U.S. markets open in 5 hours 53 minutes
  • S&P Futures

    3,851.50
    +32.25 (+0.84%)
     
  • Dow Futures

    31,953.00
    +177.00 (+0.56%)
     
  • Nasdaq Futures

    12,492.75
    +195.50 (+1.59%)
     
  • Russell 2000 Futures

    2,223.10
    +22.30 (+1.01%)
     
  • Crude Oil

    64.81
    -0.24 (-0.37%)
     
  • Gold

    1,694.90
    +16.90 (+1.01%)
     
  • Silver

    25.60
    +0.34 (+1.33%)
     
  • EUR/USD

    1.1895
    +0.0042 (+0.36%)
     
  • 10-Yr Bond

    1.5960
    0.0000 (0.00%)
     
  • Vix

    25.11
    +0.45 (+1.82%)
     
  • GBP/USD

    1.3885
    +0.0063 (+0.46%)
     
  • USD/JPY

    108.7660
    -0.1350 (-0.12%)
     
  • BTC-USD

    53,944.48
    +4,039.62 (+8.09%)
     
  • CMC Crypto 200

    1,086.99
    +62.78 (+6.13%)
     
  • FTSE 100

    6,711.42
    -7.71 (-0.11%)
     
  • Nikkei 225

    29,027.94
    +284.69 (+0.99%)
     

U.S. Household Net Worth Hits Record High in Q3: 5 Top Picks

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Nalak Das
·6 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Net worth of American households reached a fresh all-time high in the third quarter of 2020 despite the pandemic. On Dec 10, the Fed reported that household net worth surged 3.2% in the third quarter from the second quarter to reach $123.52 trillion. The value of equities increased approximately $2.8 trillion while the value of real estate held by households rose around $430 billion.

The U.S. economy remained stable despite the global outbreak of coronavirus and its devastations. The unprecedented health hazard put the global economy in complete standstill during March to May. Countries across the world, especially the United States and Eurozone members are still suffering from the resurgence of the deadly virus.

In spite of facing these problems, which forced the U.S. economy to operate at a sub-optimal level in the last 10 months, the devastations were not as severe as expected earlier. Defying all hurdles, the U.S. economy keeps growing albeit at a slow pace.

Reasons for Surging Household Net Worth

Meanwhile, the U.S. stock markets have witnessed a V-shaped recovery that has helped Wall Street to confirm a new bull market after exiting a coronavirus-led short bear market.

The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have rallied an astonishing 64%, 66.4% and 87.6%, respectively, from their recent lows recorded from Mar 23 to Dec 14. The mid-cap centric S&P 400 and the small-cap specific Russell 2000 indexes also jumped 83.3% and 90.9%, respectively.

On the other hand, the housing market remained robust primarily due to record-low mortgage rates. The Fed adopted an ultra-dovish monetary stance and reduced the benchmark interest rate to as low as 0%-0.25% in March.

The central bank later confirmed that it will maintain this range of the benchmark lending rate until all economic variables return to the pre-pandemic level. The low rate of market interest rate significantly reduced mortgage rates enabling consumers to buy houses. The strong demand has strengthened the real estate sector.

Future Drivers

Market participants rejoiced on Dec 11 after the FDA gave emergency authorization to the first coronavirus vaccine developed by Pfizer Inc. (PFE) and BioNTech SE (BNTX). Although nationwide vaccination will take some time, the approval of a vaccine will be a game-changer for 2021.

The FDA authorization of a COVID-19 vaccine this year means that the economy will reopen and gradually operate at the pre-pandemic level. The news will have a strong impact on the stock market.

In its latest estimation on Dec 9, the Atlanta Fed projected that fourth-quarter 2020 GDP will increase 11.2% after increasing a record 33.1% in the third quarter. Projections for corporate earnings are also growing since last July. At present, the consensus estimate is that the 2021 earrings of S&P 500 Index will increase 21.6% on 7.4% higher revenues after it declined 16.9% in earnings on 3.8% lower revenues in 2020.

Our Top Picks

We have narrowed down our search to five large-cap (market capital > $10 billion) stocks as these companies have an established business model and a solid brand value. All these stocks have strong growth potential for 2021, witnessed earnings estimate revisions within the last 30 days and have popped more than 20% in the past six months. Each of our picks carries a Zacks Rank #1 (Strong Buy). 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 in the past six months.

 

Deere & Co. DE manufactures and distributes farm equipment worldwide. The company operates through three segments: Agriculture and Turf, Construction and Forestry, and Financial Services.

The company has an expected earnings growth rate of 46% for the current year (ending October 2021). The Zacks Consensus Estimate for its current-year earnings has improved 0.4% over the last 7 days. The stock price has soared 59.6% in the past six months.

General Motors Co. GM designs, builds, and sells cars, trucks, crossovers, and automobile parts worldwide. It operates through the GM North America, GM International, Cruise, and GM Financial segments.

The company has an expected earnings growth rate of 26.2% for next year. The Zacks Consensus Estimate for its next-year earnings has improved 1.1% over the last 30 days. The stock price has rallied 49.8% in the past six months.

Micron Technology Inc. MU designs, manufactures and sells memory and storage products worldwide. It operates through four segments: Compute and Networking Business Unit, Mobile Business Unit, Storage Business Unit, and Embedded Business Unit.

The company has an expected earnings growth rate of 28.3% for the current year (ending August 2021). The Zacks Consensus Estimate for its current-year earnings has improved 31% over the last 30 days. The stock price has jumped 40.2% in the past six months.

Qorvo Inc. QRVO develops and commercializes technologies and products for wireless and wired connectivity worldwide. It operates in two segments, Mobile Products, and Infrastructure and Defense Products.

The company has an expected earnings growth rate of 36.5% for the current year (ending March 2021). The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 7 days. The stock has climbed 37.2% in the past six months.

D.R. Horton Inc. DHI operates as a homebuilding company in East, Midwest, Southeast, South Central, Southwest, and West United States. The company has expected earnings growth of 23.6% for the current year (ending September 2021). The Zacks Consensus Estimate for current-year earnings has improved by 4.1% over the last 30 days. The stock price has surged 21.3% in the past six months.

Legal Marijuana: An Investor’s Dream

Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.

Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.

Download Marijuana Moneymakers FREE >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Micron Technology, Inc. (MU) : Free Stock Analysis Report
 
Deere & Company (DE) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
 
Qorvo, Inc. (QRVO) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research