the last month to retake its 50-day, its 200-day, and its long-term 50-week moving averages. Yet, the e-signature stock still trades over 80% below its record highs after it got crushed for slowing growth and weak bottom-line results.DOCU’s revenue soared following its 2018 IPO, including four straight years of between 35% to 49% growth (19% last year in FY23). The company remains a powerhouse of electronic signatures, document generation, and beyond as medical forms, legal documents, and much more are becoming increasingly paperless. DocuSign has responded to its slower growth and higher rate environment by cutting costs, changing leadership, and rolling out other efforts to streamline its business. Image Source: Zacks Investment ResearchDocuSign’s valuation levels remain sky-high. But DOCU is focused on the bottom line. Investors might want to consider the e-signature and digital document firm with 1.4 million customers as Wall Street begins to search high and low for technology stocks that are still trading far below their highs.
Nike, Inc. (NKE)Nike trades around 30% below its highs heading into its Q2 FY24 earnings release on December 21. Wall Street sold Nike shares based on fears about growing competition and other headwinds. NKE also got caught up in the broader consumer discretionary selloff. Nike certainly faces increased competition from relative newcomers Hoka and On in the running shoe segment and among consumers looking for maximum comfort and support at their jobs. Adidas, Lululemon, and digital native upstarts are also fighting for a larger share of the so-called streetwear market or the fashion end of sportswear.Despite more challengers, Nike remains the heavyweight champion of sportswear and one of the most valuable brands in the world alongside the likes of Coca-Cola. NKE has treaded down a new direct-to-consumer-heavy path in both brick-and-mortar and e-commerce. Nike’s sales are projected to climb 4% this year and over 8% higher next year to help boost its adjusted earnings by 16% and 17%, respectively, based on Zacks estimates. Image Source: Zacks Investment ResearchNike’s earnings revisions help it land a Zacks Rank #2 (Buy) right now and its Shoes and Retail Apparel segment is in the top 23% of over 250 Zacks industries. Nike has climbed 850% during the last 15 years vs. the S&P 500’s 420% and its sector’s 220%. Nike is up 73% in the past five years, even though it trades 30% below its highs. Nike has retaken its 50-day and 200-day and is on the cusp of climbing above its very long-term 50-month moving average. Nike trades near its 10-year median at 29.7X forward 12-month earnings and pays a dividend.
Target (TGT)Target posted blowout Q3 earnings results in mid-November and provided upbeat guidance that helped it capture a Zacks Rank #2 (Buy). The strong bottom-line performance extended its recent rebound that has TGT stock up 30% since the start of the fourth quarter. Even with the comeback, the retail standout trades 45% below its highs.TGT’s resurgence has taken it right to its 50-week moving average and solidly above its 200-day and 50-day. Target trades at a 30% discount to its sector, 32% below Walmart, and close to TGT’s 10-year median. TGT stock is far more than a plummeting pandemic winner. Target crushed Walmart over the last 15 years, up 310% vs. 170% despite its massive fall from its 2021 highs. Image Source: Zacks Investment ResearchTarget, like many others, failed to adapt to quickly changing consumer shopping patterns over the last year-plus. The firm is also dealing with other setbacks. But it appears that TGT is finally finding its footing again. TGT’s adjusted earnings are projected to soar 39% this year and then climb another 9% higher next year. And its dividend yields 3.2% right now. More By This Author:2 Top-Ranked Tech Stocks To Buy Now For A Potential Santa Claus RallyBear Of The Day: Sonos, Inc. Bull of the Day: AvidXchange Holdings, Inc.