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4 Must-Have Growth Stocks in Your Portfolio for 2021 and Ahead
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The stock market is witnessing a broad rally with all the three major indices, namely the S&P, the Nasdaq and the Dow registering their fifth consecutive quarterly gains.
The S&P 500 recorded its second-best first-half performance since 1998, having risen 14.5% year to date.
While inflationary fears induced volatility in the market every now and then, the uncertainty has now somewhat subsided as the price rise is considered a transitory phenomenon.
Market participants are thus looking beyond the inflation fury and are upbeat about the economic recovery.
Improving consumer confidence and bettering employment scenario should keep the mojo in the markets alive. Also, the second-quarter 2021 earnings expectation for the S&P 500 index raises investor optimism.
Total June-quarter 2021 earnings for the S&P 500 index are expected to be up 61.6% year over year on 18.1% growth estimated for revenues. The most notable aspect of the second-quarter earnings growth trajectory is that the projection looks good not only owing to favorable comps last year but because quarterly estimates genuinely ring true. It is to be noted that total index earnings are expected to increase 9.6% from the pre-COVID levels of second-quarter 2019.
With a strong second-quarter earnings expectation and all positive economic indicators in place, it is wise to bet on growth stocks. It’s a daunting task to cherry-pick stocks with great prospects but our Zacks Proprietary methodology makes this work very simple.
Using this model, we narrowed down to four stocks from four different sectors, which are expected to deliver impressive earnings in the impending quarterly release. These sectors are Technology (earnings to be up 31.8%), Retail (25.6%), Medical (20.3%) and Construction (58.9%).
Stocks to Pick
An Integral Component of Virtual Life
Zoom Video Communications , Inc. (ZM - Free Report) found a vital place in our lives with takers of varying ages (right from a child to an elderly person), thanks to the prevalent COVID situation. The pandemic shifted our lives to online platforms for all big and small tasks. No wonder, the stupendous demand swell for the company’s services and products drove its shares nearly 400% in 2020. The stock, however, is unable to keep up with the last-year rally as it has gained a meager 17% year to date following restoration of normalcy, which prompted many people to return to office for work.
However, we believe, the stock will continue to gain albeit at a speed slower than the rate seen in 2020 as the world adapts to a hybrid work environment. Moreover, demand for Zoom Video’s platform and solutions is expected to remain robust as some processes of healthcare are moving online. Internet education is another growth area. .
Zoom is taking initiatives to solve privacy and security issues, which will make users more comfortable in using its services and sticking to the same in the long term. Zoom has a strong balance sheet and generates significant cash flow to make further investments in product development and acquisitions in the future.
The Zacks Consensus Estimate for 2021 and 2022 earnings has been revised 27% and 17% upward over the past 30 days. The stock presently has a Zacks Rank of 1 and a Growth Score of A
A Favorite With Shoppers
Macy's, Inc. (M - Free Report) suffered a sales decline in 2020 due to the ongoing pandemic. But this year, things are looking up for this premier omni-channel retailer. The company’s strategy of rationalizing store base, revamping assortments and managing costs prudently will help it gain ground. The company is firing on all cylinders to become customer centric. Options like providing doorstep delivery, offering flexible payment facility with its ‘buy-now-pay-later’ scheme and refurbishing its mobile and website features bode well.
Management’s recent upward revision of earnings guidance will likely instill investor confidence in the company’s operations. On the back of a faster-than-anticipated economic rebound, the company expects net sales in the bracket of $21.73-$22.23 billion compared with $19.75-$20.75 billion predicted earlier. Further, adjusted earnings are anticipated in the range of $1.71-$2.12 compared with the prior anticipation of 40-90 cents.
Impressively, this New York-based company has a trailing four-quarter earnings surprise of 161.8%, on average. The stock currently has a Zacks Rank of 1 and a Growth Style Score of B. Moreover, the Zacks Consensus Estimate for its current financial year’s sales and earnings suggests growth of 27.6% and 197.3%, respectively, from the corresponding year-ago reported figures.
The Zacks Consensus Estimate for 2021 and 2022 earnings has moved 182% and 71% north each over the past 60 days.
The stock has a Zacks Rank #1 and a Growth Score of B at present.
A Stable Health Insurance Leader
UnitedHealth Group Inc. (UNH - Free Report) from the healthcare sector, which belongs to the broader medical sector, is another desirable pick for the investment portfolio. The stock has a very comprehensive healthcare business profile, which is bound to provide stability in all market cycles, be it boom or bust. Along with providing health insurance coverage, it renders several other technology services in the healthcare space.
Its hugely diversified business makes it resilient to withstand all economic vagaries. Its international operations also lend it with geographical diversification. Now that the ACA (Affordable Care Act) has a solid political support, it will make health insurance inexpensive for the Americans, which will directly benefit the company. Its sturdy balance sheet with consistent cashflows is enough to aid its growth strategies.
The Zacks Consensus Estimate for 2021 and 2022 earnings has been revised 0.3% and 1.3% upward each over the past 60 days. The stock has a Zacks Rank #2 and a Growth Score of B, currently.
Home Beautification to Continue
The Home Depot, Inc. (HD - Free Report) stock traded green last year as its products and services were in high demand among people who spend most of their time at home. The pandemic turned their attention to home improvement , which drove the company’s sales, courtesy of Do-It-Yourself customers.
However, even with the pandemic adversities relenting, the company’s growth is expected to continue. It is working on long-term strategies to expand its supply-chain facilities, increase investments in technology and enhance the digital experience.
Demand from Professional customer base is also rising. The company remains on track with its strategic investments to build a Pro ecosystem that includes professional grade product, exclusive brands, enhanced delivery, credit, digital capabilities, field sales support, HD rental and more. It expects its differentiated Pro ecosystem to encourage deeper engagement with Pro customers in the long term.
The Zacks Consensus Estimate for 2021 and 2022 earnings has been raised 0.3% and 1.3%, respectively, over the past 60 days. The stock carries a Zacks Rank #2 ad a Growth Score of A.
Bottomline
Investors can seldom go wrong in their stock-picking journey if they choose fundamentally strong bets. Though one can’t dictate the market dynamics but it is certainly in shareholders’ hands to select a winning basket of stocks to enrich their portfolio returns.
Zacks Names “Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
4 Must-Have Growth Stocks in Your Portfolio for 2021 and Ahead
The stock market is witnessing a broad rally with all the three major indices, namely the S&P, the Nasdaq and the Dow registering their fifth consecutive quarterly gains.
The S&P 500 recorded its second-best first-half performance since 1998, having risen 14.5% year to date.
While inflationary fears induced volatility in the market every now and then, the uncertainty has now somewhat subsided as the price rise is considered a transitory phenomenon.
Market participants are thus looking beyond the inflation fury and are upbeat about the economic recovery.
Improving consumer confidence and bettering employment scenario should keep the mojo in the markets alive. Also, the second-quarter 2021 earnings expectation for the S&P 500 index raises investor optimism.
Total June-quarter 2021 earnings for the S&P 500 index are expected to be up 61.6% year over year on 18.1% growth estimated for revenues. The most notable aspect of the second-quarter earnings growth trajectory is that the projection looks good not only owing to favorable comps last year but because quarterly estimates genuinely ring true. It is to be noted that total index earnings are expected to increase 9.6% from the pre-COVID levels of second-quarter 2019.
With a strong second-quarter earnings expectation and all positive economic indicators in place, it is wise to bet on growth stocks. It’s a daunting task to cherry-pick stocks with great prospects but our Zacks Proprietary methodology makes this work very simple.
It is a time-honored research that demonstrates stocks with a Zacks Rank of #1 (Strong Buy) and 2 (Buy) along with a Growth Score of A or B to generate superior investment returns.You can see the complete list of today’s Zacks #1 Rank stocks here
Using this model, we narrowed down to four stocks from four different sectors, which are expected to deliver impressive earnings in the impending quarterly release. These sectors are Technology (earnings to be up 31.8%), Retail (25.6%), Medical (20.3%) and Construction (58.9%).
Stocks to Pick
An Integral Component of Virtual Life
Zoom Video Communications , Inc. (ZM - Free Report) found a vital place in our lives with takers of varying ages (right from a child to an elderly person), thanks to the prevalent COVID situation. The pandemic shifted our lives to online platforms for all big and small tasks. No wonder, the stupendous demand swell for the company’s services and products drove its shares nearly 400% in 2020. The stock, however, is unable to keep up with the last-year rally as it has gained a meager 17% year to date following restoration of normalcy, which prompted many people to return to office for work.
However, we believe, the stock will continue to gain albeit at a speed slower than the rate seen in 2020 as the world adapts to a hybrid work environment.
Moreover, demand for Zoom Video’s platform and solutions is expected to remain robust as some processes of healthcare are moving online. Internet education is another growth area. .
Zoom is taking initiatives to solve privacy and security issues, which will make users more comfortable in using its services and sticking to the same in the long term. Zoom has a strong balance sheet and generates significant cash flow to make further investments in product development and acquisitions in the future.
The Zacks Consensus Estimate for 2021 and 2022 earnings has been revised 27% and 17% upward over the past 30 days. The stock presently has a Zacks Rank of 1 and a Growth Score of A
A Favorite With Shoppers
Macy's, Inc. (M - Free Report) suffered a sales decline in 2020 due to the ongoing pandemic. But this year, things are looking up for this premier omni-channel retailer. The company’s strategy of rationalizing store base, revamping assortments and managing costs prudently will help it gain ground. The company is firing on all cylinders to become customer centric. Options like providing doorstep delivery, offering flexible payment facility with its ‘buy-now-pay-later’ scheme and refurbishing its mobile and website features bode well.
Management’s recent upward revision of earnings guidance will likely instill investor confidence in the company’s operations. On the back of a faster-than-anticipated economic rebound, the company expects net sales in the bracket of $21.73-$22.23 billion compared with $19.75-$20.75 billion predicted earlier. Further, adjusted earnings are anticipated in the range of $1.71-$2.12 compared with the prior anticipation of 40-90 cents.
Impressively, this New York-based company has a trailing four-quarter earnings surprise of 161.8%, on average. The stock currently has a Zacks Rank of 1 and a Growth Style Score of B. Moreover, the Zacks Consensus Estimate for its current financial year’s sales and earnings suggests growth of 27.6% and 197.3%, respectively, from the corresponding year-ago reported figures.
The Zacks Consensus Estimate for 2021 and 2022 earnings has moved 182% and 71% north each over the past 60 days.
The stock has a Zacks Rank #1 and a Growth Score of B at present.
A Stable Health Insurance Leader
UnitedHealth Group Inc. (UNH - Free Report) from the healthcare sector, which belongs to the broader medical sector, is another desirable pick for the investment portfolio. The stock has a very comprehensive healthcare business profile, which is bound to provide stability in all market cycles, be it boom or bust. Along with providing health insurance coverage, it renders several other technology services in the healthcare space.
Its hugely diversified business makes it resilient to withstand all economic vagaries. Its international operations also lend it with geographical diversification. Now that the ACA (Affordable Care Act) has a solid political support, it will make health insurance inexpensive for the Americans, which will directly benefit the company. Its sturdy balance sheet with consistent cashflows is enough to aid its growth strategies.
The Zacks Consensus Estimate for 2021 and 2022 earnings has been revised 0.3% and 1.3% upward each over the past 60 days. The stock has a Zacks Rank #2 and a Growth Score of B, currently.
Home Beautification to Continue
The Home Depot, Inc. (HD - Free Report) stock traded green last year as its products and services were in high demand among people who spend most of their time at home. The pandemic turned their attention to home improvement , which drove the company’s sales, courtesy of Do-It-Yourself customers.
However, even with the pandemic adversities relenting, the company’s growth is expected to continue. It is working on long-term strategies to expand its supply-chain facilities, increase investments in technology and enhance the digital experience.
Demand from Professional customer base is also rising. The company remains on track with its strategic investments to build a Pro ecosystem that includes professional grade product, exclusive brands, enhanced delivery, credit, digital capabilities, field sales support, HD rental and more. It expects its differentiated Pro ecosystem to encourage deeper engagement with Pro customers in the long term.
The Zacks Consensus Estimate for 2021 and 2022 earnings has been raised 0.3% and 1.3%, respectively, over the past 60 days. The stock carries a Zacks Rank #2 ad a Growth Score of A.
Bottomline
Investors can seldom go wrong in their stock-picking journey if they choose fundamentally strong bets. Though one can’t dictate the market dynamics but it is certainly in shareholders’ hands to select a winning basket of stocks to enrich their portfolio returns.
Zacks Names “Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>