Investors with an appetite for risks may find growth stocks attractive at present, taking into account the new highs touched by major U.S. stock market indexes recently.
After all, the much-anticipated partial trade agreement between the United States and China may be finalized soon, thanks to positive comments by Chinese officials earlier this week. In addition, investor optimism around the U.S. economy is also boosting the stock market.
Let us, thus, take a look at some growth stocks that could gain more from the recent rally in financial markets.
US-China’s Phase-One Trade Deal Appears Closer
Major stock indexes hit fresh new highs on Nov 18, marking a fifth consecutive day of record close. The gains were largely a result of investor optimism surrounding the possible signing of the first phase of the U.S.-China trade agreement.
Investors’ hoped were renewed after the Chinese state media outlet Xinhua said that vice premier Liu He had a telephonic conversation with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Nov 16. According to Xinhua, the discussions were “constructive.”
Needless to say, following this news, all the three major indexes rose. But this progress isn’t the only factor behind the recent stock market rally. A low-rate environment has been fuelling investor optimism as well.
Fed’s Low Rates Drove Away Recession Fears
The Fed’s decision to trim interest rates by 0.75 percentage points over the past three meetings since the beginning of this year has helped to a large extent in combating fears about an impending recession. Traders were highly skeptical of the country’s economic health, given that the major economies worldwide were witnessing a slowdown in growth.
But Fed’s decision to bring about a low-rate environment in the country has been a relief for both corporates and investors. Essentially, a low-rate environment means that companies could have easier access to receiving monetary aid from banks to maintain their infrastructure and operations.
Thus, the change in policy has also helped in boosting business confidence, which aided the yield curve in attaining a positive slope. The yield curve’s positive slope is contrary to the prediction of an economic recession.
Given the current bullishness, one could consider investing in growth stocks to get the best out of the market’s upward movement. We have selected four stocks that carry a Zacks Rank #1 (Strong Buy) and Growth Scoreof A or B.
PC Connection, Inc. CNXN is a provider of a broad range of information technology solutions. The company carries a Growth Score of A. The Zacks Consensus Estimate for PC Connection’s current-year earnings has risen 11.7% over the past 60 days. The stock has gained 72.7% year to date versus the S&P 500’s 23.3% growth. You can see the complete list of today’s Zacks #1 Rank stocks here.
TopBuild Corp. BLD is a company that engages in the installation and distribution of insulation and other building products. The company carries a Growth Score of A. The Zacks Consensus Estimate for TopBuild’s current-year earnings has risen 2.7% over the past 60 days.The stock has gained 142.1% year to date.
Cable One, Inc. CABO is the owner and operator of cable systems that provide data, video and voice services. The company carries a Growth Score of B. The Zacks Consensus Estimate for Cable One’s current-year earnings has risen 4.6% over the past 60 days.The stock has gained 85.1% year to date.
Fortinet, Inc. FTNT is a provider of broad, integrated and automated cybersecurity solutions. The company carries a Growth Score of B. The Zacks Consensus Estimate for Fortinet’s current-year earnings has risen 6.7% over the past 60 days. The stock has gained 47.4% year to date.
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