April showers might just bring May flowers for investors this year.
April started with a stammer, continuing the correction in the S&P 500 index that began back at the start of March. But the month ended strong, finishing Friday just 0.7% shy of the all-time highs the S&P set earlier this year. Simply put, the S&P is just a strong trading session away from being higher than ever before in history. That's a pretty strong place to start a new month.
And as earnings season pushes on, the overwhelming positive earnings surprise stocks are seeing this quarter is helping to fuel higher ground ahead.
To find the stocks that look most likely to lead the market higher this spring, we're turning to a fresh set of "Rocket Stocks" worth buying this week.
In case you're not familiar, 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 past 397 weeks, our weekly list of plays has outperformed the S&P 500's record-breaking run by 77.38%.
So, without further ado, here's a look at this week's Rocket Stocks.
PayPal Holdings Inc.
Leading things off is $58 billion digital payments company PayPal Holdings Inc. (PYPL) . PayPal has already been a stellar performer in 2017: shares are up 21% since the calendar flipped to January, leaving the rest of the broad market in its dust. And that bullish price trajectory isn't showing any signs of slowing as we head to the back-half of the spring.
PayPal operates one of the biggest independent closed-loop payment networks on the planet, with around 180 million active users worldwide. PayPal is one of the big winners in the push toward electronic payments. Despite the ubiquity of credit cards and digital wallets today, the vast majority of global trade is still carried out in cash--that's changing rapidly, and it provides a valuable tailwind for PayPal and its peers.
On the global payments front, some of PayPal's biggest assets are the ones it's acquired from others. For instance, it's managed to pull off some smart acquisitions like payment processor Braintree (which included peer-to-peer payment service Venmo), money transfer company Xoom, and mobile commerce platform Modest. The firm's pending deal to buy bill payment firm TIO Networks is another one that PayPal's user base and has the potential to add more functionality to its existing platform.
T-Mobile US Inc.
Verizon Communications (VZ) got plenty of attention during its Q1 earnings call last month, when the firm revealed that it had actually lost subscribers for the first time. That's been a coup of sorts for smaller players like T-Mobile US Inc. (TMUS) , the third-largest mobile phone carrier in the country. T-Mobile may be No. 3, but it's a very distant third, and that makes customer attrition at T-Mobile's biggest competitor a very good thing for anyone who owns this stock.
T-Mobile provides cellular service for approximately 71.5 million wireless subscribers. While the firm is dwarfed by the larger players in the cellular business, T-Mobile still owns substantial spectrum assets that give it the ability to compete well with larger, better-financed peers. T-Mobile has been a major force in pushing cellular services towards commoditization, which means that as it snatches market share from the big guys, it's able to close the gap toward consistent profitability.
Finally, the firm's brand positioning as the "uncarrier," as well as an outspoken leader in CEO John Legere, makes it stand out against bigger competitors that historically don't connect well with customers. Buyers are clearly in control of shares here--TMUS is up 17% year-to-date.
Royal Caribbean Cruises Ltd.
Rounding out our Rocket Stocks list is $24 billion cruise line Royal Caribbean (RCL) . RCL is another stock that's been charging higher in 2017, driven up by strong inventory positioning, boosted consumer confidence, and a major demographic tailwind.
Royal Caribbean is the second-largest cruise ship operator in the world, sailing more than 40 ships across six brands. The firm operates under the Royal Caribbean, Celebrity, Azamara Club Cruises, Pullmantur and CDF Croisieres de France lines, as well as a 50% stake in Germany's TUI Cruises. The firm projects that it will grow to 130,900 total berths by 2018.
Prolonged low-fuel costs, plus a growing number of retiring cruise-hungry baby boomers are two factors to thank for the 30% upside we've seen in RCL this year. And with rising analyst sentiment in shares of this stock this spring, expect that bullish price momentum to continue in the quarters ahead.