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Jobless Claims Hit 4-Month Low in Early July: An Analysis

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Per the latest report released by the Labour Department, the US economywitnessed jobless claims fall to a four-month low of 1.314 million in the week ending July 4 from 1.41 million in the prior week, extending the deceleration to 14 consecutive weeks. Economists polled by Dow Jones predicted the scale to drop to a reading of 1.39 million while a survey conducted by MarketWatch shows that economists anticipated new claims of 1.40 million.

Continuing claims, which measure the total number of people receiving the ongoing unemployment sops through the states, plunged to a three-month low of 18.06 million from the previous week’s tally of 18.8 million. The figure marked a steeper decline than the Wall Street estimate of 18.9 million continuing claims. A Bloomberg review affirms that economists expected a median projection of 18.8 million.

An additional 1.04 million claims were filed under the Pandemic Unemployment Assistance (PUA), the federal program which provides redundancy perks to workers, such as independent contractors or self-employed, who otherwise will not be eligible for the grant. The number underlined an uptick of roughly 42,000 from the previous week, bringing the total PUA recipients to 14.4 million.

Without seasonal adjustments, among the hot-spot states that saw a spike in COVID-19 cases, California and Florida reported a decrease in initial claims from the previous week while Arizona changed moderately. The initial claims in Texas shot up by 20,651. Several other states also saw a noteworthy rise in the initial claim index including New Jersey, Louisiana, Maryland, Nevada and Tennessee.

Top Buys

Despite the sliding of weekly unemployment claims in early July, initial claims surpassed one million for the 15th consecutive week. A total of 32.9 million individuals reportedly claimed benefits through all states and federal programs in the week ended Jun 20. The still-elevated level of initial and continuing claims is reported just weeks ahead of the expiration of the federal government’s $600 worth stimulus package as weekly unemployment incentives in response to the rampant COVID-19 outbreak.

Last week, the Labour Department declared that the US economy regained 4.8 million jobs in June, lowering the unemployment level to 11.1% from 13.3%.

Yet, economists anticipate a jerky ride to economic recovery amid the resurgence of the pandemic. There is still a long way to go before the job market stabilizes and assumes the pre-pandemic standards. Another wave of lay-offs could hit the U.S. economy with United Airlines (UAL - Free Report) warning 36,000 of its employees of a mass furlough this week. 

Against this backdrop, we zoomed in on five stocks for investment purpose, cautiously picked from the industries that saw largest job gains of late. Leisure & hospitality, retail, education & health services and manufacturing are to name a few. Each stock currently has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General Corp. (DG - Free Report) , based in Goodlettsville, TN, is one of the largest discount retailers in the United States. The company, which is currently a #1 Ranked player, offers a wider variety of merchandise including consumable items, seasonal items, home products and apparel. The company has a trailing four-quarter positive surprise of 16.90%, on average.

Green Plains, Inc. (GPRE - Free Report) is a vertically integrated producer, marketer and distributer of ethanol. The company operates through four segments: Ethanol Production, Corn Oil Production, Agribusiness, and Marketing and Distribution. The company has a trailing four-quarter positive earnings surprise of 23.09%, on average, and presently flaunts a Zacks Rank of 1. 

Marcus Corp. (MCS - Free Report) engages in lodging and entertainment industries. It operates via two segments: Movie Theatres, and Hotels and Resorts. Marcus' lodging division owns or manages hotels and resorts in several states as well as runs a vacation club. The company has a trailing four-quarter positive earnings surprise of 18.33%, on average. It currently holds a Zacks Rank #2. 

American Public Education, Inc. (APEI - Free Report) is an online provider of higher education, focused primarily on serving the military as well as public service communities. Given the current market volatility wherein the coronavirus crippled most businesses including the education industry, American Public registered a record spring-term enrollment. The Zacks Consensus Estimate for current-year earnings has witnessed one upward revision in the past 60 days. The company has a Zacks Rank of 2 at present. 

West Pharmaceutical Services, Inc. (WST - Free Report) is a global drug delivery technology company that applies proprietary materials science, formulation research and manufacturing innovation to enhance the quality of therapeutic value as well as accelerate the developmental activity and the market availability of pharmaceuticals, biologics, vaccines and consumer healthcare products. The company has a trailing four-quarter positive earnings surprise of 17.99%, on average. It is a Zacks #2 Ranked player at present.

 

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.


See the 5 high-tech stocks now>>