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Wall Street Posts Best Day of Summer: Top 5 Winners
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Both the S&P 500 and the Nasdaq gained more than 1% for the first time in 3 months on Aug 14, while the Dow Jones rose more than 100 points as geopolitical fears ebb. In fact, the S&P 500 and the Nasdaq traded above their 50-day moving averages as Wall Street sees less tension over North Korea.
The broad stock market rally followed a loss of nearly $1 trillion dollar last week, when President Trump warned Kim Jong-un’s hermit state that it would face “fire and fury” if it threatens the United States, leading to a verbal standoff between Washington and Pyongyang.
Corporate America, meanwhile, is having its best earnings season in 13 years with top executives from Dow Chemical Co (DOW - Free Report) and Morgan Stanley (MS - Free Report) citing rise in overseas sales, a telltale sign that should help boost gains in the second half of this year. Economists also predict that U.S. economic expansion will last another two years, while global growth chugs along. Thanks to such bullish trends, it will be prudent to invest in some of the top gainers.
U.S. – North Korea Standoff Calms
Geopolitical fears seem to have faded after Secretary of State Rex Tillerson and U.S. Secretary of Defense James Mattis said that Washington would continue to pursue diplomatic solutions with North Korea. CIA Director Mike Pompeo and National Security Adviser H.R. McMaster also stated that there was no hint of a war with Pyongyang. Chinese President Xi Jinping urged for a peaceful resolution to the North Korea issue.
The soothing comments came after Trump said last week that Pyongyang will face “fire, fury and frankly power the likes of which this world has never seen before.” His harsh words came in after U.S. intelligence analysts said that North Korea has developed a miniaturized nuclear warhead. Following Trump’s comments, North Korea said that it was “examining the operational plan” to strike sensitive areas like the Anderson Air Force base.
Best Earnings Season for Corporate America in 13 Years
Corporate profits, in the meantime, are on pace to register the highest number of S&P 500 companies beating sales estimates in 13 years, as per Bank of America Corp (BAC - Free Report) equity strategists. They added the earnings beats will also be the highest since 2004.
Of the 454 companies in the S&P 500 that have so far reported second-quarter results, earnings for these companies are up 10.8% from the same period last year on 5.8% higher revenues, with 74.3% beating EPS estimates and 68% beating revenue estimates.
While Europe has been the source of strength in the first three months of this year, emerging-market sales were the driving force from April through June. A weak dollar benefitted U.S. companies like Kellogg Company (K - Free Report) , which beat earnings estimates.
U.S. Economic Growth Will Last Another 2 Years
U.S. economic growth also will last at least another two years, according to 34 of 57 economists polled by Reuters. Among those economists, 13 said it would last more than three years, while 21 said two to three years.
U.S. GDP has already crossed the $19 trillion mark, according to the U.S. Bureau of Economic Analysis. Under Trump, the U.S. economy grew more than $300 billion in just two quarters. Conversely, at the end of the first two quarters under President Obama, U.S. GDP had contracted.
A rebound in consumer spending boosted overall economic growth. Consumer outlays grew 2.8% in the second quarter as Americans spent more on healthcare, groceries and clothes. Spending rebounded in the last quarter, buoyed by an uptick in household finances. Disposable income adjusted for inflation saw the best back-to-back quarters this year since the first half of 2015.
Signs of Global Growth Boosted Stocks
Stocks were also helped by signs that global growth is persisting along. Japan’ economy expanded at an annualized rate of 4% in the second quarter, its fastest pace of growth since the first quarter of 2015. Private consumption and capital expenditures were cited to be the reasons behind this uptick in economic expansion. This also marked the country’s longest streak of uninterrupted growth in 11 years.
While growth was faster than expected in Japan, China’s factory output rose 6.4% in July from a year earlier. The International Monetary Fund (IMF) has already revised up growth expectations for China for this year and next. Overall, IMF has kept its growth forecasts for the world economy unchanged for this year and next.
Top 5 Gainers
Banking on such positive trends, we have selected five solid stocks from the major indices. These stocks have not only gained immensely on Aug 14, but, are also poised to move north in the near term. At the same time, these stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of ‘A’ or ‘B.’ Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Axcelis Technologies Inc. (ACLS - Free Report) designs, manufactures and services ion implantation and other processing equipment used in the fabrication of semiconductor chips. The company has a Zacks Rank #2, a VGM score of ‘A’ and has rallied 3.9% on Apr 14.
The company’s estimated earnings growth rate for the current year is 239.8%, more than the industry’s addition of 8.5%. Axcelis Technologies has outperformed the industry on a year-to-date basis (+45.1% vs. +28.2%).
KB Home (KBH - Free Report) is a homebuilding company. The company has a Zacks Rank #1, a VGM score of ‘A’ and has rallied 1.8% on Apr 14.
The company’s estimated earnings growth rate for the current year is 51.7%, more than the industry’s addition of 13.7%. KB Home has outperformed the industry on a year-to-date basis (+46.1% vs. +13%).
Deere & Company (DE - Free Report) is engaged in equipment operations. The company has a Zacks Rank #2, a VGM score of ‘B’ and has rallied 1.5% on Apr 14.
The company’s estimated earnings growth rate for the current year is 31.6%, more than the industry’s addition of 25.1%. Deere & Company has outperformed the industry on a year-to-date basis (+24.7% vs. +16.6%). You can see the complete list of today’s Zacks #1 Rank stocks here.
CAI International Inc is a transportation finance and logistics company. The company has a Zacks Rank #1, a VGM score of ‘B’ and has rallied 3.8% on Apr 14.
The company’s estimated earnings growth rate for the current year is 405.4%; in contrast the industry is projected to decline 23.8%. CAI International has outperformed the industry on a year-to-date basis (+226% vs. +5.1%).
Best Buy Co Inc (BBY - Free Report) is a provider of technology products, services and solutions. The company has a Zacks Rank #2, a VGM score of ‘A’ and has rallied 1.1% on Apr 14.
The company’s estimated earnings growth rate for the current year is 9.2%, more than the industry’s addition of 3%. Best Buy has outperformed the industry on a year-to-date basis (+42.3% vs. +20.1%).
Zacks' 10-Minute Stock-Picking Secret
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month.
Image: Bigstock
Wall Street Posts Best Day of Summer: Top 5 Winners
Both the S&P 500 and the Nasdaq gained more than 1% for the first time in 3 months on Aug 14, while the Dow Jones rose more than 100 points as geopolitical fears ebb. In fact, the S&P 500 and the Nasdaq traded above their 50-day moving averages as Wall Street sees less tension over North Korea.
The broad stock market rally followed a loss of nearly $1 trillion dollar last week, when President Trump warned Kim Jong-un’s hermit state that it would face “fire and fury” if it threatens the United States, leading to a verbal standoff between Washington and Pyongyang.
Corporate America, meanwhile, is having its best earnings season in 13 years with top executives from Dow Chemical Co (DOW - Free Report) and Morgan Stanley (MS - Free Report) citing rise in overseas sales, a telltale sign that should help boost gains in the second half of this year. Economists also predict that U.S. economic expansion will last another two years, while global growth chugs along. Thanks to such bullish trends, it will be prudent to invest in some of the top gainers.
U.S. – North Korea Standoff Calms
Geopolitical fears seem to have faded after Secretary of State Rex Tillerson and U.S. Secretary of Defense James Mattis said that Washington would continue to pursue diplomatic solutions with North Korea. CIA Director Mike Pompeo and National Security Adviser H.R. McMaster also stated that there was no hint of a war with Pyongyang. Chinese President Xi Jinping urged for a peaceful resolution to the North Korea issue.
The soothing comments came after Trump said last week that Pyongyang will face “fire, fury and frankly power the likes of which this world has never seen before.” His harsh words came in after U.S. intelligence analysts said that North Korea has developed a miniaturized nuclear warhead. Following Trump’s comments, North Korea said that it was “examining the operational plan” to strike sensitive areas like the Anderson Air Force base.
Best Earnings Season for Corporate America in 13 Years
Corporate profits, in the meantime, are on pace to register the highest number of S&P 500 companies beating sales estimates in 13 years, as per Bank of America Corp (BAC - Free Report) equity strategists. They added the earnings beats will also be the highest since 2004.
Of the 454 companies in the S&P 500 that have so far reported second-quarter results, earnings for these companies are up 10.8% from the same period last year on 5.8% higher revenues, with 74.3% beating EPS estimates and 68% beating revenue estimates.
While Europe has been the source of strength in the first three months of this year, emerging-market sales were the driving force from April through June. A weak dollar benefitted U.S. companies like Kellogg Company (K - Free Report) , which beat earnings estimates.
U.S. Economic Growth Will Last Another 2 Years
U.S. economic growth also will last at least another two years, according to 34 of 57 economists polled by Reuters. Among those economists, 13 said it would last more than three years, while 21 said two to three years.
U.S. GDP has already crossed the $19 trillion mark, according to the U.S. Bureau of Economic Analysis. Under Trump, the U.S. economy grew more than $300 billion in just two quarters. Conversely, at the end of the first two quarters under President Obama, U.S. GDP had contracted.
A rebound in consumer spending boosted overall economic growth. Consumer outlays grew 2.8% in the second quarter as Americans spent more on healthcare, groceries and clothes. Spending rebounded in the last quarter, buoyed by an uptick in household finances. Disposable income adjusted for inflation saw the best back-to-back quarters this year since the first half of 2015.
Signs of Global Growth Boosted Stocks
Stocks were also helped by signs that global growth is persisting along. Japan’ economy expanded at an annualized rate of 4% in the second quarter, its fastest pace of growth since the first quarter of 2015. Private consumption and capital expenditures were cited to be the reasons behind this uptick in economic expansion. This also marked the country’s longest streak of uninterrupted growth in 11 years.
While growth was faster than expected in Japan, China’s factory output rose 6.4% in July from a year earlier. The International Monetary Fund (IMF) has already revised up growth expectations for China for this year and next. Overall, IMF has kept its growth forecasts for the world economy unchanged for this year and next.
Top 5 Gainers
Banking on such positive trends, we have selected five solid stocks from the major indices. These stocks have not only gained immensely on Aug 14, but, are also poised to move north in the near term. At the same time, these stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of ‘A’ or ‘B.’ Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Axcelis Technologies Inc. (ACLS - Free Report) designs, manufactures and services ion implantation and other processing equipment used in the fabrication of semiconductor chips. The company has a Zacks Rank #2, a VGM score of ‘A’ and has rallied 3.9% on Apr 14.
The company’s estimated earnings growth rate for the current year is 239.8%, more than the industry’s addition of 8.5%. Axcelis Technologies has outperformed the industry on a year-to-date basis (+45.1% vs. +28.2%).
KB Home (KBH - Free Report) is a homebuilding company. The company has a Zacks Rank #1, a VGM score of ‘A’ and has rallied 1.8% on Apr 14.
The company’s estimated earnings growth rate for the current year is 51.7%, more than the industry’s addition of 13.7%. KB Home has outperformed the industry on a year-to-date basis (+46.1% vs. +13%).
Deere & Company (DE - Free Report) is engaged in equipment operations. The company has a Zacks Rank #2, a VGM score of ‘B’ and has rallied 1.5% on Apr 14.
The company’s estimated earnings growth rate for the current year is 31.6%, more than the industry’s addition of 25.1%. Deere & Company has outperformed the industry on a year-to-date basis (+24.7% vs. +16.6%). You can see the complete list of today’s Zacks #1 Rank stocks here.
CAI International Inc is a transportation finance and logistics company. The company has a Zacks Rank #1, a VGM score of ‘B’ and has rallied 3.8% on Apr 14.
The company’s estimated earnings growth rate for the current year is 405.4%; in contrast the industry is projected to decline 23.8%. CAI International has outperformed the industry on a year-to-date basis (+226% vs. +5.1%).
Best Buy Co Inc (BBY - Free Report) is a provider of technology products, services and solutions. The company has a Zacks Rank #2, a VGM score of ‘A’ and has rallied 1.1% on Apr 14.
The company’s estimated earnings growth rate for the current year is 9.2%, more than the industry’s addition of 3%. Best Buy has outperformed the industry on a year-to-date basis (+42.3% vs. +20.1%).
Zacks' 10-Minute Stock-Picking Secret
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month.
Learn the secret >>