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Why Traders Say These 2 Laggard Stocks Could Soon Rally

Why Traders Say These 2 Laggard Stocks Could Soon Rally

The market saw solid gains in April, but not all stocks rose higher and traders say 2 of last months laggards could soon be on the rise. Here’s why.

April was a good month for stocks.

The S&P 500 gained 4% last month, while the Dow and Nasdaq ended April up 2.1% and 3.5%, respectively.

However, not all stocks saw gains. Boeing (NYSE: BA) fell more than 8% in April, eBay (NASDAQ: EBAY) shed 9%, Enphase Energy (NASDAQ: ENPH) dropped 17.7%, Intel (NASDAQ: INTC) slid 11% lower, and Penn National Gaming (NASDAQ: PENN) fell 16.5%.

Despite these moves lower, traders say there are a few names among last month’s laggards that could soon move higher.

Simpler Trading’s Danielle Shay argues eBay’s post-earnings drop is “a great reason to buy the stock.”

Shares of eBay dropped more than 10% last Thursday after the e-commerce company issued an earnings outlook that fell short of Wall Street’s earnings expectations. The company said it expects earnings per share of $0.91 on revenue of $2.98 billion for the second quarter, while analysts had anticipated earnings per share of $0.96 on revenue of $3.03 billion.

The lighter-than expected outlook was met with several downgrades, including from Wedbush analysts Ygal Arounian and Chad Larkin, who downgraded the stock from Outperform to Neutral. The analysts said eBay’s guidance now implies that the company will give back much of the gains it saw in 2020.

“Moreso, visibility into the following quarters as we lap COVID gains is limited as mobility increases,” Arounian and Larkin said in a note. “So we move to the sidelines as we potentially head into four quarters of negative [year-over-year gross merchandise] growth.”

But Shay sees things differently.

“This is a really good company,” Shay said. “They’ve seen amazing growth throughout the pandemic. While they’re trying to be cautious for next quarter, I do think that people are going to continue to buy online.”

“I’m looking for it to actually do really well next quarter,” she added. “eBay’s my pick here and I’m sticking with online shopping.”

Piper Sandler’s Craig Johnson has his eye on another April laggard: Boeing.

Pointing to Boeing’s chart, Johnson noted that the stock is “coming right back into a big area of support right around 300, and from our perspective, any sort of move above this… $369 level is going to just open the door for a whole [new] leg higher. This is a stock that we think should be bought here and I think it will be a winner.”

Source: TradingView.

Boeing shares slid last week after the company delivered an earnings miss. The company reported an adjusted loss per share of $1.53 on revenue of $15.2 billion, while analysts had expected a loss of $1.03 per share on revenue of $15.7 billion.

Even after the earnings miss, Goldman Sachs analyst Noah Poponak rates Boeing a Buy with a $307 price target.

Poponak also has Boeing on his conviction buy list, which is reserved for his best ideas. The analyst noted that Boeing’s cash burn is improving, and he sees commercial air travel recovering and the company’s order and production rates stabilizing.

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