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Wall Street Makes Record Recovery From Coronavirus: 5 Growth Picks

Tirthankar Chakraborty

The Dow Jones Industrial Average, despite the recent turmoil, has almost recovered all losses suffered during the coronavirus pandemic. The blue-chip index bounced back from the bear market territory in March and is now near its all-time high achieved on Feb 12, 2020.

Similarly, the S&P 500 had plummeted more than 30% within six weeks this spring, marking its fastest descend from record levels into a bear market. But the broader index has been on an uptrend, recording the fifth successive month of rally in August in more than 80 years.

What’s more, the S&P 500’s journey from a record high in February to a bear market in March, and then again to a new record, only took 126 trading days this year, the fastest-ever climb. To put things into perspective, if we go back to 1928, it took the index 1,500 trading sessions to return to record levels after slipping into the bear territory.

This year’s stock market rebound has been even more startling, since the year has been plagued by a pandemic that left millions of Americans unemployed, while corporate profits have seen the steepest collapse in a decade. So, what drove the historic rally? Primarily, stimulus from the Fed and the Congress helped the stock market scale north.

The Fed has kept interest rates at near-zero levels and has promised to keep it at that level even if inflation picks up. Fed’s initiative to lend billions across markets also buoyed investors. Moreover, as Fed bought corporate and Treasury bonds, yields tanked, making stocks more alluring.

At the same time, the U.S. government provided more than 150 million in stimulus checks to Americans and nearly half a trillion dollars in loans to small business houses. The encouraging response along with the lessons learned in the financial crisis of 2008 helped the stock market’s rebound.

And let’s admit, many investors still had faith that the U.S. economy will get its mojo back once the pandemic is under control. In fact, factory activity had accelerated in August, and hiring improved for the fourth straight month. Consumer outlays also picked up in August after a substantial drop. To top it, many analysts opine that the skid in corporate profits has likely bottomed, too. Leuthold Group, a research firm, added that many economists now expect annual GDP to improve next year at a rate not seen in the past 70 years.

Talking about individual performers, the tech behemoths in particular have increasingly influenced Wall Street. Tech giants have benefitted significantly from the societal changes forced by the pandemic. And recently, a pick-up in merger and acquisition activities helped tech shares regain their footing that followed last week’s selloff.

In fact, going forward, tech as well as other sectors is set to do well. It’s worth pointing out that further stimulus measures from the U.S. government have been delayed but not canceled. And with unemployment falling steadily despite economic hiccups, consumers will certainly remain confident about their well-being. The unemployment rate of 8.4% in August is well below the recent peak of 14.7%, and in addition, U.S. retail sales have been above prior-year levels since June.

Last but not the least, further monetary stimulus policies from the Fed are expected to be declared in the coming months, which shall be a shot in the arm for stocks.

Stay Bullish: 5 Top-Ranked Growth Stocks to Buy Now

Given the aforesaid positives, it’s imperative for investors to regain faith in equities and continue betting on fundamentally-sound stocks for stellar returns in the near future. Here’re five choices that possess a Zacks Rank #1 (Strong Buy) and a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Atlas Air Worldwide Holdings AAWW is the parent company of Atlas Air and Polar Air Cargo, which together operate the world's largest fleet of Boeing freighter aircraft. The Zacks Consensus Estimate for its current-year earnings has moved up 37.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 122.3%.

BMC Stock Holdings, Inc. BMCH provides diversified building products and services to professional builders and contractors primarily in the residential housing market. The Zacks Consensus Estimate for its current-year earnings has risen 66.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 13.7%.

Central Garden Pet Company CENT produces and distributes products for the lawn and garden, and pet supplies markets in the United States. The Zacks Consensus Estimate for its current-year earnings has climbed 21.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 21.9%.

Comfort Systems USA, Inc. FIX is a national provider of comprehensive heating, ventilation and air conditioning installation, maintenance, repair and replacement services. The Zacks Consensus Estimate for its current-year earnings has moved 48.3% north over the past 60 days. The company’s expected earnings growth rate for the current year is 16.7%.

DICKS Sporting Goods, Inc. DKS operates as a major omni-channel sporting goods retailer. The Zacks Consensus Estimate for its current-year earnings has moved more than 100% up over the past 60 days. The company’s expected earnings growth rate for the current quarter is 57.7%.

More Stock News: This Is Bigger than the iPhone!                   

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.  

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DICKS Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
 
Central Garden Pet Company (CENT) : Free Stock Analysis Report
 
Comfort Systems USA, Inc. (FIX) : Free Stock Analysis Report
 
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BMC Stock Holdings, Inc. (BMCH) : Free Stock Analysis Report
 
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