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The market has been experiencing distress in the banking sector, and it isn’t clear exactly what will happen next. After the tremendous rally in interest rates over the last year, it seems there are a number of banking institutions whose bond portfolios have been battered.

While financial authorities have stepped up and opened specialized lending facilities to ease the banking stress, they have also stated that they believe the system is broadly safe and the issues are contained. We will see if that is true over the next few months.

Fortunately, there is always a bull market somewhere. Using the Zacks Rankings is an effective way to identify stocks with strong near-term expectations. Looking closer at historical data, like we do below, can also help investors find stocks with robust fundamentals.

Financial stocks and any other businesses sensitive to interest rates are a no-go right now. Thankfully, there are still plenty of stocks that will survive and even thrive in this market environment.

Below, I go over three top-ranked stocks from three different sectors. By diversifying across different industries, we decrease the correlation between investments, and this can further reduce the portfolio’s volatility.

Ollie’s Bargain Outlet

Ollie’s Bargain Outlet (OLLI - Free Report) is a discount retailer for name brand merchandise. The company sells a full range of goods, such as houseware, groceries, electronics, clothing, books, stationery, and much more.

Customers at Ollie’s are well known for being avid fans of the discount retailer, some traveling from far away to visit, and others making regular outings to the store to hunt for discounted treasures. OLLI operates 450 stores in 29 states, and it was founded in 1982.

Ollie’s Bargain Outlet is a Zacks Rank #2 (Buy) stock, indicating upward trending earnings revisions. Current quarter sales are projected to grow 13% year-ver-year to $460 million, while current year sales are expected to grow 13% to $2 billion.

Earnings growth is expected to be exceptionally strong over the coming quarters. Current quarter earnings are expected to climb 140% to $0.48 per share, and current year earnings are expected to grow 52% to $2.46 per share. Revenues at OLLI have nearly tripled since its IPO in 2015.

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OLLI was last seen trading at a one-year forward earnings multiple of 24x, which is below its five-year median of 32x and above the industry average of 19x. It should be noted that for most of its history, OLLI has traded at a premium to the industry.

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An additional benefit of investing in discount shops is that people always enjoy a good deal. Consumers like a good deal during strong economic times, but bargains become a necessity during tough times. 

Hershey

Hershey (HSY - Free Report), everyone’s favorite chocolate bar, is a phenomenal business and stock. Over the last 20 years, HSY stock has compounded at an annual rate of 13%, and has delivered 10x investors’ money over that time. This performance is nearly double that of the broad market. It was also a standout performer over the last 12 months, returning 20% compared to the market’s -10%.

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Something dramatic would have to shift in the world for people to stop consuming Hershey’s products. Additionally, considering the business has been around since 1894, it has been through all imaginable economic environments. Investors can be confident HSY can survive a banking crisis.

Hershey is a Zacks Rank #2 (Buy) stock, indicating upward trending earnings revisions. Current year sales estimates are expecting 7.7% year-over-year growth to $11.2 billion and 10% earnings growth to $9.37 per share. HSY has been pumping out this kind of steady growth for decades. Earnings per share have grown at an impressive 11% annually over the last 15 years.

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Hershey stock was last seen trading at a one-year forward earnings multiple of 26x, which is in line with its 10-year median of 24x and above the industry average of 23x. HSY also offers a 1.7% dividend yield and has increased it by an average of 9% annually over the last five years.

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Meta Platforms

Meta Platforms (META - Free Report) is one of the best performing stocks in the market year-to-date. This performance follows one of the worst performances last year, when the stock was down nearly -80% in 2022. Meta has made significant cuts to its workforce over the last year to dramatically rein in costs and boost profitability.

This restructuring leaves META in an advantageous position, but it wasn’t until the stock got crushed that they decided to act. But now, as the economy enters an uncertain period, there is nothing better than stacking up free cash flow. Meta was one of the early technology companies to start prioritizing profits instead of growth in the last year, and many others have since followed suit.

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Meta boasts a Zacks Rank #1 (Strong Buy), indicating upward trending earnings revisions. Last quarter META beat earnings expectations by 42%, and next quarter is projected to beat by 7%.

Analysts have revised META’s earnings higher across all the timeframes. While the current quarter has seen a nice upgrade, the current year and next year are projected to be exceptional years for earnings growth. Because of the major restructuring, Meta’s next year earnings have been revised higher by 37% over the last 90 days.

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After trading as low as 10x one-year forward earnings last year, META has recently been seen trading at 20x one-year forward earnings. This is well below its 10-year median of 31x and the industry average of 45x.

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Conclusion

While many in the market are panicking, savvy investors are seeking out great deals. There may be more volatility to come in this market. Still, great companies will always be great companies. It is hard to go wrong with investing in companies with growing earnings and improving earnings estimates.

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