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Bull Market Set to Become Longest in History: 5 Picks

Swarup Gupta
The strength of the economy and the success of U.S. tech majors indicates that the rally isn't going to run out of steam.

On Aug 22, the current bull market will become the longest one ever. Yesterday, the S&P 500 touched a fresh all-time high, helping the current bull market match the longest one in history. The previous record period of gains extended from October 1990 to March 2000. A bullish economy and strong earnings performances have helped to fuel the rally over an extended period of time.

A recession seems unlikely at this time and the Fed is hiking rates at a measured pace. The strength of the domestic economy and the success of U.S. tech majors also indicate that the rally isn’t going to run out of steam any time soon. At this point, it makes sense to bet on some top-ranked S&P 500 stocks, which have delivered stellar price gains year to date.

S&P Soars from Bear Market Low

On Aug 22, the bull market will turn 3,453 days old. The rally began on Mar 9, 2009 when the S&P 500 closed at 666, its bear market low. From this point, the benchmark index has gained more than 300%. On Wednesday, it will be a day longer than the previous record-setting bull market, which lasted from October 1990 to March 2000, when the tech bubble exploded.

Almost no one could have imagined that the longest bull market in history would come immediately after the worst financial crisis since the Great Depression. Over this record-busting period, the S&P 500 has increased more than four times in price terms. It has also outperformed most of the major market benchmarks across the world.

Earnings, Economy Fuel Gains

The strength of the U.S. economy has been one of the major factors powering the current bull market. According to the Department of Commerce’s first estimate, U.S. GDP increased at a 4.1% pace in the second quarter. This is the sharpest pace of growth experienced since the 4.9% pace registered in the third quarter of 2014. (Read: U.S. Growth Hits Best Pace Since 2014: 5 Great Picks)

Further, earnings performances have been consistently spectacular, a point borne out by Q2 numbers. As of Aug 17, 2018, we had Q2 results from 467 S&P 500 members, or 93.4% of the index’s total market membership.

Total earnings for these 467 companies are up 25.5% from the same period last year on +9.9% higher revenues, with 79.2% of the companies beating EPS estimates and 72.8% surpassing revenue estimates. (Read: Strong Retail Sector Earnings Performance)

Our Choices

Even though a fresh market milestone will soon be achieved, the current market rally is unlikely to fade out any time soon. A strong economy and steady earnings growth continue to fuel the current bull market, which may soon create fresh milestones.

At this point, it makes sense to invest in top-ranked S&P 500 stocks, which have made spectacular price gains year to date. We have narrowed our search to the following stocks based on a Zacks Rank #1 (Strong Buy) and other relevant metrics. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amazon.com Inc. AMZN reported strong second-quarter earnings driven by robust performance of Amazon Web Services (AWS) and retail.

Amazon’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 36% over the past 30 days. The stock has gained 61.1% year to date.

W.W. Grainger, Inc. GWW is a leading North American distributor of material handling equipment, safety and security supplies, lighting and electrical products, power and hand tools, pumps and plumbing supplies, and various aftermarket components.

W.W. Grainger’s expected earnings growth for the current year is 39.9%. The Zacks Consensus Estimate for the current year has improved 0.2% over the past 30 days. The stock has gained 56.2% year to date.

Illumina, Inc. ILMN is a life sciences company, which provides tools and integrated systems for analysis of genetic variation and function.

Illumina’s projected growth rate for the current year is 35.2%. The Zacks Consensus Estimate for the current year has improved 11.1% over the past 30 days. The stock has gained 51.7% year to date.

NetApp, Inc. NTAP provides enterprise storage and data management software and hardware products and services.

NetApp’s expected earnings growth for the current year is 27.5%. The Zacks Consensus Estimate for the current year has improved 11% over the past 30 days. The stock has gained 48.1% year to date.

SVB Financial Group SIVB is a diversified financial services company. Incorporated in 1999, the company operates through, among others, the Silicon Valley Bank, its primary subsidiary, providing a wide range of banking and financial products and services.

SVB Financial Group’s expected earnings growth for the current year is 73.4%. The Zacks Consensus Estimate for the current year has improved 6.7% over the past 30 days. The stock has gained 40.7% year to date.

More Stock News: This Is Bigger than the iPhone!                   

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NetApp, Inc. (NTAP) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
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