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After S&P 500's best month since 1987, two top performers could continue to rally

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Six of the worst-performing stocks have bounced hard this month

The S&P 500 just posted its best month since 1987.

Some of the hardest hit stocks led the charge — Halliburton, Royal Caribbean, Wynn Resorts, MGM, Lennar and Ulta Beauty are all sharply lower over the past three months but were among the top performers in April.

Gina Sanchez, CEO of Chantico Global, says these stock bounces could have something in common.  

"This is a bet on survival. And every single one of these companies that has done really well have managed to get their hands on either operational cash that they otherwise had or lay their hands on debt. So, look for example at Halliburton. Halliburton has cut back its capex spending plans in order to preserve cash," Sanchez said on CNBC's "Trading Nation" on Thursday.

Whether all these stocks can continue to outperform is another matter, she adds. There is one stock in the bunch that she says could make moves higher in May.

"The one that has the simplest path to survival is Ulta Beauty. Ulta Beauty simply needs the markets to open, the economy to open back up. Once the economy opens back up, this was a very strong company with a very strong economic moat and a strong story," she said. "Ulta, of this trash heap, actually probably looks the best."

Ulta ended 24% higher in April. Shares are down 21% over the past three months. 

Todd Gordon, managing director at Ascent Wealth Partners, has a different name on his watch list.

"One we do like is Lennar," he said during the same segment. "Homebuilding looks good from a fundamental point in the future, provided we don't have a second wave [of coronavirus]. Starting off, if we look at the monthly chart, really nice triple pop-up in Lennar — up around the $69 region."

Gordon adds that the low 10-year yield and the Federal Reserve holding rates lower for longer should support growth in homebuying and construction, a trend that will benefit Lennar stock.

"Lennar could be our comeback story," he said. "Forty percent of the business that Lennar does is first-time homebuyers. Maybe people will be buying houses."

Lennar surged 31% in April, though remains down 26% over the past three months. 

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