Oppenheimer’s Three Favorite Stocks From Its Three Favorite Sectors

While the report contains a total of 50 buys and 50 sells against each other in the S&P 500, the most interesting part is that there are three buy ideas from Oppenheimer’s favorite stock sectors. These include Facebook, Hess and Delta Air.

The report discusses a low level in the VIX not being bearish for stocks. Oppenheimer even goes on to show how the S&P 500 has tended to post above-average performance in the month, quarter, half-year and even a year after the VIX is below 15 (see table and chart image below). It stated:

We believe this study is another piece of evidence that argues against a bull market cycle top. While we believe that the bull market cycle is intact, we recognize that tactical conditions have become less favorable. For instance, the composite Put/Call ratio is back to its most optimistic levels of the year. We see 1900 to 1925 as support should the S&P 500 require time to consolidate. Overall, we recommend sticking with the S&P 500’s strong trend and using weakness to buy stocks in the Technology, Energy, and Industrials sectors.

Facebook Inc. (NASDAQ: FB) was represented in the technology sector as follows:

We like big-caps, we like Technology, we like FB. FB was one of the few Internet stocks that held its 200-day moving average in April, and a subsequent rally above $63 indicates a resumption of the stock’s uptrend, in our view. We expect a test and ultimate breakout above $72 resistance.

Hess Corp. (NYSE: HES) was represented in the energy sector as follows:

Hess remains on our Buy List because the stock is reversing a six-year downtrend vs. the S&P 500 and we see ample opportunity for additional outperformance. The stock’s breakout above $87 is now a level of support and we believe the stock should continue to trend toward its $130 all-time peak notched in 2008.

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Delta Air Lines Inc. (NYSE: DAL) is one we would count in transportation, but Oppenheimer has it counted and lumped into a broader industrials sector. Delta was represented as follows:

We view the Airlines industry within the middle innings of a bearish-to-bullish secular reversal. We therefore advocate exposure to the group and believe dips should be bought. DAL has rallied in a healthy manner, and we do not see signs of a top. We continue to expect higher highs and believe the stock’s dip to $37 support should be bought.