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Bull Market Approaches 10-Year Mark: 5 Winners

Tirthankar Chakraborty

The great bull market is on the verge of celebrating its 10th anniversary by the end of this week. Its expiration was foreseen in December, but, an array of positive developments propelled stock prices northward yet again. The United States and China are nearing a deal, stabilized interest rates and rising consumer confidence are certainly providing the required momentum to stocks. Needless to say, March has historically been a great month to buy equities.

This calls for investing in some rock-solid stocks that have not only outperformed in the current bull market but also have scope to scale higher.

US and China Are Close to a Trade Deal

Both Beijing and Washington near a deal that could lift almost all U.S. tariffs on $200 billion worth of Chinese goods as long as China promises to protect intellectual property rights and buy significant number of American products. By the way, the United States has made it clear that China shouldn’t bring World Trade Organization cases in response to U.S. tariffs, according to people familiar with the negotiations.

Zhang Yesui, a spokesman for the National People’s Congress, recently told reporters in Beijing that U.S. and Chinese officials “have conducted fruitful and intensive consultations and made important progress on many issues of common concern.”

Such a positive update, no doubt, encouraged Wall Street. After all, several companies have been concerned that the trade war has been affecting revenues and eating into their profit margins.

A Dovish Fed

Remember, fears over gradual rate hikes by the Fed resulting in an imminent recession were among the primary factors that dragged the markets down last December. However, recently, the Fed did say that they will be “patient” with further rate hikes this year.

With less than three weeks to go before the FOMC’s next meeting scheduled on Mar 20, the CME Fed Watch tool shows that the probability of rates remaining unchanged at 225 to 250 basis points or 2.25%-2.50% is 98.7%.

Fed’s dovish stance helped the broader market chug along. And why not? Hike in rates increases the cost of lending money from financial institutions for small and medium business houses. This in turn could harm their businesses.

Consumer Confidence Rebounds

Things are also looking up on the economic front as well. 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.

According to the Conference Board, the consumer confidence index climbed to 131.4 this month from a revised 121.7 in January. The key economic indicator that measures attitudes on future economic prospects exceeded analysts’ expectations of a 124.7 reading and has rebounded after three straight months of declines.

Consumers’ optimism was largely driven by strength in the labor market. According to the Bureau of Labor Statistics, the economy added 304,000 new jobs in January, exceeding analysts’ estimates of around 172,000.

December’s job additions, in the meanwhile, were revised down from 312,000 jobs to 222,000, while November’s rose from 176,000 to 196,000. Nonetheless, the average for the last three months is now 241,000 jobs, marking one of the best stretches during an economic expansion dating back nine-and-a-half years ago. By the way, employment gains in 2018 turned out to be the strongest in the last three years.

Top 5 Gainers

Courtesy of possibilities of a U.S.-China trade deal, a dovish Fed and more confident Americans, we are about to experience a 10-year bull run this March. In fact, March has been the second strongest month for stocks both over the past 10 and 20 years period, per LPL Financial Research.

Banking on such positives, we have selected five solid stocks that have outdone in the current bull market and have scope to gain further. Lest we forget, investors who have been riding this bull market have reaped some impressive returns during that time. The S&P 500, for instance, has soared an incredible 312%.

Nonetheless, the stocks that are selected flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

eGain Corporation EGAN operates as a software-as-a service provider of customer engagement solutions. The Zacks Consensus Estimate for its current-year earnings has moved up 137.5% in the past 60 days. The company’s expected earnings growth rate for the current year is 216.7%, way more than the Internet - Software industry’s projected gain of 11.8%. The company has given a superb return of 2,140% in the past 10 years.

Shoe Carnival, Inc. SCVL operates as a family footwear retailer in the United States. The Zacks Consensus Estimate for its current-year earnings has moved up 1.7% in the past 60 days. The company’s expected earnings growth rate for the current year is 62.4%, higher than the Retail - Apparel and Shoes industry’s projected gain of 10.6%. The company has given a whopping return of 390% in the past decade.

Kirkland Lake Gold Ltd. KL engages in the exploration and development of gold properties. The Zacks Consensus Estimate for its current-year earnings has moved 12.1% north in the past 60 days. The company’s expected earnings growth arte for the current quarter is 56%, in contrast to the Mining - Gold industry’s estimated decline of 723.5%. The company has yielded a stellar return of 355% in the past decade.

Griffon Corporation GFF engages in home and building products, and defense electronics businesses. The Zacks Consensus Estimate for its current-year earnings has moved 10.9% north in the past 60 days. The company’s expected earnings growth rate for the current year is 34.2%, more than the Diversified Operations industry’s projected gain of 3.2%. The company has given a promising return of 106% in the past 10 years.

DSW Inc. DSW operates as a branded footwear and accessories retailer in the United States. The Zacks Consensus Estimate for its current-year earnings has moved up 2.3% in the past 90 days. The company’s expected earnings growth rate for the current year is 16.5%, more than the Retail - Apparel and Shoes industry’s estimated gain of 10.6%. The company has given a solid return of 447.4% in the past decade.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.

This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.

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eGain Corporation (EGAN) : Free Stock Analysis Report
 
Shoe Carnival, Inc. (SCVL) : Free Stock Analysis Report
 
DSW Inc. (DSW) : Free Stock Analysis Report
 
Kirkland Lake Gold Ltd. (KL) : Free Stock Analysis Report
 
Griffon Corporation (GFF) : Free Stock Analysis Report
 
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