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The Zacks Analyst Blog Highlights: TopBuild, Foundation Building Materials, Simpson Manufacturing, Universal Forest Products and Lithia Motors

Zacks Equity Research

For Immediate Release

Chicago, IL – December 19, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: TopBuild Corp. BLD, Foundation Building Materials, Inc. FBM, Simpson Manufacturing Co., Inc. SSD, Universal Forest Products, Inc. UFPI and Lithia Motors, Inc. LAD.

Here are highlights from Wednesday’s Analyst Blog:

5 Big Winners of Stock Market Melt-Up in 2020

The U.S. stock market, primarily measured by the S&P 500 index, has rallied around 18% so far in 2019. And the bull run is sure to stay going into 2020. In fact, chief investment strategist at CFRA Research, Sam Stovall said that the broader index is expected to rise an additional 9% by the end of 2020.

After all, there are an array of factors that will help the major bourses stay at record highs next year. Primarily, it’s the preliminary U.S.-China trade truce over import duties that will boost stocks. The United States has said that China has agreed to increase import of commodities in 2020 and 2021 by almost $200 billion, which includes nearly $40 billion of U.S. agricultural products.

China has also agreed to protect American intellectual property rights and has assured not to manipulate its currency. What’s more, China has called off additional tariffs on U.S. goods. The United States, in the meanwhile, has agreed not to impose extra tariffs on nearly $160 billion of Chinese consumer electronics and toys that were supposed to take effect from Dec 15.

Beijing had earlier blamed the United States of economic bullying. Both the countries had imposed tit-for-tat tariffs that had eventually affected China’s economy, threatened U.S. farmers and damaged global economic growth, resulting in gyrations in global stock markets.

Nonetheless, upbeat reports on domestic manufacturing and home building have infused optimism about the current state of the economy. Last month, factory output bounced back after General Motor Company’s strike ended, per the Federal Reserve.

Industrial production increased at a seasonally adjusted rate of 1.1% in November compared to the prior month. That marked the biggest month-over-month increase since October 2017. Now, if we exclude motor vehicles and parts, industrial production was still up 0.5% last month. Capital Economics economist Michael Pearce summed up by saying that “against a backdrop of easing trade tensions, the prospects for the industrial sector look set to brighten a touch in 2020.”

Another reading on the U.S. housing sector saw construction of new homes jump in November, a tell-tale sign of continued momentum in the housing sector. Per the Commerce Department, housing starts, a measure of home building, increased 3.2% last month from October to a seasonally adjusted annual rate of 1.365 million.

Building permits show that future home construction increased 1.4% in November compared to the previous month to a seasonally adjusted annual rate of 1.482 million. Thus, it can be safely concluded that the housing sector has strengthened this year and will likely continue doing well next year following a slump that began in late 2018 (read more: Millennials to Drive US Housing Market in 2020: 5 Must Buys).

Last but not the least, the Fed is likely to continue its monetary easing program next year as well. And that should help the stock market continue its winning ways in 2020. To top it, president election years are also traditionally highly favorable for stocks.

5 Top Growth Stocks to Buy for 2020

Given the bullishness, it seems prudent to invest in stocks that can make the most of the market’s upward journey next year. We have thus used the Zacks Stock Screener to narrow down on stocks with solid growth prospects, sporting a Zacks Rank #1 (Strong Buy) along with Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

TopBuild Corp.engages in the installation and distribution of insulation and other building products to the U.S. construction industry. The Zacks Consensus Estimate for its next-year earnings has moved up 8.3% over the past 60 days. The company’s expected earnings growth rate for the next year is 14.5%, more than the Building Products - Miscellaneous industry’s expected rise of 12.9%.

Foundation Building Materials, Inc. distributes building products in the United States. It offers wallboard, suspended ceiling system and metal framing products. The Zacks Consensus Estimate for its next-year earnings has moved 1.7% north over the past 60 days. The company’s expected earnings growth rate for the next year is 20.6% versus the Building Products - Miscellaneous industry’s projected rise of 12.9%.

Simpson Manufacturing Co., Inc. designs, engineers, manufactures and sells building construction products. The Zacks Consensus Estimate for its next-year earnings has climbed nearly 9% over the past 60 days. The company’s expected earnings growth rate for the next year is 19.3%, compared with the Building Products - Miscellaneous industry’s estimated rise of 12.9%.

Universal Forest Products, Inc.designs, manufactures, and markets wood and wood-alternative products in North America. The Zacks Consensus Estimate for its next-year earnings has risen 4.6% over the past 60 days. The company’s expected earnings growth rate for the next year is 16.8% versus the Building Products - Wood industry’s expected rise of 15.2%.

Lithia Motors, Inc.operates as an automotive retailer in the United States. The Zacks Consensus Estimate for its next-year earnings has moved 5.5% up over the past 60 days. The company’s expected earnings growth rate for the next year is 13.6% compared with the Automotive - Retail and Whole Sales industry’s expected rise of 8.8%.

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
TopBuild Corp. (BLD) : Free Stock Analysis Report
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Foundation Building Materials, Inc. (FBM) : Free Stock Analysis Report
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