A new year is a time for optimism, so I won’t dwell any further on the market’s 2018 misery. I’m more interested in the rally to come—whenever it comes. Some stocks have already gotten a head start on the rebound. Several of those rebounding stocks look poised for even bigger run-ups in 2019.
These rebounding stocks should appeal to both momentum investors and value investors. All three of these stocks got punched in the mouth in October and at least part of November, but have since gotten up off the canvas and shaken off the cobwebs. I screened for stocks that have pushed back above their 50- and 200-day moving averages, and yet still trade well below their 2018 peaks.
So, without further ado, here are three rebounding stocks to consider for the New Year.
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3 Rebounding Stocks for 2019
Rebounding Stock #1: Atlassian (TEAM)
Because it’s an Australian enterprise software company, Atlassian is probably an unfamiliar name to most American investors. But it has a big market cap ($21 billion), does big business around the world ($945 million in sales in the last 12 months), and has a rebounding stock with plenty of momentum. TEAM (cool ticker symbol!) peaked above 96 in September before plummeting all the way to 67 during the first leg of the market correction in October. Since then, it’s been in recovery mode, stretching as high as 89 in early December. It’s been base-building in the month since, and currently trades at the high end of that range at 87, above its 50- and 200-day moving averages (see chart below).
Any break above 89, and TEAM could start to threaten its 2018 highs.
Rebounding Stock #2: Match Group (MTCH)
Online dating apps have become the best way for single people to meet, and Match Group owns the most popular app, Tinder. Also the owner and operator of Match.com, OkCupid and PlentyOfFish, Match Group has doubled its sales since 2012 and become consistently profitable. In full-year 2018, the company was expected to grow sales another 29% and earnings per share by a whopping 121%. That growth sent MTCH stock soaring to 60 in the first nine months of 2018, before the bottom fell out in October and November, sending the stock back down to 36. Slowly but surely, it’s been rebounding since, operating in a trading range between 38 and 43. At 42, it appears poised to break out of that bubble, especially if the market gets going.
Rebounding Stock #3: Dollar Tree (DLTR)
Most of the damage done to shares of this popular discount retailer occurred well before the recent market crash, with the biggest blow coming after a late-August earnings miss. The ensuing gap down from 94 to 79 turned out to be a bottom, however, and DLTR has been inching its way higher since. It closed 2018 at 90, its highest point since the late-August tumble, which could signal better days ahead. Trading at a mere 12 times earnings and with analysts anticipating 12% EPS growth in 2019, there’s no reason to doubt that a much larger rebound in DLTR is imminent.
Bottom Line on Rebounding Stocks
Again, this is a list of rebounding stocks. By definition, that means all three of them have gone through some tough times in recent months, but are now showing serious signs of life. The combination of technical momentum and still-depressed share prices bodes well as we head into the New Year.
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Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.Sign up now!
*This post has been updated from an original version.