In the wake of the recent market sell off, a lot of investors are worried that there is additional downside left in the market. Most analysts agree that the sell off was overdone, and that the underlying fundamentals of the market remain strong, but we should expect more volatility in the weeks and months ahead.
The biggest fear in the market right now is inflation. Inflation was a non-factor during the last several years, but improvements in the jobs market, and the recent tax reform do suggest that inflation will be a problem moving forward, and that it will force the Federal Reserve to raise rates quicker than previously expected.
After such a long period of steady gains and record setting highs for the market, investors are right to feel nervous after the last week’s sell off, but the important thing to remember is that the overall economy remains OK, and after such a bullish run, a correction every now and then is actually healthy for the overall health of a bull market.
Having said that, we must take into account the spike in volatility, and accept that there will be more profit taking down the road. Higher interest rates will result in a money transfer out of stocks and into traditional fixed income assets, and we have started to see signs that this is already happening.
What all of this means is that there are still valid reasons for staying in the stock market, but also valid reasons to be particularly careful about the stocks you purchase.
We want to take a closer look at five stocks that get high rankings on InvestorsObserver’s screening tool, the Stock Score Report, since the overall rankings take into account both technical and fundamental data, which gives a good insight into which stocks have fared well in the past, and have the right stuff to keep performing well moving forward.
Here are five stocks that appear to have the right stuff.