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5 Top Stocks to Buy as S&P 500 Nears an All-Time High

Tirthankar Chakraborty

The broader S&P 500, barring Tuesday’s setback, is quite close to an all-time high. The S&P 500 has rallied more than 50% since its March low and is now 1.8% off from its record high. The broader market index had hit a record at 3,386.15 on Feb 19, followed by a plunge of nearly 34% to a bear-market low of 2,237.40 on Mar 23.

 

It’s worth pointing out that the S&P 500’s recent recovery is on pace to be the fastest in history. This is because last time, the S&P 500 took 310 days to traverse from its Feb 9, 1966 low to a record high on May 4, 1967, per Dow Jones Market Data. On average, a recovery from a bear market to a record high generally takes 1,447 trading days.

 

Nonetheless, investors placed their bets on risky assets like stocks banking on hopes of a new coronavirus relief package as well as a vaccine along with encouraging economic data. What’s more, with the second wave of the virus coming under control and corporate earnings coming in much better than expected, the broader index is well poised to notch a record close in the coming days.

 

U.S. stocks are predominantly moving closer to a record high as investors are betting on a fresh round of government stimulus measures to pep up the economy battered by the COVID-19 pandemic. President Trump recently signed an executive order to expand the coronavirus relief package, extend weekly jobless bonus to $400 per week, provide a payroll tax holiday for Americans earning less than $100,000 per year and defer student loan payments this year.

 

On the vaccine front, Russia came up with positive news on a vaccine for COVID-19. Now, though the safety of the vaccine is in question, it has lifted sentiments and many are expecting more vaccines to come up by the end of this year.

 

Meanwhile, despite the coronavirus outbreak, job numbers, consumer outlays and manufacturing as well as service sector activities picked up in recent times, a tell-tale sign that most part of the economy has been able to sustain the blow of the pandemic.

 

In fact, coronavirus case count recently showed a declining trend. Only 13 U.S. states reported that their seven-day average of new cases in the last two-week period has moved up, down from 42 states having higher averages a month earlier.

 

And with cases declining steadily, we may well expect the economic as well as corporate earnings picture to improve steadily in the third and fourth quarter of this year. Notably, 2020 estimates may also move up.

5 Top-Performing S&P 500 Stocks to Buy Now

Given that the S&P 500 is close to its first record close in six months as hopes rise for U.S. economic stimulus and a COVID-19 vaccine, investing in some of the best-performing stocks from the index which are poised to gain further seems prudent. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

 

Best Buy Co., Inc. BBY is a multinational specialty retailer. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 11.6% over the past 60 days. The company’s expected earnings growth rate for the next five-year period is 8.2%. Its shares have gained 18.6% year to date.

 

Activision Blizzard, Inc ATVI is a leading developer and publisher of console, online and mobile games. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has risen 13.4% over the past 60 days. The company’s expected earnings growth rate for the next five-year period is 17.3%. Its shares have gained 33.2% so far this year.

 

DaVita Inc. DVA is a leading provider of dialysis services in the United States. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has climbed 9.3% over the past 60 days. The company’s expected earnings growth rate for the next five-year period is 9.5%. Its shares have gained 9% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Micron Technology, Inc. MU has established itself as one of the leading worldwide providers of semiconductor memory solutions. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved 13.6% north over the past 60 days. The company’s expected earnings growth rate for the next five-year period is 10.3%. Its shares have rallied 9.7% in the past three-month period.

 

PulteGroup, Inc. PHM engages in homebuilding and financial services businesses, primarily in the United States. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 44.9% over the past 60 days. The company’s expected earnings growth rate for the next five-year period is 9.4%. Its shares have gained 14.3% year to date.

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020? 

 

Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys. 

 

Access Zacks Top 10 Stocks for 2020 today >>


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Micron Technology, Inc. (MU) : Free Stock Analysis Report
 
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