Covering the stock scene for RBC Capital, US equity strategy head Lori Calvasina has pinpointed the upcoming US midterm elections as a major positive catalyst for stocks heading into the year’s end. That may sound counter intuitive – American politics being anything but positive these days – but Calvasina lays out a strong case for a market rally in Q4.
“The midterms are a potential positive catalyst later this year. Not only do stocks tend to rally in the 4th quarter of midterm election years, Congress is expected to shift back to Republican control which is good news for stocks since the S&P 500 tends to post its strongest returns in years that have a Democratic President and split or Republican Congressional control,” Calvasina explained.
Against this backdrop, Calvasina’s colleagues among the RBC stock analysts have picked out two stocks they see as strong gainers in the months ahead – gainers to the tune of 70% or better. We’ve looked up these stocks, using TipRanks platform, to find out what makes them stand out.
Liberty Energy (LBRT)
The first RBC pick is Liberty Energy, an oilfield services company in the North American hydrocarbon sector. Oilfield services are the supporting services required by the producing firms to get oil and gas resources out of the ground. The producers find the oil and drill the wells; the services companies, like Liberty, provide the necessary support: engineering know-how in the water, sand, chemicals, piping, and pumping needed for effective fracking ops.
Liberty operates in some of the richest energy production regions of the US and Canada, including the Appalachian gas formations of Ohio, West Virginia, and Pennsylvania, and the oil and gas fields of the Gulf Coast, the Great Plains, and the Rocky Mountains. In all, Liberty has a presence in 12 US states and 3 Canadian provinces.
Oilfield support has notoriously high costs, and Liberty ran a consistent net loss until Q2 of this year. In its 2Q22 financial release, Liberty reported a diluted EPS of 55 cents. This compares favorably to the 3-cent loss from 1Q22, and…