- (0:30) - Secular Bull vs Secular Bear Market
- (8:40) - 3 signs We Are In A Secluar Bull Market
- (16:30) - Growth Stocks To Keep An Eye On: Top Stock Picks
- (24:00)- Episode Roundup: VRTX, ECOM, GFI, AU, DBX
Welcome to Episode #227 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, she’s going solo to discuss why this stock market continues to hit new highs despite the horrible headlines which include over 40 million unemployed, the coronavirus pandemic, and nationwide protests surrounding the murder of George Floyd.
It’s the difference between a secular bull, versus a secular bear, market.
Remember, a secular stock market indicates you’re looking at it for the long term, usually 5 to 20 years. Cyclical stock markets are defined by the shorter term, as in weeks or months.
A secular bull market is defined by a market that continues to hit new all-time highs over a long time period.
This market hit new all-time highs in 2007, and then tested that level again in 2013.
After it broke out in 2013, it never looked back, and has been hitting dozens of new highs in the years since.
We’re in year 7 of this secular bull market, which, historically, have averaged about 11 years.
Growth Beats Value in Secular Bulls
One sign you’re in a secular bull market is that growth stocks out perform value.
This happened in the late 1990s, at the end of the 1982-2000 secular bull, and it’s doing so right now.
Therefore, successful investors are seeing the best performance in the growth names.
Screening for the Best Growth Stocks
How do you find the best growth stocks right now with companies withdrawing guidance and earnings on the decline?
Screen for Zacks Rank #1 (Strong Buy) stocks. There are only about 240 of those out of over 4,000 companies.
Zacks #1 (Strong Buy) stocks are Zacks’ highest Rank. It should mean that the earnings estimates are on the rise, which, in 2020, is pretty rare.
Where are analysts raising their estimates right now?
Additionally, to get companies with a track record of growth, screen for a minimum of 20% historical earnings growth rate and a 20% or more projected earnings growth rate.
That means that there was growth in the past, and hopefully, there will be in the future.
The screen returned 18 stocks.
5 Strong Buy Growth Stocks to Buy Now
1. Vertex Pharmaceuticals VRTX is expected to growth earnings in 2020 by 65% and sales by 37%. In April, the drug company even raised full year 2020 revenue guidance, when most companies were cutting or withdrawing it completely. Impressive.
2. Channel Advisor ECOM is a small cap cloud-based e-commerce solutions company that operates on the subscription model. Earnings are expected to jump 62.5% in 2020. It also trades with a forward P/E of just 21, which gives it attractive valuations for a growth stock.
3. Gold Fields GFI is a South African gold miner expected to see earnings rise 31% this year and another 87% in 2021 as the price of gold rises. It trades with a forward P/E of only 14.2. You’ll also get a dividend, currently yielding 1.3%.
4. AngloGold Ashanti AU is another gold miner which is even cheaper than Gold Fields, with a forward P/E of just 12.7. Not only is AngloGold Ashanti a Zacks Rank #1, it also has Zacks Style Scores of A, the highest score, across all fields of Value, Growth and Momentum. Earnings are expected to jump 113% in 2020.
5. Dropbox DBX is a global collaboration platform that is hot on the Street. Earnings are expected to be up 48% in 2020 and another 21% in 2021. It has an attractive forward P/E for a growth stock of just 30.5.
What else should you know about secular bull markets and growth stocks?
Listen to this week’s podcast to find out.
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.
Today, See These 5 Potential Home Runs >>
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Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
Gold Fields Limited (GFI) : Free Stock Analysis Report
AngloGold Ashanti Limited (AU) : Free Stock Analysis Report
ChannelAdvisor Corporation (ECOM) : Free Stock Analysis Report
Dropbox, Inc. (DBX) : Free Stock Analysis Report
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