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5 Must-Buy S&P 500 Stocks Flying High YTD With More Upside
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Wall Street's impressive rally, which started in April 2020 defying the coronavirus pandemic, is continuing this year, barring minor fluctuations. While the growth-oriented technology sector was the predominant driver for last year's rally, cyclical sectors like consumer discretionary, oil-energy, industrials, materials and financials and are the main factors pushing Wall Street upward this year.
Possibilities of faster-than-expected reopening of the U.S. economy on the back of ramp-up in the nationwide COVID-19 vaccination rollout and significant reduction in new coronavirus cases are the primary reasons for the shift in market participants' preference for cyclical stocks over growth/momentum.
Moreover, the recent approval of a massive $1.9 trillion coronavirus aid package by the Biden administration, sky high savings of U.S. citizens in 2020, robust pent-up demand and concerns regarding higher inflation in near future also influenced investors' preference shift.
At this stage, it will be prudent to invest in S&P 500 stocks with a favorable Zacks Rank that have skyrocketed year to date and still have more upside.
Cyclical Sectors Outperform Year to Date
A closer look at the performance of the S&P 500 Index — popularly known as the market's benchmark — so far this year reveals some interesting facts.
Year to date, cyclical sectors like Industrials Select Sector SPDR (XLI), Materials Select Sector SPDR (XLB), Financials Select Sector SPDR (XLF), Consumer Discretionary Select Sector SPDR (XLY) and Energy Select Sector SPDR (XLE) have rallied 8.6%, 8.8%, 17.3%, 5.1% and 39.7%, respectively. In contrast, the Technology Select Sector SPDR (XLK) has gained just 2.9%, underperforming the benchmark's 5.7%.
In this regard, it should be noted that another major Wall Street benchmark the Dow, which is inclined toward cyclical stocks, has gained 7.3% year to date. Meanwhile, the tech-heavy Nasdaq Composite, which had an astonishing rally in 2020, has gained only 4.5%.
Near-Term Catalysts
The FDA has approved three COVID-19 vaccines so far. On Feb 11, Biden said that by the end of the summer, United States will have adequate doses of COVID-19 vaccines to administer to more than 300 million citizens.
The speeding up of the vaccination process implies chances of faster-than-expected reopening of the U.S. economy. Reopening of the economy with the easing of the pandemic will significantly ramp up business activities and employment.
Several research firms, like Bloomberg Economics, Oxford Economics and Goldman Sachs estimated that currently, U.S. citizens have a staggering $1.5 - $1.8 trillion in "excess" or "forced" savings that could climb to $2.4 trillion by mid-2021 as consumers were restricted from spend on items unavailable during lockdowns.
President Joe Biden signed the new $1.9 trillion coronavirus-aid package on Mar 12. Per the bill, eligible U.S. citizens will receive a $1,400 check payment in addition to $1,400 for any dependent. Moreover, the extra amount in unemployment benefits would be increased to $300 a week and the period will be extended up to Sep 6. The fresh stimulus is likely to significantly boost pent-up demand for U.S. consumers.
Our Top Picks
We have narrowed down our search to five S&P 500 large-cap (market capital >$40 billion) cyclical stocks that have popped more than 40% year to date and still have upside left for 2021. These stocks have seen solid earnings estimate revisions in the past seven to 30 days. 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 year to date.
Exxon Mobil Corp. (XOM - Free Report) explores and produces crude oil and natural gas in the United States, Canada/Other Americas, Europe, Africa, Asia, and Australia/Oceania. It operates through the Upstream, Downstream and Chemical segments.
The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has moved up 12.2% over the past seven days. The stock has jumped 43.4% year to date.
L Brands Inc. (LB - Free Report) operates as a specialty retailer of women's intimate and other apparel, personal care, and beauty and home fragrance products. It operates in three segments: Victoria's Secret, Bath & Body Works, and Victoria's Secret and Bath & Body Works International.
This Zacks Rank #1 company has an expected earnings growth rate of 20.8% for the current year (ending January 2022). The Zacks Consensus Estimate for its current-year earnings has improved 16.9% over the past seven days. The stock price has soared 62.1% year to date.
ConocoPhillips (COP - Free Report) produces transports and markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids worldwide.
The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 32.3% over the past seven days. The stock has appreciated 41.5% year to date.
The Mosaic Co. (MOS - Free Report) produces and markets concentrated phosphate and potash crop nutrients in North America and internationally. It operates through three segments: Phosphates, Potash and Mosaic Fertilizantes.
The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 54.2% over the past 30 days. The stock price has climbed 43.4% year to date.
EOG Resources Inc. (EOG - Free Report) explores, develops, produces and markets crude oil, and natural gas and natural gas liquids in the United States and internationally.
The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has risen 8.5% over the past seven days. The stock price has advanced 41.6% year to date.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Image: Bigstock
5 Must-Buy S&P 500 Stocks Flying High YTD With More Upside
Wall Street's impressive rally, which started in April 2020 defying the coronavirus pandemic, is continuing this year, barring minor fluctuations. While the growth-oriented technology sector was the predominant driver for last year's rally, cyclical sectors like consumer discretionary, oil-energy, industrials, materials and financials and are the main factors pushing Wall Street upward this year.
Possibilities of faster-than-expected reopening of the U.S. economy on the back of ramp-up in the nationwide COVID-19 vaccination rollout and significant reduction in new coronavirus cases are the primary reasons for the shift in market participants' preference for cyclical stocks over growth/momentum.
Moreover, the recent approval of a massive $1.9 trillion coronavirus aid package by the Biden administration, sky high savings of U.S. citizens in 2020, robust pent-up demand and concerns regarding higher inflation in near future also influenced investors' preference shift.
At this stage, it will be prudent to invest in S&P 500 stocks with a favorable Zacks Rank that have skyrocketed year to date and still have more upside.
Cyclical Sectors Outperform Year to Date
A closer look at the performance of the S&P 500 Index — popularly known as the market's benchmark — so far this year reveals some interesting facts.
Year to date, cyclical sectors like Industrials Select Sector SPDR (XLI), Materials Select Sector SPDR (XLB), Financials Select Sector SPDR (XLF), Consumer Discretionary Select Sector SPDR (XLY) and Energy Select Sector SPDR (XLE) have rallied 8.6%, 8.8%, 17.3%, 5.1% and 39.7%, respectively. In contrast, the Technology Select Sector SPDR (XLK) has gained just 2.9%, underperforming the benchmark's 5.7%.
In this regard, it should be noted that another major Wall Street benchmark the Dow, which is inclined toward cyclical stocks, has gained 7.3% year to date. Meanwhile, the tech-heavy Nasdaq Composite, which had an astonishing rally in 2020, has gained only 4.5%.
Near-Term Catalysts
The FDA has approved three COVID-19 vaccines so far. On Feb 11, Biden said that by the end of the summer, United States will have adequate doses of COVID-19 vaccines to administer to more than 300 million citizens.
The speeding up of the vaccination process implies chances of faster-than-expected reopening of the U.S. economy. Reopening of the economy with the easing of the pandemic will significantly ramp up business activities and employment.
Several research firms, like Bloomberg Economics, Oxford Economics and Goldman Sachs estimated that currently, U.S. citizens have a staggering $1.5 - $1.8 trillion in "excess" or "forced" savings that could climb to $2.4 trillion by mid-2021 as consumers were restricted from spend on items unavailable during lockdowns.
President Joe Biden signed the new $1.9 trillion coronavirus-aid package on Mar 12. Per the bill, eligible U.S. citizens will receive a $1,400 check payment in addition to $1,400 for any dependent. Moreover, the extra amount in unemployment benefits would be increased to $300 a week and the period will be extended up to Sep 6. The fresh stimulus is likely to significantly boost pent-up demand for U.S. consumers.
Our Top Picks
We have narrowed down our search to five S&P 500 large-cap (market capital >$40 billion) cyclical stocks that have popped more than 40% year to date and still have upside left for 2021. These stocks have seen solid earnings estimate revisions in the past seven to 30 days. 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 year to date.
Exxon Mobil Corp. (XOM - Free Report) explores and produces crude oil and natural gas in the United States, Canada/Other Americas, Europe, Africa, Asia, and Australia/Oceania. It operates through the Upstream, Downstream and Chemical segments.
The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has moved up 12.2% over the past seven days. The stock has jumped 43.4% year to date.
L Brands Inc. (LB - Free Report) operates as a specialty retailer of women's intimate and other apparel, personal care, and beauty and home fragrance products. It operates in three segments: Victoria's Secret, Bath & Body Works, and Victoria's Secret and Bath & Body Works International.
This Zacks Rank #1 company has an expected earnings growth rate of 20.8% for the current year (ending January 2022). The Zacks Consensus Estimate for its current-year earnings has improved 16.9% over the past seven days. The stock price has soared 62.1% year to date.
ConocoPhillips (COP - Free Report) produces transports and markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids worldwide.
The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 32.3% over the past seven days. The stock has appreciated 41.5% year to date.
The Mosaic Co. (MOS - Free Report) produces and markets concentrated phosphate and potash crop nutrients in North America and internationally. It operates through three segments: Phosphates, Potash and Mosaic Fertilizantes.
The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 54.2% over the past 30 days. The stock price has climbed 43.4% year to date.
EOG Resources Inc. (EOG - Free Report) explores, develops, produces and markets crude oil, and natural gas and natural gas liquids in the United States and internationally.
The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has risen 8.5% over the past seven days. The stock price has advanced 41.6% year to date.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>