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Wall Street Sees Second Best Day of the Year: 5 Winners

Tirthankar Chakraborty

U.S. stock market soared on Jun 4, recovering from a big rout in the past one-month period, after Federal Reserve Chairman Jerome Powell indicated that the central bank is open to a possible rate cut. Hopes that trade tensions between the United States and its primary trading partners would ease in the near term also helped calm nerves. Thanks to such bullish trends, it will be prudent to invest in some of the top gainers.

U.S. Stocks Climbed the Most Since January

The Dow Jones Industrial Average rallied more than 500 points on Jun 4, while the broader S&P 500 quite successfully scaled above its 200-day moving average. The Dow settled at 25,332.18 and the S&P 500 closed at 2,803.27.

But, most importantly, the Nasdaq bounced back from correction territory to settle at 7,527.12. As a reminder, the tech-heavy index was bleeding on heightened threats that U.S. regulatory authorities might trim the size of tech bigwigs including Facebook and Google-parent Alphabet for violating antitrust protocols.

Thanks to Tuesday’s remarkable gains, all the three major bourses posted their second-best performance of the year since Jan 4, when the Dow, the S&P 500 and the Nasdaq rose 3.3%, 3.4% and 4.3%, respectively.

What Led the Gains?

Jerome Powell’s openness to rate cuts helped the major indexes scale north. After all, lower rate cuts have helped the economy expand at a steady pace since the financial crisis, with the stock market recently registering its 10th year of bull run.

Powell clearly stated that he is keeping an eye on how the economy is performing in the face of prolonged trade tensions. He assured everyone that the central bank is keen to “act as appropriate” in order to “sustain the economic expansion, with a strong labor market and inflation near the Fed’s symmetric 2% objective.”

Powell’s remarks followed St. Louis Fed President James Bullard’s views on rate cuts. Bullard also believes that rate cuts “may be warranted soon” amid international trade disputes. All these comments come at a time when market pundits are increasingly expecting a Fed rate cut.

In fact, the CME FedWatch tool indicated a 90% chance of a September rate cut, while expectations of a December rate cut were also above 80%.

Additionally, Wall Street gained support from renewed hopes that trade issues between the United States and its trading partners will ultimately get resolved. The Mexican president is hoping to reach a deal with the United States, while the Chinese Commerce Ministry said that the “differences and frictions between the two sides” should be dealt through talks.”

Republican senators have already cautioned the Trump administration not to impose duties on Mexican imports as it may hamper several U.S. firms and dent economic growth. Recently, Trump said that he would impose new tariffs on all products imported from Mexico. He categorically mentioned that such tariffs will stay in effect until the illegal immigration problem is sorted.

But it’s just not Trump’s Mexico declaration, China’s plan to restrict rare-earth exports has also done its share of damage. This was in response to the White House’s inclusion of Huawei Technologies to its Entity List that includes companies that American firms can’t sell technology to without obtaining a license from the U.S. government.

Top 5 Gainers

Banking on such positive trends, we have selected five solid stocks from the major indices. These stocks not only gained immensely on Jun 4, but, are also poised to move north in the near term. At the same time, these stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A or B.  Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.

Molina Healthcare, Inc. MOH provides managed health care services to low-income families and individuals. The company has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings increased 10% over the past 60 days. The company’s stock gained 5.1% on Jun 4. The company has already outperformed the broader Medical - HMOs industry so far this year (+31.3% vs -3.2%).

TTEC Holdings, Inc. TTEC designs and provides customer experience solutions. The company has a Zacks Rank #2 and VGM Score of B. The Zacks Consensus Estimate for its current-year earnings increased 1.2% over the past 60 days. The company’s stock gained 1.8% on Jun 4. The company has already outperformed the broader Technology Services industry on a year-to-date basis (+37% vs +11.3%).

Riverview Bancorp, Inc. RVSB provides community banking services to small and medium-size businesses, professionals and individuals. The company has a Zacks Rank #2 and VGM Score of B. The Zacks Consensus Estimate for its current-year earnings increased 4.2% over the past 60 days. The company’s stock gained 3.4% on Jun 4. The company has already outperformed the broader Financial - Savings and Loan industry so far this year (+13.2% vs +9.9%).You can see the complete list of today’s Zacks #1 Rank stocks here.

Rent-A-Center, Inc. RCII leases household durable goods to customers on a rent-to-own basis. The company has a Zacks Rank #1 and VGM Score of A. The Zacks Consensus Estimate for its current-year earnings increased 12.8% over the past 60 days. The company’s stock gained 1.7% on Jun 4. The company has already outperformed the broader Consumer Services - Miscellaneous industry on a year-to-date basis (+51.4% vs +2.8%).

Fly Leasing Limited FLY, purchases and leases commercial aircraft under multi-year contracts to various airlines. The company has a Zacks Rank #1 and VGM Score of A. The Zacks Consensus Estimate for its current-year earnings increased 24.8% over the past 60 days. The company’s stock gained almost 4% on Jun 4. The company has already outperformed the broader Transportation - Equipment and Leasing industry so far this year (+62.1% vs +9.0%).

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