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CBOE VIX Plunges More Than 25% YTD: 5 Top Growth Picks
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Wall Street is firing on all cylinders with the new bull market gains momentum. U.S. stock markets completed an impressive first-quarter 2021 after witnessing an astonishing rally in the pandemic-ridden 2020. The rally has gathered pace in April. Meanwhile, CBOE VIX — popularly known as the best fear-gauge of Wall Street — has plunged 25.9% year to date. In fact, the volatility index has dropped 12.8% so far in April.
CBOE VIX Plunges in 2021
On Apr 8, the CBOE VIX touched its 52-week low of 16.20. On Apr 12, the index closed at 16.91, its lowest level since Feb 20, 2020. Notably, the CBOE VIX is derived from the prices of S&P 500 options (both call and put) and represents the market’s expectations of volatility over the coming 30 days.
At its current level of 16.91, the CBOE VIX is lower than its 50-day moving average of 22.20 and the 200-day moving average of 24.87. In financial literature, the 50-day moving average line is generally recognized as the short-term trend setter while the 200-day moving average is the long-term trend setter.
It is widely recognized in the technical analysis space that whenever the 50-day moving average line falls below the 200-day moving average line, a long-term downtrend for the volatility index becomes a strong possibility. This reflects a significant upside for the equities.
Several Upsides Ahead
The U.S. government has ramped up nationwide COVID-19 vaccination on a priority basis. Per CDC data, as of Apr 12, more than 183 million vaccines have been administered. On Apr 6, President Joe Biden announced that all American adults will be vaccinated by Apr 19, ahead of an earlier timetable of May 1. The speeding up of the process implies chances of a faster-than-expected reopening of the U.S. economy.
The two major fiscal stimuli, the $900 billion of the second-round of government aid package and a fresh round of a massive $1.9 trillion coronavirus relief package approved by the Biden administration significantly strengthened the economy. Furthermore, an estimated $1.5 - $1.8 trillion savings by Americans also supported strong pent-up demand.
A series of recently released economic data like job market data, manufacturing and services index, vehicle sales and consumer satisfaction optimization indexes have clearly indicated that the U.S. economy is witnessing a strong recovery since the beginning of 2021.
Moreover, on Mar 31, President Joe Biden unveiled his $2.3 trillion infrastructure development plan that includes transport, drinking-water, broadband, manufacturing and construction infrastructure developments. Segments like basic materials, industrials and utilities will benefit immensely along with more job creation for the economy.
Finally, the Fed has reaffirmed that it will continue ultra-dovish monetary policies despite a marked improvement in the U.S. economy. Fed Chairman Jerome Powell said that any inflation in 2021 will be transitory in nature and that the central bank will allow inflation to remain above its targeted 2% for some time until the labor market returns to the pre-pandemic level. This means that the existing benchmark interest rate of 0-0.25% and the quantitative easing program of buying $120 billion of bonds will prevail till 2023.
Our Top Picks
At this stage, it will be prudent to invest in growth stocks to enhance one's portfolio going forward. We have narrowed down our search to five growth stocks that have popped more than 20% and have witnessed robust earnings estimate revisions in the last 7 to 30 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Growth Score A. 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.
Tempur Sealy International Inc. (TPX - Free Report) develops, manufactures, markets and distributes bedding products. It operates through two segments, North America and International.
The company has expected earnings growth of 27.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% north over the last 7 days. The stock price has rallied 44.1% year to date.
Cambium Networks Corp. (CMBM - Free Report) provides wireless broadband networking infrastructure products and solutions for network operators.
The company has expected earnings growth of 47.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% north over the last 7 days. The stock price has soared 159.9% 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.
The company has an expected earnings growth rate of 39.6% for the current year (ending January 2022). The Zacks Consensus Estimate for its current-year earnings has improved 18.4% over the last 30 days. The stock price has jumped 79% year to date.
Louisiana-Pacific Corp. (LPX - Free Report) manufactures and markets building products primarily for use in new home construction, repair and remodeling, and outdoor structure markets. It operates through four segments: Siding, Oriented Strand Board, Engineered Wood Products, and South America.
The company has an expected earnings growth rate of 68.7% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 22.8% over the last 7 days. The stock price has climbed 69.5% year to date.
Evercore Inc. (EVR - Free Report) operates as an independent investment banking advisory firm in the United States, Europe, Latin America, and internationally. It operates through two segments, Investment Banking and Investment Management.
The company has an expected earnings growth rate of 6.6% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 5.5% over the last 7 days. The stock price has surged 23% year to date.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
CBOE VIX Plunges More Than 25% YTD: 5 Top Growth Picks
Wall Street is firing on all cylinders with the new bull market gains momentum. U.S. stock markets completed an impressive first-quarter 2021 after witnessing an astonishing rally in the pandemic-ridden 2020. The rally has gathered pace in April. Meanwhile, CBOE VIX — popularly known as the best fear-gauge of Wall Street — has plunged 25.9% year to date. In fact, the volatility index has dropped 12.8% so far in April.
CBOE VIX Plunges in 2021
On Apr 8, the CBOE VIX touched its 52-week low of 16.20. On Apr 12, the index closed at 16.91, its lowest level since Feb 20, 2020. Notably, the CBOE VIX is derived from the prices of S&P 500 options (both call and put) and represents the market’s expectations of volatility over the coming 30 days.
At its current level of 16.91, the CBOE VIX is lower than its 50-day moving average of 22.20 and the 200-day moving average of 24.87. In financial literature, the 50-day moving average line is generally recognized as the short-term trend setter while the 200-day moving average is the long-term trend setter.
It is widely recognized in the technical analysis space that whenever the 50-day moving average line falls below the 200-day moving average line, a long-term downtrend for the volatility index becomes a strong possibility. This reflects a significant upside for the equities.
Several Upsides Ahead
The U.S. government has ramped up nationwide COVID-19 vaccination on a priority basis. Per CDC data, as of Apr 12, more than 183 million vaccines have been administered. On Apr 6, President Joe Biden announced that all American adults will be vaccinated by Apr 19, ahead of an earlier timetable of May 1. The speeding up of the process implies chances of a faster-than-expected reopening of the U.S. economy.
The two major fiscal stimuli, the $900 billion of the second-round of government aid package and a fresh round of a massive $1.9 trillion coronavirus relief package approved by the Biden administration significantly strengthened the economy. Furthermore, an estimated $1.5 - $1.8 trillion savings by Americans also supported strong pent-up demand.
A series of recently released economic data like job market data, manufacturing and services index, vehicle sales and consumer satisfaction optimization indexes have clearly indicated that the U.S. economy is witnessing a strong recovery since the beginning of 2021.
Moreover, on Mar 31, President Joe Biden unveiled his $2.3 trillion infrastructure development plan that includes transport, drinking-water, broadband, manufacturing and construction infrastructure developments. Segments like basic materials, industrials and utilities will benefit immensely along with more job creation for the economy.
Finally, the Fed has reaffirmed that it will continue ultra-dovish monetary policies despite a marked improvement in the U.S. economy. Fed Chairman Jerome Powell said that any inflation in 2021 will be transitory in nature and that the central bank will allow inflation to remain above its targeted 2% for some time until the labor market returns to the pre-pandemic level. This means that the existing benchmark interest rate of 0-0.25% and the quantitative easing program of buying $120 billion of bonds will prevail till 2023.
Our Top Picks
At this stage, it will be prudent to invest in growth stocks to enhance one's portfolio going forward. We have narrowed down our search to five growth stocks that have popped more than 20% and have witnessed robust earnings estimate revisions in the last 7 to 30 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Growth Score A. 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.
Tempur Sealy International Inc. (TPX - Free Report) develops, manufactures, markets and distributes bedding products. It operates through two segments, North America and International.
The company has expected earnings growth of 27.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% north over the last 7 days. The stock price has rallied 44.1% year to date.
Cambium Networks Corp. (CMBM - Free Report) provides wireless broadband networking infrastructure products and solutions for network operators.
The company has expected earnings growth of 47.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% north over the last 7 days. The stock price has soared 159.9% 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.
The company has an expected earnings growth rate of 39.6% for the current year (ending January 2022). The Zacks Consensus Estimate for its current-year earnings has improved 18.4% over the last 30 days. The stock price has jumped 79% year to date.
Louisiana-Pacific Corp. (LPX - Free Report) manufactures and markets building products primarily for use in new home construction, repair and remodeling, and outdoor structure markets. It operates through four segments: Siding, Oriented Strand Board, Engineered Wood Products, and South America.
The company has an expected earnings growth rate of 68.7% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 22.8% over the last 7 days. The stock price has climbed 69.5% year to date.
Evercore Inc. (EVR - Free Report) operates as an independent investment banking advisory firm in the United States, Europe, Latin America, and internationally. It operates through two segments, Investment Banking and Investment Management.
The company has an expected earnings growth rate of 6.6% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 5.5% over the last 7 days. The stock price has surged 23% year to date.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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