Spring is officially here, making it not just the time to clean your closet but also your portfolio.
Financial and energy-oriented stocks usually perform better than the broader market this warmer season. At the same time, spring breaks are great for family vacations and trips, working its magic on leisure and travel stocks.
How Will the Stock Market Perform?
Investors are baffled over conflicting reports on U.S.-China trade negotiations. A Bloomberg news report stated that U.S. officials are concern over China pushing back against U.S. demands for concessions in bilateral trade talks. Chinese officials said that they haven’t received any assurance that the tariffs imposed on $200 billion worth of Chinese goods would be lifted in exchange of Beijing promising to protect intellectual property rights and buying a significant number of American products.
Meanwhile, the Wall Street Journal reported that both the world’s largest economies are in the final stages of negotiations with U.S. Representative Robert Lighthizer and Secretary of Treasury Steven Mnuchin expected to fly to Beijing next week. Nonetheless, a U.S.-China trade deal is much required, or else corporate profits will get squeezed to an excruciating extent.
On the brighter side though, the domestic economy is in sound shape and that should surely provide the required impetus to stocks this spring season. Consumers’ assessment of current conditions improved and expectations about the future strengthened, indicating sturdy economic growth. In fact, consumer confidence bounced back in February on a healthy labor market and an end to the U.S. government’s longest shutdown in history. Trump’s business-friendly policies including tax cuts and repealing regulations will also add to stock market gains. Needless to say, we are heading into April which has been traditionally good for stocks.
Financials & Energy Tend to Outpace
While the spring season bodes well for the broader market, financial and energy sectors have traditionally performed even better. Per CNBC.com, these sectors have given a staggering return of around 20% over the past 11 spring seasons, while the S&P 500 managed an average gain of around 5%.
This time around it won’t be any different. The Fed hiking rates last year has created a positive environment for investors in the financial sector, helping financial shares gain traction. After all, higher the rates, the wider the spread and the bigger the profit margins, especially for banks and credit card companies.
Energy companies, in the meantime, notched significant gains recently after the price of U.S. crude oil closed above the $59 a barrel for the first time since last November. And it’s all because of global oil producers other than the United States agreeing to put a lid on output.
Travel & Leisure Activities Increase in Warm Weather
With the advent of spring, many spend time on outdoor activities and travel is much on their minds. After all, very few can travel in the harsh winter months. Thus, stocks related to the travel and leisure sector will do well.
Needless to say that U.S. consumer sentiment rose at the beginning of this month, as households felt more optimistic about the economy than they did at the start of the year. An uptick in consumer sentiment generally leads to a rise in outlays, eventually benefiting companies related to travel and leisure activities.
5 Stocks to Buy This Spring
If you are looking for some solid stocks to buy this spring, look no further. Here are five to consider from the aforesaid sectors. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Atlantic Capital Bancshares, Inc. ACBI operates as the holding company for Atlantic Capital Bank, N.A. that provides commercial banking products and services in the United States. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings moved up 4.6% in the past 60 days. The company’s expected earnings growth rate for the current year is 26.9%, more than the Banks - Northeast industry’s projected gain of 9.5%. The company has outperformed the industry in the past three-month period (+17.9% vs +17.3%).
Murphy Oil Corporation MUR operates as an oil and gas exploration and production company. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings soared more than 200% in the past 60 days. The company’s expected earnings growth rate for the next year is 55.8%, more than the Oil and Gas - Exploration and Production - United States industry’s projected rise of 22.6%. The company has outperformed the industry in the past three months (+28.8% vs +17.1%).You can see the complete list of today’s Zacks #1 Rank stocks here.
SkyWest, Inc. SKYW operates a regional airline in the United States. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings moved up 5.1% in the past 60 days. The company’s expected earnings growth for the current quarter is 17.5%, in contrast to the Transportation - Airline industry’s projected decline of almost 45%. The company has outperformed the industry in the past three months (+19.6% vs +8.7%).
Hilton Worldwide Holdings Inc. HLT owns, leases, manages, develops, and franchises hotels and resorts. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings moved up 21.3% in the past 60 days. The company’s expected earnings growth rate for the current year is 34.8%, more than the Hotels and Motels industry’s estimated rise of 12.2%. The company has outperformed the industry in the past three-month period (+28.9% vs +23.2%).
RCI Hospitality Holdings, Inc. RICK engages in the hospitality and related businesses in the United States. The company owns and/or operates upscale adult nightclubs as well as restaurants and sports bars. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings moved up 2.1% in the past 60 days. The company, which is part of the Leisure and Recreation Services industry, is expected to record earnings growth of 10.1% in the current year. The company has outperformed the industry in the past two years (+33.9% vs +6.2%).
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
Click here to see these breakthrough stocks now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
Atlantic Capital Bancshares, Inc. (ACBI) : Free Stock Analysis Report
Hilton Worldwide Holdings Inc. (HLT) : Free Stock Analysis Report
RCI Hospitality Holdings, Inc. (RICK) : Free Stock Analysis Report
Murphy Oil Corporation (MUR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research