2 Stocks to Buy Before July

Last week, Kevin Warsh presided over his first FOMC meeting as Fed chair. 

The Fed held rates steady, but the tone was fairly hawkish. Inflation projections moved higher, rate expectations moved higher, and Warsh made it clear that the central bank’s priority remains restoring price stability, even if that means keeping financial conditions tighter for longer. 

Warsh’s first meeting also hinted at a different approach going forward: less hand-holding, fewer breadcrumbs, and a central bank that may be less interested in telling markets exactly where policy is headed. 

With the rate outlook still murky — and the Fed potentially becoming less explicit about its next moves, investors may need to lean more heavily on company-specific strengths. 

That means focusing on businesses with durable cash flow, strong balance sheets, pricing power, capital returns, and demand that can hold up even when the macro picture is harder to read. 

That is where large caps can stand out. The best large-cap companies are not just “safer” because they are bigger. They often have direct exposure to some of the market’s strongest themes, along with the financial flexibility to keep investing, keep rewarding shareholders, and keep executing through an uneven macro backdrop. 

The issue is that comparing, contrasting, and screening the entire large cap universe to find the best investments is incredibly time-consuming. Thankfully, there’s a way to cut down on the research time — all you have to do is turn to …

Large Caps Stock Strategy

Our proprietary quant rating system evaluates 4,600 stocks each day on the basis of 115 fundamental metrics and factors. That big-picture overview is distilled into a simple, user-friendly metric — a stock’s Zen Rating.

Only the top 5% of stocks are given a Zen Rating of A, equivalent to a Strong Buy recommendation. However, 5% of 4,600 still leaves you with about 230 stocks to consider on any given day. But there’s a way for you to hasten up your search even more — with the help of one of our exclusive Zen Strategies.

There are 11 of these strategies in total — each is a carefully-constructed portfolio, consisting of just 7 stocks. With recent market dynamics in mind, we’ll be looking at a portfolio that has already yielded a 24.56% return since the start of the year. Today, the spotlight is on our Large Caps Stock Strategy.

Comfort Systems (FIX)

Comfort Systems designs, installs, and services mechanical, electrical, plumbing, and HVAC systems for commercial and industrial buildings, which gives the business plenty of exposure to the data center boom. FIX currently has a Zen Rating of B, and ranks in the top 6% of everything we track for overall fundamentals, essentially teetering of the edge of becoming an A-rated stock. Comfort Systems is also the 6th highest-rated stock in the Engineering & Construction industry, which has an Industry Rating of A.

In terms of the Component Grade ratings that make up each Zen Rating, FIX has 3 core strengths. In terms of Growth, it’s in the top 7%. When it comes to Financials, it’s in the top 5%. And with regard to Sentiment, the stock ranks in the top 4%. Put together, we have a strong growth trajectory, a fortress balance sheet, and significant smart money positioning.

FIX is also in the top 5% of the stocks we track for Momentum, thanks to a monster 290% rally over the past 365 days. This is, admittedly, a double-edged sword: resultantly, the stock only gets a C rating for Value, and thanks to a Beta of 1.47, it also gets a C for Safety.

With that being said, there’s enough proof of operational excellence to overlook the two average grades. Comfort Systems has beaten earnings estimates for 19 quarters in a row. The last report was released on April 23, and share prices have gone up about 10% since then. All in all, a consistent $69 billion market-cap earnings beat machine with rock-solid financials and exposure to a major theme through data centers.

Valero Energy (VLO)

Valero Energy is one of North America’s largest independent refiners, and produces diesel, jet fuel, and ethanol. VLO carries a Zen Rating of A, and currently ranks in the top 1% of all the stocks we track for overall fundamental strength. Valero Energy is also the 2nd highest-rated stock in the Oil & Gas Refining & Marketing industry, which has an Industry Rating of A.

The most attention-grabbing thing about VLO is the balanced fundamental profile. Out of 7 Component Grades in total, VLO carries an A or B rating in 5 categories. As the stock is currently trading at a forward P/E of just 8.5x, it ranks in the top 26% of the market for Value. The mature $70 billion business has also beaten estimates for 20 quarters in a row, and this kind of consistency places it in the top 20% of stocks for Safety.

In terms of both Momentum and Sentiment, VLO ranks in the top 9%. This indicates strong performance relative to sector peers and significant smart money inflows. The balance sheet is strong and healthy, placing Valero Energy in the top 8% for Financials. With regard to Growth, the stock is in the top 4%.

Fundamentally, there are no weak spots here. Value and Safety are actually the stock’s weakest grades. Since the company’s last earnings report on April 30, the stock has dipped by 6.4% due to profit-taking, offering an attractive entry point.

Interested In More Great Stock Picks?

The 2 stocks highlighted above are just a fraction of what you get from our proven Large Caps Stock Strategy.

That’s because each day our system recalibrates — and Zen Strategies members get access to the top 7 artificial intelligence stocks based on 115 different parameters that point to outperformance. 

See all Top 7 Large Caps stocks here >

However, maybe large-cap stocks aren’t what you’re looking to add to your portfolio right now. Perhaps you would like to see all 11 of our market beating strategies including Growth, Value, Momentum or perhaps even Income stocks. 

Each featuring the top 7 stocks.

Each featuring tremendous performance.

We spell it all out in this timely presentation below that lives up to its name:

77 Best Stocks Now! > 

What to Do Next?

• 77 Best Stocks NOW! >
• Options Trading with the Zen Ratings >
• 2 New Stocks to Buy from Steve Reitmeister >

Want to get in touch? Email us at news@wallstreetzen.com.