After a brief lull, markets have again hit fresh highs. Investors reaffirmed their faith in the promises of the new administration, and the “Trump Rally” looks set to continue over the current week. Meanwhile, Trump celebrated his first month in office by indicating that these gains were largely attributable to the positive sentiment generated by his election to the presidency.

However, a section of market watchers remain skeptical about the rally and believe that investors have chosen to ignore risks attached to Trump’s election. At the same time, recent gains have been more evenly spread across sectors, providing a stronger basis for an extended rally. Economic data has also been largely positive, which means it may be a good idea to add top performers during Trump’s first 30 days in office to your portfolios.   

Fifth Best Performance Over First 30 Days

The rally which began after Trump’s electoral victory has surely been one of the best in recent times. However, the extent of the gains notched up, especially since Trump assumed office have been elaborately illustrated by new data from Dow Jones. During Trump’s first 30 days in office, the Dow has gained 4.02% which makes this the fifth best ever in percentage terms.

This also marks the third best performance over such a period for a president serving his first term. Meanwhile, the S&P 500 has gained 3.5% over the same period. This is the best such performance since the increase of 4.6% recorded in 1997, when Bill Clinton won his second term. It is also the fifth best performance ever for the S&P 500 over the first 30 days of a presidential term. 

Trump Takes Credit for Market Success

Quite characteristically, President Trump rang in his first month in office by reaffirming his promise to create more jobs in the U.S. At a press conference on Feb 16, Trump talked about recent market gains and said that they were “good for jobs.” Earlier in the day, he tweeted a similar message, highlighting the greater sense of optimism in the economy ahead of his proposed tax plan.

On Feb 15, benchmarks hit record highs over a fifth successive session, the longest such stretch of gains for all three major indices since last January. Most market participants attributed such gains to Trump’s tax proposals. Even the most critical of experts have admitted that Trump does at least deserve some of the credit. His proposals to deregulate industry have also met with widespread corporate acclaim. On Jan 30, Trump signed an executive order which stipulates that two regulations be eliminated for every new one that is created.

Gains Evenly Spread, Economic Indicators Improve

According to data from S&P Dow Jones Indices, financials within the S&P 500 had gained almost 23% from Nov 8 to the middle of last week. In comparison, stocks from other sectors had gained less than 8% over the same period. In other words, financials increased at a pace at least thrice as fast as stocks from other sectors.

Gains for financials have been largely attributed to Trump’s promises about deregulation. The new president has also signed an executive order designed to scale back the Dodd-Frank Act. Trump views the law as a harsh measure, especially for banks.

But since the inauguration, gains have been more evenly spread out across all sectors. Data from S&P Dow Jones Indices shows that financials have gained only 6% over the last 30 days while stocks from other sectors have gained around 3%.   

While such a pattern is a clear indication that the rally is likely to continue, the ongoing rally gains further basis from improving economic indicators. Firstly, the new President has inherited a healthy labor market from his predecessor. Additionally, fresh data on retail sales, housing and even inflation has been encouraging. Meanwhile, a private gauge of small business sentiment and the Philadelphia Fed’s manufacturing index has each surged to record highs.

Our Choices

Despite its fair share of critics and naysayers, the ongoing rally seems to have gained a second wind. President Trump seems to be largely responsible for stocks’ recent gains and many of his upcoming policy actions are likely to boost stocks further.

Picking stocks which have gained from this phenomenon would be a profitable option at this time. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.

Cymabay Therapeutics, Inc. is a biopharmaceutical company which focuses on the development and commercialization of proprietary new medicines for important human diseases.

Cymabay Therapeutics has a Zacks Rank #1 (Strong Buy). Its expected earnings growth for the current year is 16.3%. Its earnings estimate for the current year has improved by 10.2% over the last 30 days. The stock has returned 87.8% since Jan 20, outperforming the Zacks Medical - Generic Drugs sector, which has gained 12.2% over the same period.

Attunity Ltd. is a developer, marketer and seller of big data management solutions on a global basis.

Attunity has expected earnings growth of 40.6% for the current year. Its earnings estimate for the current year has improved by 17.4% over the last 30 days. The stock has returned 40.4% since Jan 20, outperforming the Zacks Internet - Software sector, which has gained 2.8% over the same period. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lumentum Holdings Inc. (LITE Quick QuoteLITE - Free Report) is a manufacturer and seller of innovative optical and photonic products.

Lumentum Holdings has a Zacks Rank #2 (Buy). The company has expected earnings growth of 71% for the current year. Its earnings estimate for the current year has improved by 2.7% over the last 30 days.The stock has returned 45.4% since Jan 20, outperforming the Zacks Lasers Systems and Components sector, which has gained 21.1% over the same period.

Datawatch Corp. is a provider of Enterprise Reporting, Report Mining and Service Center software products that help organizations increase productivity, reduce costs and gain competitive advantages.

Datawatch has a Zacks Rank #2. The company has expected earnings growth of 70% for the current year. Its earnings estimate for the current year has improved by 20.6% over the last 30 days.The stock has returned 43.9% o since Jan 20, outperforming the Zacks Computer - Software sector, which has gained 4.4% over the same period.

Arconic Inc. formed through the separation of aluminum giant Alcoa Inc., is a global leader in multi-material, precision engineered products and solutions for a variety of industries.

Arconic has a Zacks Rank #2. The company has expected earnings growth of 11.9% for the current year. Its earnings estimate for the current year has improved by 18.8% over the last 30 days.The stock has returned 40.5% since Jan 20, outperforming the Zacks Mining - Non Ferrous sector, which has gained 6.8% over the same period.

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