Wall Street is witnessing an impressive rally since Mar 23, when the three major stock indexes touched the lowest level after entering the bear market territory on Mar 11. An unprecedented $8 trillion fiscal and monetary stimulus injected by the U.S. government and the Fed to fight the coronavirus-led economic disaster boosted investors' sentiment to a large extent. Several Eurozone countries, Japan and the leading emerging market economies also provided $7-8 trillion of stimulus packages.
Wall Street Witnessing Impressive Rally
On Apr 17, the Dow closed above 24,000 for the first time since Mar 10. This was the blue-chip index's third positive close in the last four days. The S&P 500 also closed positively in three out of the last four days while the Nasdaq Composite registered its fifth positive day in the last six trading sessions.
Notably, from Mar 23 to Apr 17, the Dow, the S&P 500 and the Nasdaq Composite rallied 33.1%, 31.2% and 30.4%, respectively. For the week ended Apr 17, all three indexes posted their third positive weeks in the last four. In fact, the Dow recorded its two best consecutive weekly performances since 1938.
Two Positive Developments
In April, the most vital news is that recent data exhibits a slowing down of the deadly virus. Although the death toll continues to rise, the curves related to hospitalization, intensive-care check-ins and intubations are flattening. All these metrics are indicating that new cases are slowly decreasing.
Consequently, the U.S. economy, at least a large number of states, is expected to open in early May. On Apr 16, President Donald Trump issued the 18-page plan for “Opening Up America Again.” The draft detailed the conditions and areas suitable for people to return to work. Though the governor's of the states will take the final decision about reopening the respective economy, Trump expects around 29 states to return to normalcy before the end of this month.
On Apr 16, STAT News reported that the University of Chicago’s phase 3 clinical trial data of the drug Remdesivir for the treatment of COVID-19 showed encouraging results. The study found that most of the patients treated with remdesivir had “rapid recoveries in fever and respiratory symptoms” and were discharged in less than a week.
Momentum Likely to Continue
The Dow, the S&P 500 and the Nasdaq Composite plummeted 38.4%, 35.4% and 32.6%, respectively from their all-time highs recorded in mid-February to the lowest level on Mar 23. With this turmoil, the valuation of several good stocks — popularly called the jewels of Wall Street — also plunged.
The Dow, the S&P 500 and the Nasdaq Composite are still 18%, 15.3% and 12.1% away from their respective all-time highs registered in mid-February. While it is certain that volatility will remain part of regular trading at least for the next few months, extreme volatility will likely recede.
Our Top Picks
At this stage, it will be prudent to invest in growth sectors like technology. Notably, in the first two weeks of April, the technology sector, one of the 11 broad sectors of the S&P 500, rallied 15.3%. We have narrowed down our search to five tech stocks sporting a Zacks Rank #1 (Strong Buy) and having solid growth potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks since Mar 23.
BWX Technologies Inc. BWXT supplies precision manufactured components and services to the commercial nuclear power industry. It offers technical, management and site services to governments in complex facilities and environmental remediation activities. The company has an expected earnings growth rate of 6.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days.
ManTech International Corp. MANT is a leading provider of innovative technologies and solutions for mission-critical national security programs for the Intelligence Community, the Departments of Defense, State, Homeland Security, and Justice; the Space Community and other U.S. federal government customers. The company has an expected earnings growth rate of 5.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.9% over the past 60 days.
OSI Systems Inc. OSIS designs, manufactures and sells electronic systems and components worldwide. It operates through three segments: Security, Healthcare, and Optoelectronics and Manufacturing. The company has an expected earnings growth rate of 9% for the current year (ending June 2020). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days.
Dropbox Inc. DBX provides a collaboration platform worldwide. The company's platform allows individuals, teams, and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan for premium features. It has an expected earnings growth rate of 40% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 22.8% over the past 60 days.
Cloudera Inc. CLDR provides a suite of data analytics and management products in the United States, Europe, and Asia. It operates through two segments, Subscription and Services. The company has an expected earnings growth rate of 300% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved 129% over the past 60 days.
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ManTech International Corporation (MANT) : Free Stock Analysis Report
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