BALTIMORE (Stockpickr) -- The first official day of summer was only yesterday, but it seems the summer doldrums are already here.
After a sluggish start to 2015 performance-wise, U.S. stocks are following up with an even less-than-lukewarm start to the warmer months. In the last month, for instance, the big S&P 500 index has given back about 1% of its barely-there gains.
Historically, summertime tends to be a pretty uneventful stretch for the broad market, as investors take vacations and trading volumes decline. The thing is, that's pretty much how this market has behaved all year long, churning sideways with little hint of which way things are going to resolve.
But if 2015's price action has taught us anything so far, it's that even in go-nowhere markets, individual stocks can make some big, meaningful moves. To find the big stocks primed for progress in June, we're turning to a new set of Rocket Stocks worth buying this week.
For the uninitiated, "Rocket Stocks" are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows. In the last 304 weeks, our weekly list of five plays has outperformed the S&P 500's record run by 77.32%.
Without further ado, here's a look at this week's Rocket Stocks.
BoeingBA data by YCharts
$100 billion aerospace giant Boeing (BA) is a perfect example of a big stock that's made some equally big moves in 2015's sideways market. Since the calendar flipped to January, shares of Boeing have rallied 11.7%, generating almost five times the total returns you'd find elsewhere in this market. And there's reason to believe that Boeing is going to keep heading higher in the near-term.
Boeing doesn't need much of an introduction. This firm is one of the biggest manufacturers of commercial airliners on the planet, operating a virtual duopoly with European aerospace firm Airbus. Boeing also operates a large defense systems business, filling lucrative contracts for the Department of Defense that include replacing the Air Force's KC-46A refueling tanker fleet and retrofitting aging F-16s into unmanned aerial targets.
In recent years, Boeing has been paring down its exposure to defense, moving towards a 70/30 split in favor of the commercial business. With airlines reporting record profits and perennial drama in congressional budgets, it's a step in the right direction.
Airliners are actually on the front side of a global upgrade cycle, one that's been driven by fuel savings and consumer demand to fly on shiny new jets. That's a big contributor to Boeing's $495 billion backlog today. Don't expect lower oil prices to dampen Boeing's sales numbers much. Jet fuel remains the biggest component of an airline's cost structure, so next-generation airframes such as the 787 Dreamliner and the 737NG still make as much sense as they did at $120 a barrel.
With rising analyst sentiment in shares of Boeing this week, we're betting on shares.
CignaCI data by YCharts
Health care firm Cigna (CI) has the distinction of making our Rocket Stocks list for a second straight week today. This health care firm rallied more than 13% last week, boosted by rumors of a $47.5 billion merger offer from Anthem (ANTM). Cigna rejected Anthem's bid over the weekend, but the message has been sent: It's a seller's market for healthcare firms, and for Cigna in particular.
As a refresher, Cigna is one of the biggest health insurers in the country, with more than 14 million medical participants. The firm provides health insurance plans, as well as administration for self-insured employers who pay Cigna to handle the moving parts of providing coverage for their workforces. Because of its size, Cigna can negotiate low costs with health care providers, making it an attractive place to turn for HR departments seeking out the best bang for their benefit dollar.
This week looks like a good time for Cigna to start shopping out other offers. The firm reportedly declined Anthem's request for a standstill agreement that would keep it from negotiating a sale to other companies. With health care moving from a higher-margin operation to a bigger-volume, low-margin business, Cigna's 14 million customers should look pretty attractive to rivals right now -- and those rivals have an offer price to beat.
SunTrust BanksSTI data by YCharts
$22 billion financial stock SunTrust Banks (STI) is one of the biggest regional banks in the country, with some 1,500 branches and 2,000 ATMs spread across the country. SunTrust provides a full menu of financial services, including consumer and business banking, wealth management and scores of lending products. The firm's geographic footprint is focused on the Southeast, ranging from Maryland to Florida.
In a lot of ways, the SunTrust story is a macro story. For starters, the U.S. housing market has been heating up again, and that's parlaying into better home values (and more equity) in the Southern states that got hit the hardest in 2008 and where SunTrust has the bulk of its exposure. That's driving new loan originations and helping to tamp down charge-offs. At the same time, the ongoing hints at rising interest rates from the Fed would come with greatly improved profitability for lenders like SunTrust, which stands to enjoy some operating leverage as rates move off of zero.
In the meantime, SunTrust has been working hard to fix the factors that it has control of. Lower costs and a bigger share of fee-based revenues are just a couple of important catalysts that would spur buying this summer.
Analyst sentiment is on the rise in SunTrust, so this big regional bank is making the Rocket Stock cut this week.
Polaris IndustriesPII data by YCharts
Long-term, it's hard to deny the trend in consumer spending. With low interest rates and a rebound in the economy, consumers are buying big-ticket toys again.
The price trend in shares of Polaris Industries (PII) has been equally hard to deny in the last 12 months. Since last June, shares of this recreational vehicle manufacturer have rallied more than 17%, outperforming the S&P 500 by double digits.
Polaris basically makes toys for grown ups. The firm's products include ATVs, motorcycles and snowmobiles, and they're sold through a network of more than 1,650 North American dealers as well as distributors in more than 100 countries. Thanks to the Fed's macro policy, it's cheaper than ever to take home a new ATV -- and while that's admittedly probably not a conscious part of Janet Yellen's strategy as Fed Chair, the results are just the same. Revenue is up a whopping 89% since 2010, while profits are up more than double thanks to widening margins.
The firm has been investing in moving beyond toys and onto (slightly) more pragmatic vehicles in recent years. For instance, Polaris has also been buying complementary brands to its stable with the purchase of Indian Motorcycle and small electric vehicle makers. Look for the trend in spending to continue this summer.
FireEyeFEYE data by YCharts
FireEye (FEYE) is another stock that's had a stupendous year. Just since the calendar flipped to January, this $8.4 billion cybersecurity stock has rallied close to 70%. And with the glut of high-profile computer security breaches, it's not hard to see why FireEye's customers are putting a premium on its services right now.
FireEye sells tools that detect, prevent and resolve cybersecurity attacks. FireEye's solutions include tools that create "virtual sandboxes" that separate malicious code from customers' networks, giving it the ability to respond to potential breaches quickly. To date, FireEye has been good at using the visibility of recent high-profile hacks to boost awareness for its own Mandiant services that provide incident response services.
One big benefit for FireEye is pricing power. Hacking incidents don't just risk data, they also come with career risk for IT executives and even senior C-level management (as we saw last summer with Target (TGT) CEO Gregg Steinhafel's resignation following the firm's hacking debacle). That means that execs are far more likely to sign high-priced contracts in hopes that they'll avoid potentially damaging hacking events by paying FireEye.
The cold war between companies and hackers is unlikely to simmer down any time soon, and that's a very good thing for this stock -- and anyone who owns it.