Markets hit a major milestone this week.
The S&P 500 on Monday has doubled since its March 2020 pandemic closing low. A handful of its stocks have performed even better – Moderna, Caesars Entertainment, Etsy and FreeportMcMoRan are among the names that have run circles around the benchmark index.
JC O’Hara, chief market technician at MKM Partners, says one of those stocks is set to continue its run.
“You want to go through names that have exhibited leadership, but you want to buy them during a pullback. You want to buy them when they’re consolidating. And my favorite name out of the recent leadership names is Etsy,” O’Hara told CNBC’s “Trading Nation” on Tuesday.
“If you look at the longer-term chart of Etsy, we can see this name has gone through periods of strong rising uptrends, followed by multimonth consolidation periods, which ultimately results in resumption of that uptrend,” said O’Hara.
Etsy is in one of those consolidation stretches. He says a break above $200 would be a buy signal and suggest the resumption of its uptrend. Etsy traded at just above $191 on Wednesday.
Etsy has surged 538% since its low on March 23, 2020.
Quint Tatro, president of Joule Financial, agrees that investors should look to the outperformers that have recently undergone a pullback.
“Freeport is one of these names that’s 25% off highs,” Tatro said during the same interview. “As global manufacturing picks up and as we continue to sort of see this rebound out of Covid and people going back to work and so forth in addition to an infrastructure bill that will eventually get passed, we see that copper should continue its demand and its rise higher.”
Copper has fallen back this month on fears of an economic slowdown tied to the spread of the delta variant. It remains up nearly 20% for the year.
“Freeport is a name that we like because of those macro components, but it’s also a real cheap stock,” said Tatro. “This is a stock you’re getting at an incredibly cheap valuation against the backdrop and macro environment that I think will do very well for these commodity names.”
The mining company trades at 10 times forward earnings, roughly half the forward multiple for the S&P 500. It has risen 612% from its lows in March 2020.
