The coronavirus pandemic has wrecked havoc globally, halting business activities and inversing stock market rally since the beginning of this year. After several rounds of financial stimulus and monetary easing by the government and the Federal Reserve along with series of lockdowns to contain the health scare, the economy has shown signs of rebound.
On Aug 28, the Dow erased it’s year-to-date loss, closing at 28,653.87, while the S&P 500 and the Nasdaq hit an all-time closing high and are up 8.6% and 30.4%, respectively, so far this year.
Economic Data Supports Growth
Per the Bureau of Economic Analysis’ report on Aug 28, consumer spending increased 1.9% in July, beating the consensus estimate of 1.7%. The parameter has moved up despite rise in new coronavirus cases that made several states close down stores and businesses.
The bureau also reported that personal income turned positive, increasing 0.4% in July against the 1% slump in June and a consensus estimate of 0.3% decline. Additionally, the University of Michigan reported its August consumer sentiment index at 74.1 versus a preliminary reading of 72.8 and 72.5 in July. These data definitely point toward consumers’ health and rebound in the U.S. economy.
Another sector supporting the U.S. economy currently is the housing space. Per the Commerce Department data, new home sales rose 13.9% in July to a seasonally adjusted annual rate of 901,000 units. Additionally, National Association of Realtors reported on Aug 28 that pending home sales jumped 5.9% to 122.1 in July.
With new home sales hitting a 13-year high and other housing data moving northward, it looks like the housing market is sizzling with opportunities. In fact, per the monthly NAHB/Wells Fargo Housing Market Index, builder confidence for newly-built single-family homes surged to 78 points in August from 72 in July. The reading was the highest in the 35-year long history of the index and matches the December 1998 record.
COVID-19 Vaccine Progress
As several companies now march toward phase-3 trials, the FDA said it could consider emergency authorization to a vaccine before the completion of phase-3 human trials, in order to make coronavirus vaccine available to Americans this year itself. FDA commissioner Dr Stephen Hahn said that it was up to the vaccine developers to apply for approval before phase-3 trials were over.
Positive news on the vaccine development front boosts investors’ sentiments and helps stocks rally. So far, Moderna’s mRNA-1273 has induced consistently high levels of neutralizing antibody titers in all participants, in young adults and older. In fact, this vaccine candidate of Moderna and National Institutes of Health (NIH) is one of the eight vaccines that are undergoing phase-3 human trials.
Fed Extends Support With Average Inflation Targeting
Post the Federal Reserve’s latest meeting on Aug 27, Chairman Jerome Powell said that the central bank has formally agreed to a policy of average inflation targeting. According to the policy, central banks will let inflation run “moderately” above its 2% goal for the time being, facilitating economic recovery. In the virtual Jackson Hole symposium Powell said that the new strategy is to keep rates unchanged or low for a long period and in turn support the economy by lifting inflation and returning the economy to full employment.
5 Stocks to Buy
Given the positive developments in coronavirus vaccine trials and the rebound in the U.S. economy, we have shortlisted five stocks that are poised to grow. These stocks flaunt a Zacks Rank #1 (Strong Buy) and carry a Momentum Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
At Home Group Inc. HOME operates home decor superstores. The company’s expected earnings growth rate for the current year is more than 100% compared with the Zacks Retail – Home Furnishings industry’s estimated earnings growth of 18.7%. The Zacks Consensus Estimate for its current-year earnings has climbed more than 100% over the past 60 days.
Dycom Industries, Inc. DY provides specialty contracting services. The company’s expected earnings growth rate for the current year is 7.5% against the Zacks Building Products – Heavy Construction industry’s estimated earnings decline of 6%. The Zacks Consensus Estimate for its current-year earnings has risen20.8% over the past 60 days.
Aspen Technology, Inc. AZPN provides asset optimization solutions. The company’s expected earnings growth rate for the current year is 36.8% compared with the Zacks Computer – Software industry’s estimated earnings growth of 0.5%. The Zacks Consensus Estimate for its current-year earnings has climbed 37.6% over the past 60 days.
Emergent BioSolutions Inc. EBS is a life sciences company, focusing on the provision of specialty products to civilian and military populations. The company’s expected earnings growth rate for the current year is more than 100% compared with the Zacks Medical – Biomedical and Genetics industry’s estimated earnings growth of 12.7%. The Zacks Consensus Estimate for its current-year earnings has moved up83.2% over the past 60 days.
DICK’S Sporting Goods, Inc. DKS operates as a sporting goods retailer. The company’s expected earnings growth rate for the current year is 2.7% against the Zacks Retail – Miscellaneous industry’s estimated earnings decline of 9.4%. The Zacks Consensus Estimate for its current-year earnings has climbed more than 100% over the past 60 days.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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