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5 High-Flying Mid-Cap Stocks Fueling Market Rally in August

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Wall Street is maintaining its northbound journey for the fifth consecutive month. After rallying for four months in a row, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite —  are up 7.2%, 6.3% and 8.6%, respectively, month to date.

The market is not yet out of the woods owing to the rapid worldwide spread of coronavirus and its devastating impact on the U.S. and global economies. Despite this, Wall Street has witnessed a few record-breaking events so far this month.

On Aug 18, the S&P 500 posted a new all-time high surpassing the Feb 19 figure of 3,393.52 and erasing all losses from the coronavirus-led woes. On Aug 5, the Nasdaq Composite crossed the landmark 11,000 for the first time. On Aug 19, tech behemoth Apple Inc. (AAPL) became the first U.S. publicly traded company to touch $2 trillion market capitalization.

Notably, all these achievements were performed by either large-cap stocks or large-cap-centric stock indexes. Meanwhile, the performance of the mid-cap-centric S&P 400 Index is rather subdued  so far in August. Month to date, the S&P 400 has gained 3.5%, well below its three large-cap-centric peers. However, a closer look into the index revealed that five stocks with a favorable Zacks Rank have skyrocketed fueling, Wall Street's rally.

Importance of Mid-Cap Stocks

nvestment in mid-cap (market capital > 1 billion but < 10 billion) stocks is often recognized as a good portfolio diversification strategy. These stocks combine the attractive attributes of both small and large-cap stocks.

If the economic impacts of coronavirus are more severe ahead, mid-cap stocks will be less susceptible to losses than their large-cap counterparts owing to less international exposure. However, if the crisis doesn’t worsen or any good news surfaces on the treatment front,  these stocks will gain more than small caps due to established management teams, a broad distribution network, brand recognition and ready access to capital markets.

During the recovery phase, many of these mid-cap stocks may join the large-cap league.

Upward Revision of EPS Estimates - A Crucial Indicator

An upward earnings per share (EPS) estimate revision for 2020 of any stock simply means the market is expecting the company to do good business this year. A positive EPS estimate revision during the period of historic financial turmoil highlights a solid business model and robust growth potential. Market participants are likely to be interested in stocks that have witnessed positive EPS estimate revisions within the last 30 days.

Our Top Picks

We have narrowed down our search to five mid-cap stocks that have popped more than 45% in the past month and seen robust earnings estimate revisions in the last 30 days. Each of our picks carries either a Zacks Rank#1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks in the past month.

 

At Home Group Inc. (HOME - Free Report) is a leading home decor superstore in the United States. It offers a wide range of home products, including furniture, mirrors, rugs, art, houseware, tabletop, patio and seasonal decor.

The Zacks Consensus Estimate for the current year has increased more than 100% over the last 30 days. The Zacks Rank #1 stock has soared 112.8% in the past month.

Penn National Gaming Inc. (PENN - Free Report) owns and manages gaming and racing properties, and operates video gaming terminals with a focus on slot machine entertainment. It operates through four segments: Northeast, South, West, and Midwest.

The Zacks Consensus Estimate for the current year has increased more than 14.1% over the last 30 days. The Zacks Rank #2 stock has jumped 66.2% in the past month.

Red Rock Resorts Inc. (RRR - Free Report) is engaged in casino entertainment and gaming entertainment businesses in the United States. It operates through two segments, Las Vegas Operations and Native American Management.

The Zacks Consensus Estimate for the current year has increased more than 29.8% over the last 30 days. The Zacks Rank #2 stock has climbed 58.3% in the past month.

Maxar Technologies Inc. (MAXR - Free Report) provides space technology solutions for commercial and government customers worldwide. It operates through three segments: Space Systems, Imagery and Services.

The Zacks Consensus Estimate for the current year has improved more than 100% over the last 30 days. The Zacks Rank #2 stock has surged 51.3% in the past month.

Celsius Holdings Inc. (CELH - Free Report) develops, markets, distributes, and sells functional calorie-burning fitness beverages in the United States and internationally. It has specialization in commercializing healthier, nutritional functional foods beverages and dietary supplements.

The Zacks Consensus Estimate for the current year has improved more than 100% over the last 30 days. The Zacks Rank #1 stock has appreciated 47.4% in the past month.

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>>