NEW YORK (TheStreet) -- Is this month's stock market rally a long-term trend or a pause in the extreme market volatility that has plagued stocks since August?

It may be "too soon to say," as Oppenheimer analysts believe.

The S&P 500 is up 4.9% in October, while down 6.7% for the first nine months of the year, primarily due to unsteady markets in August as a result of concerns over China's growth ability.

"It's too soon to say that the market volatility we've seen in recent months is fully behind us," according to a technical note Oppenheimer sent to clients on Monday.

"For the S&P 500, we expect this mean-reverting rally to continue based on pessimistic sentiment conditions and improving seasonals; in this case we're keying on the index's mean over the last 200 days, currently near 2060," the note said.

"Most notable about the index's latest rally is that the bounce has been led by what were the worst performing stocks of the year," the analysts said. "For these beaten-up stocks, whether this is the start of a prolonged base-building process or simply a pause in an established downtrend will be crucial in determining if the S&P 500 can recover to new highs, in our view."

Here's 10 stock ideas to buy in each S&P 500 sector, paired with ratings from TheStreet ratings for added perspective.

TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

XEC Chart XEC data by YCharts

1. Cimarex Energy Co. (XEC - Get Report)
Industry: Energy/Oil & Gas Exploration & Production
Year-to-date return: 15.6%

Cimarex Energy Co. operates as an independent oil and gas exploration and production company primarily in Texas, Oklahoma, and New Mexico. The company owns interests in 3,240 net productive oil and gas wells.

TheStreet Said: TheStreet Ratings team rates CIMAREX ENERGY CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate CIMAREX ENERGY CO (XEC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, XEC has a quick ratio of 2.36, which demonstrates the ability of the company to cover short-term liquidity needs.
  • After a year of stock price fluctuations, the net result is that XEC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 34.5%. Since the same quarter one year prior, revenues fell by 33.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CIMAREX ENERGY CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $257.37 million or 38.97% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: XEC

 

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2. Headwaters Inc. (HW)
Industry: Materials/Construction Materials
Year-to-date return: 37%

Headwaters Incorporated, a building products company, provides products and services in the light and heavy building materials sectors primarily in the United States and Canada. It operates through three segments: Light Building Products, Heavy Construction Materials, and Energy Technology.

TheStreet Said: TheStreet Ratings team rates HEADWATERS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate HEADWATERS INC (HW) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 8.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HEADWATERS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HEADWATERS INC increased its bottom line by earning $0.21 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($0.50 versus $0.21).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Construction Materials industry. The net income increased by 120.5% when compared to the same quarter one year prior, rising from $10.35 million to $22.82 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Construction Materials industry and the overall market, HEADWATERS INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • 35.41% is the gross profit margin for HEADWATERS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.37% is above that of the industry average.
  • You can view the full analysis from the report here: HW

 

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3. Northrop Grumman Corp. (NOC)
Industry: Industrials/Aerospace & Defense
Year-to-date return: 19.2%

Northrop Grumman Corporation, a security company, provides systems, products, and solutions in aerospace, electronics, information systems, and technical service areas to government and commercial customers worldwide.

TheStreet Said: TheStreet Ratings team rates NORTHROP GRUMMAN CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate NORTHROP GRUMMAN CORP (NOC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, notable return on equity, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 37.50% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NOC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Aerospace & Defense industry average. The net income increased by 3.9% when compared to the same quarter one year prior, going from $511.00 million to $531.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Aerospace & Defense industry and the overall market on the basis of return on equity, NORTHROP GRUMMAN CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • Net operating cash flow has slightly increased to $626.00 million or 9.44% when compared to the same quarter last year. Despite an increase in cash flow, NORTHROP GRUMMAN CORP's cash flow growth rate is still lower than the industry average growth rate of 26.96%.
  • NORTHROP GRUMMAN CORP has improved earnings per share by 15.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, NORTHROP GRUMMAN CORP increased its bottom line by earning $9.74 versus $8.34 in the prior year. For the next year, the market is expecting a contraction of 0.4% in earnings ($9.70 versus $9.74).
  • You can view the full analysis from the report here: NOC

 

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4. Priceline Group Inc. (PCLN)
Industry: Consumer Goods & Services (Consumer Discretionary)/Internet Retail
Year-to-date return: 15.2%

The Priceline Group Inc. provides online travel and travel related reservation and search service

TheStreet Said: TheStreet Ratings team rates PRICELINE GROUP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

We rate PRICELINE GROUP INC (PCLN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PCLN's revenue growth trails the industry average of 33.8%. Since the same quarter one year prior, revenues slightly increased by 7.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, PCLN has a quick ratio of 2.11, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market, PRICELINE GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for PRICELINE GROUP INC is currently very high, coming in at 91.78%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.67% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to $702.38 million or 1.79% when compared to the same quarter last year. Despite an increase in cash flow of 1.79%, PRICELINE GROUP INC is still growing at a significantly lower rate than the industry average of 85.43%.
  • You can view the full analysis from the report here: PCLN

 

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5. Tyson Foods (TSN - Get Report)
Industry: Consumer Non-Discretionary/Packaged Foods & Meats
Year-to-date return: 15.6%

Tyson Foods, Inc., together with its subsidiaries, produces, distributes, and markets chicken, beef, pork, prepared foods, and related allied products worldwide. The company breeds and raises chickens; and processes live chickens into fresh, frozen, and value-added chicken product.

TheStreet Said: TheStreet Ratings team rates TYSON FOODS INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

We rate TYSON FOODS INC (TSN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and attractive valuation levels. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 8.7%. Since the same quarter one year prior, revenues slightly increased by 4.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • TYSON FOODS INC has improved earnings per share by 13.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TYSON FOODS INC increased its bottom line by earning $2.40 versus $2.32 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $2.40).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 31.9% when compared to the same quarter one year prior, rising from $260.00 million to $343.00 million.
  • You can view the full analysis from the report here: TSN

 

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6. DENTSPLY International (XRAY - Get Report)
Industry: Health Care/Health Care Supplies
Year-to-date return: 6.1%

DENTSPLY International Inc. designs, develops, manufactures, and markets various consumable dental products for the professional dental market in the United States and internationally.

TheStreet Said: TheStreet Ratings team rates DENTSPLY INTERNATL INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

We rate DENTSPLY INTERNATL INC (XRAY) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for DENTSPLY INTERNATL INC is rather high; currently it is at 61.61%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.31% trails the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • DENTSPLY INTERNATL INC's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DENTSPLY INTERNATL INC increased its bottom line by earning $2.23 versus $2.15 in the prior year. This year, the market expects an improvement in earnings ($2.59 versus $2.23).
  • The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.89 is somewhat weak and could be cause for future problems.
  • You can view the full analysis from the report here: XRAY

 

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7. Progressive Corp. (PGR - Get Report)
Industry: Financial Services/Property & Casualty Insurance
Year-to-date return: 18.9%

The Progressive Corporation, an insurance holding company, provides personal and commercial property-casualty insurance, and other specialty property-casualty insurance and related services primarily in the United States.

TheStreet Said: TheStreet Ratings team rates PROGRESSIVE CORP-OHIO as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

We rate PROGRESSIVE CORP-OHIO (PGR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, notable return on equity, good cash flow from operations and compelling growth in net income. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 12.5%. Since the same quarter one year prior, revenues rose by 11.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 26.53% and other important driving factors, this stock has surged by 25.26% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, PGR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market, PROGRESSIVE CORP-OHIO's return on equity exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 23.8% when compared to the same quarter one year prior, going from $293.40 million to $363.30 million.
  • Net operating cash flow has significantly increased by 73.12% to $658.90 million when compared to the same quarter last year. In addition, PROGRESSIVE CORP-OHIO has also vastly surpassed the industry average cash flow growth rate of -45.63%.
  • You can view the full analysis from the report here: PGR

 

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8. Saleforce.com Inc. (CRM - Get Report)
Industry: Technology/Application Software
Year-to-date return: 26.9%

Salesforce.com, inc. provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide.

TheStreet Said: TheStreet Ratings team rates SALESFORCE.COM INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

We rate SALESFORCE.COM INC (CRM) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, compelling growth in net income, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 24.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 29.68% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CRM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 98.6% when compared to the same quarter one year prior, rising from -$61.09 million to -$0.85 million.
  • Net operating cash flow has increased to $304.41 million or 23.79% when compared to the same quarter last year. In addition, SALESFORCE.COM INC has also vastly surpassed the industry average cash flow growth rate of -30.31%.
  • The gross profit margin for SALESFORCE.COM INC is currently very high, coming in at 81.91%. Regardless of CRM's high profit margin, it has managed to decrease from the same period last year.
  • You can view the full analysis from the report here: CRM

 

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9. Vonage Holdings Corp. (VG - Get Report)
Industry: Telecom/Alternative Carriers
Year-to-date return: 58.5%

Vonage Holdings Corp. provides unified communications as a service solutions connecting people through cloud-connected devices worldwide.

TheStreet Said: TheStreet Ratings team rates VONAGE HOLDINGS CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate VONAGE HOLDINGS CORP (VG) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • VG's revenue growth has slightly outpaced the industry average of 4.6%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 51.3% when compared to the same quarter one year prior, rising from $5.52 million to $8.35 million.
  • Net operating cash flow has increased to $35.24 million or 46.32% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 3.60%.
  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that VG's debt-to-equity ratio is low, the quick ratio, which is currently 0.50, displays a potential problem in covering short-term cash needs.
  • Powered by its strong earnings growth of 33.33% and other important driving factors, this stock has surged by 88.71% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • You can view the full analysis from the report here: VG

  


NI Chart NI data by YCharts

9. NiSource Inc. (NI - Get Report)
Industry: Utilities Non-telecom/Multi-Utilities
Return from July 2 (split from Columbia Pipeline Group): 11.7%

NiSource Inc., an energy holding company, provides natural gas, electricity, and other products and services in the United States.

TheStreet Said: TheStreet Ratings team rates NISOURCE INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

We rate NISOURCE INC (NI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly increased by 98.94% to $511.30 million when compared to the same quarter last year. In addition, NISOURCE INC has also vastly surpassed the industry average cash flow growth rate of 42.00%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • NI, with its decline in revenue, slightly underperformed the industry average of 7.6%. Since the same quarter one year prior, revenues fell by 12.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • NISOURCE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NISOURCE INC increased its bottom line by earning $1.69 versus $1.57 in the prior year. For the next year, the market is expecting a contraction of 16.3% in earnings ($1.42 versus $1.69).
  • You can view the full analysis from the report here: NI