We have held the position here at 24/7 Wall Street that the recent sell-off could possibly follow a similar pattern of other sell-offs over the years by retesting the lows set in August. Sure enough, last week the S&P 500 came within five points of the 1,867 low printed on August 25. With a big day last Thursday and a huge reversal on Friday, as well as a strong Monday to open this week, the basis for a solid fourth quarter rally may be getting put in place.
A new research piece from the technical team at Oppenheimer notes something that has been in place for a while now. The overall sentiment in the market is extremely pessimistic, which is very bullish. Plus the fourth quarter often offers seasonal upside, especially in a year when all the indexes are still negative, and Oppenheimer says it may be smart to buy any weakness in the coming weeks.
We screened the company’s top 50 Buy Ideas and found four that look very solid now and are rated Outperform at Oppenheimer.
This company is a nice side play on the continuing growth in the housing market. Acuity Brands Inc. (NYSE: AYI) is a top stock to buy in the next-generation lighting space. The company is a North American market leader and one of the world’s leading providers of lighting solutions for both indoor and outdoor applications.
With fiscal year 2014 net sales of $2.4 billion, Acuity Brands lighting solutions are sold under various brands, including Lithonia Lighting, Holophane, Peerless, Gotham, Mark Architectural Lighting, Winona Lighting, Healthcare Lighting, Hydrel, American Electric Lighting, Carandini, Antique Street Lamps, Sunoptics, RELOC Wiring Solutions, eldoLED and Acuity Controls.
Light emitting diodes (LEDs) accounted for 40% of the company’s sales in the fourth quarter of 2014, up from 4% three years earlier. As manufacturing costs have dropped for LED technology, profit margins for the company should be going up. Acuity also benefits from the housing and commercial building recovery; sales rose 15% to $2.4 billion in the fiscal year that ended in August 2014, and earnings climbed 20% to $3.97 per share.
Investors are paid a tiny 0.3% dividend. The Oppenheimer price target for the stock is $210. The Thomson/First Call consensus price target is $212. The shares closed Tuesday at $176.38.