Keep your eye on these six top stocks in the consumer, infrastructure and housing sectors as the market heads into the fourth quarter. These are among the names coming to the fore amid the broad stock market advance fueled by last week's big Fed rate cut. Steven Madden and Wolverine World Wide, two footwear names that have flown below the radar, both raced toward buy points last week.
Infrastructure plays Emcor Group, Quanta Services and Sterling Infrastructure all got a jolt from the Fed that sent them past buy points. The boost to the housing sector from lower interest rates also has home service plans company Frontdoor knocking on the door of a buy point.
After the S&P 500 closed at a record high last week, stocks are starting off the week on the right foot. A rate-cutting environment eases business financing and makes bond yields less attractive vs. stocks. So Wall Street strategists see potential for small-cap stocks and the S&P 493 — minus the Magnificent Seven — to play catch-up to big-cap tech leaders that have been the market pacesetters.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
Top Stocks In Footwear: SHOO & WWW
Steven Madden offers bargain-priced fashion brands, including Dolce Vita and Betsey Johnson. Nearly 80% of its goods are produced in China, which is one reason Piper Sandler started coverage with a neutral rating on Aug. 22. Madden would be exposed to the threat of new tariffs if ex-President Trump wins another term. The other thing keeping Piper on the sidelines was exposure to lower-income consumers, but Fed rate cuts may help there.
Wolverine World Wide produces brands such as Merrell and Saucony. Piper started coverage with an overweight rating and 18 price target, saying the company has done "the bulk of heavy lifting." Over the past two years is has divested noncore assets and overhauled its supply chain.
IBD Stock Checkup shows that SHOO and WWW have strong relative strength ratings near the top of the Apparel-Shoes & Related Manufacturing industry group.
SHOO rose 4.1% to 47.47 last week to crest a 47.24 buy point from a seven-week consolidation, according to a MarketSurge analysis. WWW darted up 4.35% to 15.35, clearing a 15.23 buy point from a seven-week cup base.
Infrastructure Stocks: EME, PWR, STRL
Infrastructure stocks continue to enjoy a number of tailwinds. Federal dollars continue to flow to construction of chip and EV battery plants, as well as roads and highways. Plus, there's the rapid buildout of data centers to process generative artificial intelligence programs and the energy infrastructure needed to keep them up and running.
Emcor Group provides electrical and mechanical construction, as well as building and industrial services. On July 25, Emcor boosted its full-year EPS outlook to a range of $19-$20 from $15.50-$16.50.
Quanta Services serves the utility, renewable energy, communications, pipeline and energy industries. On Aug. 1, the company said it had a record $31.3 billion backlog. That is driven by customers' multiyear programs "to build the renewable generation and power grid infrastructure necessary to support North America's energy transition, load growth, security and reliability."
Sterling Infrastructure provides site development services for large-scale factories, data centers and distribution facilities, as well as transportation and residential projects.
EME surged 9.9% to 435.60 last week, clearing a 401.98 buy point from a 16-week consolidation. PWR climbed 7.9% to 290.89, nosing past a 286.87 buy point from a 16-week consolidation. STRL vaulted 16.6% to 148.16 last week, leaving behind a 137.63 buy point from an 18-week consolidation.
FTDR
Frontdoor operates a one-stop app for home repair and maintenance and provides home warranties through American Home Shield. William Blair upgraded FTDR to outperform on Aug. 2. William Blair cited Fed interest rate easing and expansion of affinity programs. Also, its acquisition of a leader in structural warranties for new homes, which should drive acceleration in revenue growth in 2025 and beyond.
FTDR rose 1.7% to 48.55 last week. FTDR has a 49.21 buy point from a thee-weeks-tight pattern, according to MarketSurge.
