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Wall Street Remains Firm Despite Volatility: 5 Growth Picks

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On Oct 16, Wall Street rebounded from the rout it suffered in the last week. All three major stock indexes – the Dow, S&P 500 and Nasdaq Composite -- closed significantly higher, marking their biggest single-day gain since Mar 26. This is a clear indication that the stock market meltdown in October was transitory in nature.

A robust U.S. economy buoyed by a series of strong data released recently, solid labor market and strong earnings momentum will pave the way for long-term growth of stock markets. At this stage, investment in good growth stocks with favorable Zacks Rank will be a prudent move.

Robust U.S. Economic Fundamentals

The U.S. GDP grew at 3.2% in the first half of 2018, better than the Trump administration’s target level of 3%. In the second quarter alone, U.S. GDP grew at 4.2%, marking its highest gain since the third quarter of 2014 and the third-best growth rate since 2008.

On Sep 26, the Federal Reserve raised forecast for 2018 and 2019 GDP growth from the 2.8% and 2.4% stated in June to 3.1% and 2.5%, respectively. The central bank’s latest GDP estimate also indicates that economic growth will remain stable throughout this year. The primary catalyst behind these positive revisions is the direct impact of tax cuts.

Healthy Labor Market

The U.S. unemployment rate in September was 3.7%, its lowest level since December 1969. On Oct 16, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) reported that job openings in the month of August reached an all-time high of 7.14. Total number of hiring by the U.S. corporates also attained a record high of 5.78 million.

Average wage rate increased 0.5% in August, the fastest pace since January. Despite wage hike, the core PCE index (excluding food and energy) in August - Fed’s preferred gauge of inflation measure - remained steady at 2%.

Strong Consumer and Business Sentiments

The Conference Board reported that the U.S. consumer confidence index for the month of August jumped to 133.4, marking its highest reading since October 2000. The ISM reported that the U.S. manufacturing index for the month of September was pegged at 59.8. Notably, any reading above 50 indicates overall growth of the manufacturing sector. Manufacturing sector constitutes nearly 12% of the U.S. GDP.

On Oct 3, the ISM reported that its services (non-manufacturing) index rose to an all-time high of 61.6 in September. Since service sector constitutes major part of the U.S. economy, market participants expect U.S. GDP to rise in third and fourth quarter.

Our Top Picks

Solid macro-economic fundamentals, government’s tax reform and deregulation policies are major tailwinds for the U.S. economy. At this stage, investment in stocks with strong growth potential will be lucrative. However, picking winning stocks can be a difficult task.

We have selected five stocks with Growth Score of A and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Our research shows that stocks with a Growth Style Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities in the Growth-investing space.

The chart below shows price performance of our five picks year to date.



Denbury Resources Inc. is engaged in the exploration, production and development of natural gas properties in the Gulf Coast region of the United States. The company has expected earnings growth of 250% for the current year. The Zacks Consensus Estimate for the current year has improved 4.2% over the past 30 days.

North American Construction Group Ltd. (NOA - Free Report) provides heavy construction and mining services primarily in Canada. The company has expected earnings growth of 235.7% for the current year. The Zacks Consensus Estimate for the current year has improved 2.2% over the past 30 days.

Methanex Corp. (MEOH - Free Report) produces and sells methanol in North America, the Asia Pacific, Europe, and South America. The company has expected earnings growth of 64.5% for the current year. The Zacks Consensus Estimate for the current year has improved 6.2% over the past 30 days.

Comtech Telecommunications Corp. (CMTL - Free Report) designs, develops, produces and markets innovative products, systems and services for advanced communications solutions. The company has expected earnings growth of 28% for the current year. The Zacks Consensus Estimate for the current year has improved 26.3% over the past 30 days.

MCBC Holdings Inc. (MCFT - Free Report) is a designer, manufacturer and marketer of MasterCraft brand premium performance sport boats. The company has expected earnings growth of 24.9% for the current year. The Zacks Consensus Estimate for the current year has improved 5.2% over the past 30 days.

5 Medical Stocks to Buy Now

Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.

New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.

Click here to see the 5 stocks >>

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