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5 Stocks to Buy as Curtains Just About Drop on Tax Season
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Familiar seasonal trends determine the growth trajectory of the stock market in a given time frame. These seasonal effects have a rational basis in contrast to some random period showing outperformance or underperformance in the stock market.
Likewise, the tax season brings a trend where the stock market is subjected to selling pressure until tax day on Apr 15, followed by a bounce back later in the month.
To meet tax bills, taxpayers raise cash by liquidating stocks, which in due course leads to a decline in the price of stocks. Thus, in the first two weeks of April, the stock market experiences bouts of volatility.
This year was no exception, with the S&P 500 retreating more than 2% in the first two weeks of the month and remaining tantalizingly close to its 50-day moving average (DMA). Any fall below the 50 DMA would mean that the broader index is destined to decline further.
Lest we forget, sticky inflation has also dented investors’ sentiment. The uptick in consumer and wholesale prices in March dashed hopes of any interest rate cuts soon.
The Federal Reserve has held rates steady, which is already at a record high. Higher interest rates hinder consumer outlays, jack up borrowing costs, derail economic growth, and impact the stock market.
However, with a large number of taxpayers funding their Individual Retirement Accounts (IRA) on tax day to avail of tax deductions, the stock market is expected to rebound in the second half of April. After all, IRAs are a set of asset classes, including stocks, in which citizens invest money to boost their retirement corpus.
The economy is also exhibiting strength, with consumers opening up their wallets amid strength in the labor market. Sales at U.S. retailers picked up in March, indicating a decent rise in consumer spending in the first quarter of 2024.
The upbeat outlook for the economy is a blessing in disguise for the stock market amid geopolitical tensions in the Middle East. However, the disruption in the stock market caused by the Middle East crisis is momentary.
This calls for investing in growth stocks such as Abercrombie & Fitch Co. (ANF - Free Report) , Core & Main, Inc. (CNM - Free Report) , EMCOR Group, Inc. (EME - Free Report) , Lifeway Foods, Inc. (LWAY - Free Report) and CompoSecure, Inc. (CMPO - Free Report) that can make the most of the encouraging economic scenario as well as a promising seasonal trend.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids. Abercrombie & Fitch currently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 14.9% over the past 60 days. ANF’s expected earnings growth rate for the current year is 19.1%.
Core & Main is a specialized distributor of water, wastewater, storm drainage and fire protection products. Core & Main presently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 5.3% over the past 60 days. CNM’s expected earnings growth rate for the current year is 20.5%.
EMCOR Group is one of the leading providers of mechanical and electrical construction, and industrial and energy infrastructure. EMCOR currently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 15.5% over the past 60 days. EME’s expected earnings growth rate for the current year is 8.7%.
Lifeway Foods produces Kefir, a drinkable product similar to, but distinct from, yogurt. Lifeway Foods presently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 13.6% over the past 60 days. LWAY’s expected earnings growth rate for the current year is 33.3%.
CompoSecure is a provider of premium financial payment cards. CompoSecure currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 0.9% over the past 60 days. CMPO’s expected earnings growth rate for the current year is 12.4%.
Shares of Abercrombie & Fitch, Core & Main, EMCOR, Lifeway Foods, and CompoSecure have surged 27.9%, 36.6%, 61.2%, 50.2%, and 23.5%, respectively, so far this year.
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5 Stocks to Buy as Curtains Just About Drop on Tax Season
Familiar seasonal trends determine the growth trajectory of the stock market in a given time frame. These seasonal effects have a rational basis in contrast to some random period showing outperformance or underperformance in the stock market.
Likewise, the tax season brings a trend where the stock market is subjected to selling pressure until tax day on Apr 15, followed by a bounce back later in the month.
To meet tax bills, taxpayers raise cash by liquidating stocks, which in due course leads to a decline in the price of stocks. Thus, in the first two weeks of April, the stock market experiences bouts of volatility.
This year was no exception, with the S&P 500 retreating more than 2% in the first two weeks of the month and remaining tantalizingly close to its 50-day moving average (DMA). Any fall below the 50 DMA would mean that the broader index is destined to decline further.
Lest we forget, sticky inflation has also dented investors’ sentiment. The uptick in consumer and wholesale prices in March dashed hopes of any interest rate cuts soon.
The Federal Reserve has held rates steady, which is already at a record high. Higher interest rates hinder consumer outlays, jack up borrowing costs, derail economic growth, and impact the stock market.
However, with a large number of taxpayers funding their Individual Retirement Accounts (IRA) on tax day to avail of tax deductions, the stock market is expected to rebound in the second half of April. After all, IRAs are a set of asset classes, including stocks, in which citizens invest money to boost their retirement corpus.
The economy is also exhibiting strength, with consumers opening up their wallets amid strength in the labor market. Sales at U.S. retailers picked up in March, indicating a decent rise in consumer spending in the first quarter of 2024.
The upbeat outlook for the economy is a blessing in disguise for the stock market amid geopolitical tensions in the Middle East. However, the disruption in the stock market caused by the Middle East crisis is momentary.
This calls for investing in growth stocks such as Abercrombie & Fitch Co. (ANF - Free Report) , Core & Main, Inc. (CNM - Free Report) , EMCOR Group, Inc. (EME - Free Report) , Lifeway Foods, Inc. (LWAY - Free Report) and CompoSecure, Inc. (CMPO - Free Report) that can make the most of the encouraging economic scenario as well as a promising seasonal trend.
These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of A or B, a combination that offers the best opportunities in the growth investing space. You can see the complete list of today’s Zacks Rank #1 stocks here.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids. Abercrombie & Fitch currently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 14.9% over the past 60 days. ANF’s expected earnings growth rate for the current year is 19.1%.
Core & Main is a specialized distributor of water, wastewater, storm drainage and fire protection products. Core & Main presently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 5.3% over the past 60 days. CNM’s expected earnings growth rate for the current year is 20.5%.
EMCOR Group is one of the leading providers of mechanical and electrical construction, and industrial and energy infrastructure. EMCOR currently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 15.5% over the past 60 days. EME’s expected earnings growth rate for the current year is 8.7%.
Lifeway Foods produces Kefir, a drinkable product similar to, but distinct from, yogurt. Lifeway Foods presently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 13.6% over the past 60 days. LWAY’s expected earnings growth rate for the current year is 33.3%.
CompoSecure is a provider of premium financial payment cards. CompoSecure currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 0.9% over the past 60 days. CMPO’s expected earnings growth rate for the current year is 12.4%.
Shares of Abercrombie & Fitch, Core & Main, EMCOR, Lifeway Foods, and CompoSecure have surged 27.9%, 36.6%, 61.2%, 50.2%, and 23.5%, respectively, so far this year.
Image Source: Zacks Investment Research