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Mismatch in Main Street & Wall Street? 4 Quality Picks
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Despite the acute coronavirus scare and global lockdowns, Wall Street ripped higher on the unprecedented U.S. central bank and government stimulus in recent times. After hitting the bottom on Mar 23, the S&P 500 skyrocketed more than 42% till Jun 10.
However, the stupendous rally halted on Jun 11 as another 1.542 million Americans claimed unemployment benefits amid Covid-19 crisis, as well as on signs of rising coronavirus cases with easing lockdowns and the Fed’s cautious outlook for the economy. Key U.S. indexes fell in the range of 5% to 6.9% on Jun 11.
Many have hoped for a V-shaped recovery, especially after the surprisingly upbeat May jobs report and some better-than-expected economic data points. However, in the latest policy meeting, Federal Reserve Chair Jerome Powell poured some cold water on the extra-euphoric Wall Street bulls, saying “millions” of people will not be able to resume work for some time because of the aftershocks to businesses from the COVID-19 crisis.
The Fed now expects the U.S. unemployment rate to hit 9.3% this year, dropping to 6.5% in 2021 and declining further to 5.5% in 2022. The unemployment rate in May dropped to 13.3% from 14.7% in April. Before the pandemic, the U.S. unemployment rate was hovering near the 50-year lows of around 3.6%.
The Fed sees American GDP falling 6.5% in 2020 before rising 5.0% in 2021 and 3.5% in 2022. The projections and Fed comments hint that the coronavirus-led economic crisis is far from over. In short, there is a “disconnect between Main Street and Wall Street,” per analysts. The U.S. economy is in recession, but investors are still enjoying cheap money.
Why You Should Focus on High-Quality Stocks
With rising uncertainty and a global recessionary environment, investors may consider parking money in quality stocks. These stocks with excellent earnings records, strong balance sheets and high return on equity are likely to weather market downturns well.
CFRA’s Sam Stovall said the market has been highly overbought and the sell-off on Thursday could mark the beginning of a bigger pullback. Stovall said stocks could decline 5% to 10% from the Jun 8 peak. So, investors may consider investing in these high-quality stocks to fight what some believe is the start of a bigger decline in Wall Street.
Stock Picks
Against this backdrop, below we highlight a few top-ranked stocks that have a Zacks Rank #1 (Strong Buy) or 2 (Buy). The stocks are rich with quality characteristics. These stocks too lost on Jun 11 selloffs, but could be bought on the dip.
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Mismatch in Main Street & Wall Street? 4 Quality Picks
Despite the acute coronavirus scare and global lockdowns, Wall Street ripped higher on the unprecedented U.S. central bank and government stimulus in recent times. After hitting the bottom on Mar 23, the S&P 500 skyrocketed more than 42% till Jun 10.
However, the stupendous rally halted on Jun 11 as another 1.542 million Americans claimed unemployment benefits amid Covid-19 crisis, as well as on signs of rising coronavirus cases with easing lockdowns and the Fed’s cautious outlook for the economy. Key U.S. indexes fell in the range of 5% to 6.9% on Jun 11.
Many have hoped for a V-shaped recovery, especially after the surprisingly upbeat May jobs report and some better-than-expected economic data points. However, in the latest policy meeting, Federal Reserve Chair Jerome Powell poured some cold water on the extra-euphoric Wall Street bulls, saying “millions” of people will not be able to resume work for some time because of the aftershocks to businesses from the COVID-19 crisis.
The Fed now expects the U.S. unemployment rate to hit 9.3% this year, dropping to 6.5% in 2021 and declining further to 5.5% in 2022. The unemployment rate in May dropped to 13.3% from 14.7% in April. Before the pandemic, the U.S. unemployment rate was hovering near the 50-year lows of around 3.6%.
The Fed sees American GDP falling 6.5% in 2020 before rising 5.0% in 2021 and 3.5% in 2022. The projections and Fed comments hint that the coronavirus-led economic crisis is far from over. In short, there is a “disconnect between Main Street and Wall Street,” per analysts. The U.S. economy is in recession, but investors are still enjoying cheap money.
Why You Should Focus on High-Quality Stocks
With rising uncertainty and a global recessionary environment, investors may consider parking money in quality stocks. These stocks with excellent earnings records, strong balance sheets and high return on equity are likely to weather market downturns well.
CFRA’s Sam Stovall said the market has been highly overbought and the sell-off on Thursday could mark the beginning of a bigger pullback. Stovall said stocks could decline 5% to 10% from the Jun 8 peak. So, investors may consider investing in these high-quality stocks to fight what some believe is the start of a bigger decline in Wall Street.
Stock Picks
Against this backdrop, below we highlight a few top-ranked stocks that have a Zacks Rank #1 (Strong Buy) or 2 (Buy). The stocks are rich with quality characteristics. These stocks too lost on Jun 11 selloffs, but could be bought on the dip.
Applied Materials, Inc. (AMAT - Free Report)
Zacks Rank #2
Current ROE (TTM): 37.13%
Debt/Equity Ratio: 0.69X
5-Yr Historical Sales Growth: 13.61%
5-Yr Historical EPS Growth: 31.78%
Dividend Yield: 1.47%
TD Ameritrade Holding Corporation (AMTD - Free Report)
Zacks Rank #2
Current ROE (TTM): 23.05%
Debt/Equity Ratio: 0.54X
5-Yr Historical Sales Growth: 17.99%
5-Yr Historical EPS Growth: 30.56%
Dividend Yield: 3.01%
BristolMyers Squibb Company (BMY - Free Report)
Zacks Rank #2
Current ROE (TTM): 30.06%
Debt/Equity Ratio: 0.86X
5-Yr Historical Sales Growth: 11.55%
5-Yr Historical EPS Growth: 21.90%
Dividend Yield: 2.99%
MEDIFAST Inc (MED - Free Report)
Zacks Rank #1
Current ROE (TTM): 65.66%
Debt/Equity Ratio: 0.00X
5-Yr Historical Sales Growth: 26.51%
5-Yr Historical EPS Growth: 38.34%
Dividend Yield: 4.12%
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>