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5 Breakthrough Stocks Doubling S&P 500 Gains in 2020

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Urmimala Biswas
·6 min read
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The economy is likely to stabilize next year with global GDP expected to rise to the pre-pandemic level by end of 2021 per a December report by the Organisation for Economic Co-operation and Development (OECD). With most of the sectors showing signs of recovery on vaccine hopes, health policies and government financial support, this report is more or less in line with investor expectations.

As far as the U.S. economy is concerned, following a 3.7% dip in 2020 real GDP, there is estimated to be a 3.2% increase in 2021. This is a far better scenario compared to the U.K. and Euro area, which are only expected to see 4.2% and 3.6% increase in 2021 following a respective 11.2% and 7.5% decline in 2020. Given this backdrop, the U.S. economy looks like a safe bet for 2021.

Meanwhile, the ongoing saga surrounding the proposal of additional COVID-19 relief package has resulted in uncertainty. Many economists are of the view that approval of this additional stimulus is only possible if there is a hindrance in vaccine rollout, which will drag down economic growth in 2021. Some Wall Street economists have also expressed concerns about the huge time needed for widespread deliveries of the COVID-19 vaccines even if these are rolled out by December.

U.S. Economic Rebound in 2021

Though there is no clarity about the timing of a full recovery, market watchers are increasingly optimistic about a successful vaccine rollout by the end of 2020. According to them, even if it takes a few months for vaccine distribution, step-by-step immunization of high-to-low risk population might pave the way for full opening of the U.S. economy, leading to a V-shaped recovery.

For 2021, we expect product innovation and increase in M&A to facilitate growth of the economy on a whole. Technological advances have already changed the healthcare setting in a big way through the difficult months, and this change is expected to continue in 2021 with lot more invention in the pipeline. Further, the pandemic-led altered livelihood of the masses and their way of communication is expected to further result in higher data consumption, video streaming and use of IoT. Within real estate too, in the United States, the industrial leasing activity backed by e-retailing as well as project management activities for occupier clients are expected to hog the limelight next year.

In this regard we note that, in November, in the United States, notable job gains occurred in transportation and warehousing, professional and business services, and health care banking on continued resumption of economic activity. Going by the U.S. Bureau of Labor Statistics data, total nonfarm payroll employment improved 245,000 while unemployment rate edged down to 6.7%. This trend in fact aligns with the last few months, which too had demonstrated prominent recovery in the job market.

Start Betting Now

Keeping the positive momentum in mind, it will be prudent for investors to bet on stocks that have displayed brilliant performance when compared with the S&P 500 Index in 2020 so far. Needless to say, this market value-weighted index has been the perfect reflection of the U.S. stock market through 2020. Going by a Statista report, as of the end of Aug 2020, the S&P 500 index had lost 34% of its value due to the COVID-19 pandemic. However, in the latter part of the year, the index gradually started to achieve news highs on increasing hopes of the availability of vaccines.

This year so far, the S&P 500 has demonstrated an improvement of 14%.

5 Prominent Picks

With the help of our Zacks Stock Screener, we have shortlisted five stocks across the prospering sectors that have gone up at least 29% this year, more than doubling the S&P 500’s corresponding return. We have narrowed our search to the following stocks based on a good Zacks Rank and other relevant metrics. Each of our stock picks has a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

YTD Price Return Performance

Wayfair Inc. W: This leading online seller of home goods products is witnessing strong top-line growth over the past few months owing to the strengthening direct retail business across the United States and international regions. Additionally, expanding active customer base was a tailwind. This Zacks Rank #2 stock has risen more than 170% year to date. Its 2021 sales growth is expected to be 13.5%.

Qorvo Inc. QRVO: This is a leading provider of core technologies and radio frequency (RF) solutions for mobile, infrastructure and aerospace/defense applications.With the gradual reopening of the economy, the companyis witnessing robust improvement in the Infrastructure and Defense Products business. Solid uptake of Bulk Acoustic Wave (BAW) antenna-plexers is a positive. This Zacks Rank #1 stock has improved 36.2% year to date. Its fiscal 2022 earnings growth is expected to be 16.8%.

Williams-Sonoma, Inc. WSM: This Zacks Rank #1 stock is a multi-channel specialty retailer of premium quality home products. The company has a history of driving market share gains, supported by strong e-commerce websites, direct mail catalogs and retail stores, along with shipping fees received for the delivery of merchandise. The stock has risen more than 42% year to date. Its fiscal 2021 earnings growth is expected to be 69.2%.

Deere & Company DE: This world’s largest producer of agricultural equipment recentlyannounced a new operating model to provide more profitable and sustainable growth to customers while revolutionizing agriculture through the rapid introduction of technologies. This Zacks Rank #1 stock has surged over 46% year to date. Its fiscal 2021 earnings growth is expected to be 20.9%.

Hologic, Inc. HOLX: This leading provider of diagnostics, medical imaging systems and surgical products is showing continued growth in the core molecular diagnostics sub-segment. Robust demand for the company’s COVID-19-related products and ongoing recovery in other segments makes it worth betting on for solid gains in 2021. This Zacks Rank #1 stock has surged 46% year to date. Its fiscal 2021 earnings growth is expected to be 34.4%.

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Deere & Company (DE) : Free Stock Analysis Report
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Wayfair Inc. (W) : Free Stock Analysis Report
Qorvo, Inc. (QRVO) : Free Stock Analysis Report
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