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5 Stocks From Top-Ranked Industries Ready to Explode in 2018

Zacks Equity Research

Overall, 2017 proved to be a great year for the U.S. stocks, buoyed by rebounding of the domestic economy. President Trump’s promise to spur economic growth through tax cuts, lighter regulations and infrastructure spending has been successful in making investors bullish about the stocks. This can be observed from the S&P 500’s rally of nearly 19.7% so far this year.

The United States' trade plans with emerging countries are likely to favor domestic companies.

Additionally, the implementation of tax legislation is anticipated to stimulate the market with more job creation and rise in inflation rate. Following the massive cuts in tax rates (from 35% to 21%) for the U.S. businesses, companies in various sectors are poised to benefit immensely. Also, the tax repatriation provision will allow the tech, drug and biotech companies, with global operations, to bring back trillions of dollars held as cash reserve overseas, in turn boosting the firms’ financial health.

Thus, among others, rise in household spending, improving rate environment and increase in business activities are expected to drive economic growth further in 2018. This will automatically benefit the market as all the sectors are expected to reap benefits from the improving macro conditions. Notably, on the verge of entering 2018, the economy seems to moving in the right direction.

Stocks to Bet on

Each sector has some stocks which have the potential to meet investors’ expectations in 2018. Using the Zacks Stock Screener, we looked for stocks that belong to the top-ranked industries. Our back-testing shows that the top 50% of the Zacks ranked industries outperforms the bottom 50% by a factor of more than two to one.

Next, we zeroed in on stocks with a Growth Score of A or B and Zacks Rank #1 (Strong Buy) or 2 (Buy). This combination increases the probability of higher returns. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lastly, with 2018 in focus, we targeted the companies whose Zacks Consensus Estimate for earnings in next year have been raised by more than 1%, over the last four weeks.

Here are stocks that met the criteria:

NVIDIA Corporation NVDA: Based in Santa Clara, CA, the company is a leader in visual computing technologies and the inventor of the graphic processing unit. Its sustained efforts toward attaining robust position in several emerging industries such as Artificial Intelligence, deep learning and driverless cars industry, make us optimistic about its growth prospect.

Shares of NVIDIA have gained 85% year to date, substantially outperforming the 46.5% rally of the industry it belongs to.

Zacks Industry Rank: Top 2%
Zacks Rank: 1
Growth Score: B
Projected EPS Growth (F2): 18.8%

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The Toro Company TTC: Headquartered in Bloomington, MN, the company is a leading worldwide provider of innovative solutions for the outdoor environment, including turf, snow and ground engaging equipment and irrigation and outdoor lighting solutions.

Shares of the company have gained 16% so far this year, outperforming the 7.1% rally of the industry it belongs to.

Zacks Industry Rank: Top 2%
Zacks Rank: 2
Growth Score: A
Projected EPS Growth (F2): 1.8%

Callaway Golf Company ELY: Carlsbad, CA-based Callaway Golf holds a key position in the industry.It designs, manufactures, and sells golf clubs, golf balls, golf bags, and other golf-related accessories worldwide.

Shares of the company have gained 37.4% year to date, outperforming the industry’s rally of 20.2%.

Zacks Industry Rank: Top 5%
Zacks Rank: 2
Growth Score: A
Projected EPS Growth (F2): 15.7%

Entegris ENTG: Headquartered in Billerica, MA, the company provides materials management solutions to the microelectronics industry including the semiconductor manufacturing and disk manufacturing markets worldwide.

Shares of the company have gained 69.8% year to date, outperforming the 35.6% rally of the industry it belongs to.

Zacks Industry Rank:Top 6%
Zacks Rank: 1
Growth Score: A
Projected EPS Growth (F2): 12.9%

Winnebago Industries WGO: Forest City, IA-based Winnebago is a leading producer of recreational vehicles in the United States. It has been manufacturing RVs for more than 50 years.

Shares of the company have gained 82.3% year to date, outperforming the 55.5% rally of the industry.

Zacks Industry Rank: Top 1%
Zacks Rank: 1
Growth Score: B
Projected EPS Growth (F2): 10.9%

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Entegris, Inc. (ENTG) : Free Stock Analysis Report
 
Winnebago Industries, Inc. (WGO) : Free Stock Analysis Report
 
Callaway Golf Company (ELY) : Free Stock Analysis Report
 
Toro Company (The) (TTC) : Free Stock Analysis Report
 
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
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