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5 Top-Ranked Winners of Wall Street Since the Pandemic Trough

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Nalak Das
·7 min read
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It has been a year since Wall Street plunged to the lowest level during the pandemic on Mar 23, 2020. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — had witnessed a strong rally till mid-February 2020. After that, the outbreak of the deadly novel coronavirus had a devastating impact on Wall Street and stock markets across the world.

The above-mentioned three major stock indexes plunged 32-36% within a month, entering bear territory and hitting the lowest point on Mar 23. At this stage, unprecedented fiscal and monetary support injected by the then Trump administration and the Fed helped revive the U.S. economy, resulting in a V-shaped recovery.

The three major stock indexes exited bear territory in the first week of April, ending Wall Street's lowest-duration bear market. The new bull market has maintained its momentum barring some fluctuations in September and October. From Mar 23, 2020 to Mar 23, 2021, the Dow, the S&P 500 and the Nasdaq Composite have railed 78%, 78.4% and 99.5%, respectively.

A number of stocks skyrocketed during this period. However, a handful of those stocks with a favorable Zacks Rank have strong potential for 2021. Expectations of solid business growth of these companies combined with their favorable Zacks Rank make these stocks lucrative from an investor point of view.

A Paradigm Shift in Stock Investing During Pandemic

With the outbreak of coronavirus, most of the nations along with the United States imposed full or partial lockdowns to maintain social distancing and curb the spread of the infection. The imposition of severe restrictions on business as well as day-to-day individual activities completely changed investment patterns.

Investors quickly dumped cyclical stocks from sectors like consumer discretionary, materials, financials, industrials, oil and energy and transportation. Instead companies that offered products useful for work from home like video conferencing, gaming, online retailers and consumer staples gained priority.

The technology sector turned out to be the savior of the stock markets. Technology is generally recognized as a growth-oriented sector. In this regard, the sector should have borne the maximum brunt of global economic devastation caused by an unprecedented health hazard.

However, the inherent strength of the technology sector owing to the need for high-tech digitization globally helped it to witness an astonishing rally during the pandemic, which prompted several economists and financial experts to call this sector the new safe-haven. The technology sector helped Wall Street to exit bear market and to form a new bull market.

Shift in Investing as Economy Reopens

The stock investment pattern has changed systematically in 2021 due to several reasons. The government has intensified nationwide deployment of COVID-19 vaccines and the three FDA approved vaccine manufacturers have ramped up productions. With the possibility of faster-than-expected reopening of the U.S. economy, the focus has once again shifted to cyclical stocks.

On Mar 19, the Wall Street Journal reported that, U.S. restaurant and hotel bookings, as well as air ticket sales, have increased considerably in the month. Americans are spending more on gyms, salons and spas in recent weeks than they have since the start of the pandemic.

Several research firms have estimated that U.S. citizens had a staggering $1.5 - $1.8 trillion in savings at the end of 2020 that could climb to $2.4 trillion by mid-2021 due to lockdown-led restrictions. This will enable U.S. consumers to realize their pent-up demand.

Moreover, per the new $1.9 trillion coronavirus-aid package of the Biden administration, eligible U.S. citizens will receive a $1,400 check payment in addition to $1,400 for any dependent. Moreover, the extra amount in unemployment benefits of $300 a week will be available till Sep 6. The fresh stimulus is likely to significantly boost consumer confidence.

Our Top Picks

We have narrowed down our search to five large-cap stocks (market capital > $10 billion) that have skyrocketed more than 150% in the past year. These stocks have strong growth potential for 2021 and have seen robust earnings estimate revisions in the past seven to 30 days. Each of our picks carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks in the past year.

L Brands Inc. LB operates as a specialty retailer of women's intimate and other apparel, personal care, and beauty and home fragrance products. It operates in three segments: Victoria's Secret, Bath & Body Works, and Victoria's Secret and Bath & Body Works International.

The company has an expected earnings growth rate of 26.9% for the current year (ending January 2022). The Zacks Consensus Estimate for its current-year earnings has improved 2.9% over the past seven days. The stock price has soared 527.3% in the past year.

Align Technology Inc. ALGN is a medical device company that designs, manufactures and markets Invisalign clear aligners and iTero intraoral scanners and services for orthodontists and general practitioner dentists and restorative and aesthetic dentistry. It operates in two segments, Clear Aligner, and Scanners and Services.

The company has an expected earnings growth rate of 73.9% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 0.4% over the past 30 days. The stock price has jumped 277.1% in the past year.

Diamondback Energy Inc. FANG is an independent oil and natural gas company focusing on the acquisition, development, exploration and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 18.8% over the past 30 days. The stock price has climbed 261.7% in the past year.

The Mosaic Co. MOS produces and markets concentrated phosphate and potash crop nutrients in North America and internationally. It operates through three segments: Phosphates, Potash and Mosaic Fertilizantes.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 54.2% over the past 30 days. The stock price has appreciated 231.3% in the past year.

Capital One Financial Corp. COF is primarily focused on consumer and commercial lending as well as deposit origination providing various financial products and services in the United States, the United Kingdom, and Canada. It operates through three segments: Credit Card, Consumer Banking and Commercial Banking.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 0.3% over the past 30 days. The stock has advanced 185.7% in the past year.

Time to Invest in Legal Marijuana

If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.

After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%

You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.

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Capital One Financial Corporation (COF) : Free Stock Analysis Report

Align Technology, Inc. (ALGN) : Free Stock Analysis Report

L Brands, Inc. (LB) : Free Stock Analysis Report

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