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Indexes Within Striking Distance of Record High: 5 Top Picks
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Wall Street is on the verge of a historic moment. On Aug 22, U.S. stock markets’ bull-run, which commenced in March 2009, will complete 3,453 days – marking its longest ever expansion. Despite global trade war concerns, a series of geopolitical conflicts and an impending fear of rising inflation, stock markets maintain their long-term winning streak.
The bull-run has helped three main stock indexes – the Dow, S&P 500 and Nasdaq Composite – to reach within striking distance of achieving record high levels. Consequently, investment in stocks which are part of these indexes with a favorable Zacks Rank and strong growth potential will be a prudent move.
Major Indexes Northbound
The benchmark S&P 500 index – generally utilized by market participants as the barometer of the broad market movement – is up 6.9% year to date. The index is just 0.6% below the all-time high that it set in Jan 26.
The tech-laden Nasdaq Composite is up 13.3% year to date. Notably, this is approximately 1.5% below its all-time high. Both S&P 500 and Nasdaq Composite are currently out of correction territory (a correction is an uplift of 10% from a recent low) which both the indexes’ had entered on Feb 8.
The Dow – the 30 stock blue-chip index – is currently about 3% away from its record high. Although the index is reeling under the correction territory since Feb 8, it is on the brink of coming out of the rut for the first time in more than six months.
Strong Economic Fundamentals
U.S. GDP grew at 4.1% in the second-quarter of 2018, marking its highest gain since the third quarter of 2014 and the third-best growth rate since the Great Recession of 2008-2009. In the second quarter, consumer spending, business investment and government spending increased 4%, 7.3% and 3.5%, respectively.
On Aug 3, the Labor Department reported that the U.S. non-firm job addition increased by 157,000 for the month of July. Unemployment rate in July fell 0.1% from June to 3.9%, its lowest level in nearly 50 years. Average hourly earnings increased by 0.3% to 2.7% over the same period a year ago, reducing investor’s fear of a hyper-inflation.
Robust Earnings Momentum
As of Aug 17, 467 S&P 500 members have reported their second-quarter results. Total earnings of these companies are up 25.5% on 9.9% higher revenues. For the S&P 500 index as a whole, total second-quarter earnings are expected to be up 24.9% from the same period last year on 9.7% higher revenues.
If the current earnings expectation of second-quarter for the S&P 500 index as a whole materializes, it will be the highest quarterly growth pace in almost eight years. (Read More: Strong Retail Sector Earnings Performance)
Our Picks
Stock markets momentum has remained largely unhindered despite volatility. Massive tax cut, business-friendly policies and steady economic activities resulted in robust earnings results.
At this stage, we narrowed down our search to five stocks within the Dow 30, S&P 500 and Nasdaq Composite, each having a Zacks Rank #1 (Strong Buy) and strong growth potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below depicts price performance of our five picks year to date.
Amazon.com Inc. (AMZN - Free Report) : The stock provided a massive positive earnings surprise of 1,347.1% in the trailing four quarters. Amazon.com has expected earnings growth of 279.6% for current year. The Zacks Consensus Estimate for the current year has improved by 39.3% over the last 30 days.
Attunity Ltd. : The stock provided a positive earnings surprise of 80% in the trailing four quarters. Attunity has expected earnings growth of 360% for current year. The Zacks Consensus Estimate for the current year has improved by 23.8% over the last 30 days.
Aspen Technology Inc. (AZPN - Free Report) : The stock provided a positive earnings surprise of 11.3% in the last four quarters. Aspen Technology has expected earnings growth of 36.4% for current year. The Zacks Consensus Estimate for the current year has improved by 14.5% over the last 30 days.
Microsoft Corp. (MSFT - Free Report) : The stock provided a positive earnings surprise of 11.4% in the last four quarters. Microsoft has expected earnings growth of 9.5% for current year. The Zacks Consensus Estimate for the current year has improved by 2.2% over the last 30 days.
W.W. Grainger Inc. (GWW - Free Report) : The stock provided a positive earnings surprise of 21.5% in the trailing four quarters. W.W. Grainger has expected earnings growth of 39.9% for current year. The Zacks Consensus Estimate for the current year has improved by 0.9% over the last 30 days.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Indexes Within Striking Distance of Record High: 5 Top Picks
Wall Street is on the verge of a historic moment. On Aug 22, U.S. stock markets’ bull-run, which commenced in March 2009, will complete 3,453 days – marking its longest ever expansion. Despite global trade war concerns, a series of geopolitical conflicts and an impending fear of rising inflation, stock markets maintain their long-term winning streak.
The bull-run has helped three main stock indexes – the Dow, S&P 500 and Nasdaq Composite – to reach within striking distance of achieving record high levels. Consequently, investment in stocks which are part of these indexes with a favorable Zacks Rank and strong growth potential will be a prudent move.
Major Indexes Northbound
The benchmark S&P 500 index – generally utilized by market participants as the barometer of the broad market movement – is up 6.9% year to date. The index is just 0.6% below the all-time high that it set in Jan 26.
The tech-laden Nasdaq Composite is up 13.3% year to date. Notably, this is approximately 1.5% below its all-time high. Both S&P 500 and Nasdaq Composite are currently out of correction territory (a correction is an uplift of 10% from a recent low) which both the indexes’ had entered on Feb 8.
The Dow – the 30 stock blue-chip index – is currently about 3% away from its record high. Although the index is reeling under the correction territory since Feb 8, it is on the brink of coming out of the rut for the first time in more than six months.
Strong Economic Fundamentals
U.S. GDP grew at 4.1% in the second-quarter of 2018, marking its highest gain since the third quarter of 2014 and the third-best growth rate since the Great Recession of 2008-2009. In the second quarter, consumer spending, business investment and government spending increased 4%, 7.3% and 3.5%, respectively.
On Aug 3, the Labor Department reported that the U.S. non-firm job addition increased by 157,000 for the month of July. Unemployment rate in July fell 0.1% from June to 3.9%, its lowest level in nearly 50 years. Average hourly earnings increased by 0.3% to 2.7% over the same period a year ago, reducing investor’s fear of a hyper-inflation.
Robust Earnings Momentum
As of Aug 17, 467 S&P 500 members have reported their second-quarter results. Total earnings of these companies are up 25.5% on 9.9% higher revenues. For the S&P 500 index as a whole, total second-quarter earnings are expected to be up 24.9% from the same period last year on 9.7% higher revenues.
If the current earnings expectation of second-quarter for the S&P 500 index as a whole materializes, it will be the highest quarterly growth pace in almost eight years. (Read More: Strong Retail Sector Earnings Performance)
Our Picks
Stock markets momentum has remained largely unhindered despite volatility. Massive tax cut, business-friendly policies and steady economic activities resulted in robust earnings results.
At this stage, we narrowed down our search to five stocks within the Dow 30, S&P 500 and Nasdaq Composite, each having a Zacks Rank #1 (Strong Buy) and strong growth potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below depicts price performance of our five picks year to date.
Amazon.com Inc. (AMZN - Free Report) : The stock provided a massive positive earnings surprise of 1,347.1% in the trailing four quarters. Amazon.com has expected earnings growth of 279.6% for current year. The Zacks Consensus Estimate for the current year has improved by 39.3% over the last 30 days.
Attunity Ltd. : The stock provided a positive earnings surprise of 80% in the trailing four quarters. Attunity has expected earnings growth of 360% for current year. The Zacks Consensus Estimate for the current year has improved by 23.8% over the last 30 days.
Aspen Technology Inc. (AZPN - Free Report) : The stock provided a positive earnings surprise of 11.3% in the last four quarters. Aspen Technology has expected earnings growth of 36.4% for current year. The Zacks Consensus Estimate for the current year has improved by 14.5% over the last 30 days.
Microsoft Corp. (MSFT - Free Report) : The stock provided a positive earnings surprise of 11.4% in the last four quarters. Microsoft has expected earnings growth of 9.5% for current year. The Zacks Consensus Estimate for the current year has improved by 2.2% over the last 30 days.
W.W. Grainger Inc. (GWW - Free Report) : The stock provided a positive earnings surprise of 21.5% in the trailing four quarters. W.W. Grainger has expected earnings growth of 39.9% for current year. The Zacks Consensus Estimate for the current year has improved by 0.9% over the last 30 days.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>