Major Indexes Set to Surpass 2013 Returns This Year: 5 Picks

While Wall Street has performed remarkably in 2019, the last month is looking even more spectacular buoyed by strong economic data, especially labor market data. Following the news of November non-farm payrolls and related data on Nov 7, all the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — posted the best daily percentage gain since Oct. 4, Oct 15 and Nov 1, respectively.

Indexes at Striking Distance of 2013 Highs

Notably, the three major indexes are currently at a striking distance from their yearly gains in 2013, which was the best year for Wall Street after the great recession. Year to date, the Dow, the S&P 500 and the Nasdaq Composite — have rallied 20.1%, 25.5% and 30.5%, respectively. In 2013, these indexes returned a respective 26.5%, 29.6% and 38.3%.

At present, economists and financial researchers are busy predicting whether major indexes will set new yearly highs this year or not.

Generally, December remains a good month for stock investors. Holiday sales usually pick up this month. Per the National Retail Federation (NRF), holiday retail sales are projected to rise 3.8% to 4.2% year over year to a total of $727.9 billion to $730.7 billion.

More importantly, the recently published jobs data for November, showed the robustness of the U.S. economy even after 11 years of expansion. The United States added 266,000 jobs last month compared with the consensus estimate of 188,000. The unemployment rate stayed at 3.5%, reflecting a 50-year low level. Inflation rate remained below the Fed’s targeted 2% rate. Moreover, durable goods data for October indicated a possible bottoming out of business spending downturn.

Finally, the central bank cut benchmark interest rate by 75 basis points in 2019 and indicated a stable monetary policy in the near future.

Tarde Dispute May Result in Market Volatility

The phase-one deal between the United States and China needs to be signed by Dec 15, which the U.S. government set to impose a new round of tariff on $160 billion of Chinese goods. The Trump administration can also raise the tariff rate on $250 billion of Chinese goods already under the U.S. tariff. On Nov 29, Reuters reported that the U.S. government may expand its power to stop more foreign shipments of products with U.S. technology to China’s telecom giant Huawei Technologies.

Our Top Picks

At present, Wall Street seems unstoppable despite any concrete resolution to the more-than-a-year-old U.S.-China trade conflict. Will a Santa rally push stock indexes to finish the year with record high gains?

At this stage, we narrowed down our search to five stocks each of which are members of at least one major index. These stocks have skyrocketed in 2019 and still have a lot of potential. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows price performance of our five picks year to date.

Target Corp. TGT operates as a general merchandise retailer in the United States. It offers beauty and household essentials, food assortments, including perishables, dry grocery, dairy, and frozen items; and apparel, accessories, home décor products, electronics, toys, seasonal offerings, and other merchandise.

The company’s expected earnings growth rate for the current fiscal year (to end in January 2020) is 18.4%. The Zacks Consensus Estimate for the current fiscal year has improved 3.6% over the last 30 days. The Zacks #1 Rank stock has jumped 89.2% year to date.

Copart Inc. CPRT provides online auctions and vehicle remarketing services. It offers a range of services for processing and selling vehicles over the Internet through its Virtual Bidding Third Generation Internet auction-style sales technology to vehicle sellers, insurance companies, banks and finance companies, charities, and fleet operators and dealers, as well as for individual owners.

The company’s expected earnings growth rate for the current fiscal year (to end in July 2020) is 23.1%. The Zacks Consensus Estimate for the current fiscal year has improved 5.7% over the last 30 days. The Zacks #1 Rank stock has jumped 85.4% year to date.

Applied Materials Inc. AMAT provides manufacturing equipment, services, and software to the semiconductor, display and related industries. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets.

The company’s expected earnings growth rate for the current fiscal year (to end in October 2020) is 24%. The Zacks Consensus Estimate for the current fiscal year has improved 14.6% over the last 30 days. The Zacks #1 Rank stock has soared 72.9% year to date.

Microsoft Corp. MSFT is one of the largest broad-based technology providers in the world. Although software is the most-important revenue source, its offerings also include hardware and online services. Microsoft has a dominant position in the desktop PC market, with its operating systems being used in the majority of PCs worldwide.

The company’s expected earnings growth rate for the current fiscal year (to end in June 2020) is 12.6%. The Zacks Consensus Estimate for the current fiscal year has improved 2.1% over the last 30 days. The Zacks #2 Rank stock has surged 49.4% year to date.

QUALCOMM Inc. QCOM designs, develops, manufactures and markets digital communication products worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), and Qualcomm Strategic Initiatives (QSI).

The company’s expected earnings growth rate for the current fiscal year (to end in September 2020) is 16.4%. The Zacks Consensus Estimate for the current fiscal year has improved 0.5% over the last 30 days. The Zacks #1 Rank stock has surged 47.3% year to date.

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Click to get this free report QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report Microsoft Corporation (MSFT) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Applied Materials, Inc. (AMAT) : Free Stock Analysis Report Copart, Inc. (CPRT) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research