Animal spirits are back with our market racing to a more than two-month high as it chalks up its fourth consecutive trading day of gains.
The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is advancing 0.5% during lunch time trade and if it finishes at this level, it would have put on 2.7% since last Tuesday.
I think the market is heading higher and investors should be positioning for the seasonal end-of-year market rally.
Wondering what stocks you should buy? There are two stocks that brokers believe are well placed to outperform.
The first is copper producer OZ Minerals Limited (ASX: OZL) and investors shouldn't be put off by the fact that the stock has already surged 36% in the last four weeks.
If anything, OZ Mineral's solid quarterly production update on Friday has prompted UBS to upgrade the stock to "buy" from "neutral" as the broker suspects the miner will achieve the upper end of management's recently upgraded guidance for 2015 or even beat that.
OZ Minerals is expecting to produce 126,000 to 131,000 tonnes of copper in this calendar year thanks to a record run of production in the last three quarters, which was its best in the past five years.
Management had been only aiming to produce 110,000-120,000 tonnes before and that isn't the only good news it pulled from its hat.
OZ Minerals also lowered its cost guidance to US70-US80 cents a pound from US80-US95 cents a pound, and the news has prompted Credit Suisse, which is one of the most bullish brokers on the stock, to upgrade its price target even further to $4.75 from $4.50 a share.
Credit Suisse reiterated its "outperform" rating on the stock.
Another stock to put on your list is Aconex Ltd (ASX: ACX) as Morgan Stanley is tipping a 70%-80% chance of the stock rising in the next 60 days.
The broker believes that the company, which makes cloud-based collaboration software for the construction industry, will post first quarter cash flows that will surprise on the upside.
That may be the needed catalyst to push the stock higher as it is hovering just under its record high of $4.80 that it hit a week ago.
The stock has been on a tear since it listed in December last year and has surged 163% since, putting Aconex on a consensus forecast price-earnings multiple of 63x.
That is a very lofty premium but the market is expecting Aconex's earnings to grow several folds over the next few years following the company releasing a better than expected inaugural full year earnings result in August.
Further, Aconex is expected to deliver a maiden profit in the current financial year, and based on research that I have done, 70% of stocks that post a maiden profit (assuming the profit is sustainable) tend to outperform the market in the 12 months following their profit results.
This means Aconex's golden run may yet continue for a while yet.
