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3 Top Stocks That Made the Most of a Predictable Q3 Rebound

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The Bureau of Economic Analysis is set to release the third-quarter GDP numbers on Oct 29, 2020, five days ahead of the U.S. presidential elections. Analysts have predicted a sharp rebound from the historic lows of the second quarter. Economists are largely predicting an annualized growth rate of about 30% for the third quarter, which would be the highest since the 16.7% increase witnessed in the first quarter of 1950 under Harry Truman’s presidentship, as quoted in a CNBC article.
 
Moreover, per the latest estimate based on the GDPNow model, the Federal Reserve Bank of Atlanta predicted third-quarter GDP to come in at a healthy 35.2%. Analysts at Goldman Sachs have also upgraded their GDP forecast to 35%, while Bloomberg economists predicted GDP of 21% for the third quarter, as quoted in a Business Insider article. The University of California Los Angeles (“UCLA”) Anderson Forecast too suggests an annualized growth rate of 28.3%, as mentioned in a Staffing Industry Analysts article.
 
Notably, the third-quarter growth estimates come against the backdrop of a record fall which had occurred in the second-quarter when GDP had plunged 31.4%, a revised estimate from the initial figure of 32.9%, the largest decline since the Great Depression. The Bureau of Economic Analysis had cited a decline in state and local government expenditure, personal consumption expenditure (PCE), exports and private inventory investment as the reason behind the plunge.
 
Nevertheless, the economy is widely predicted to have seen double-digit growth in the third quarter as it reopened, businesses resumed and people got back to work despite a surge in COVID-19 cases. Reflective of this, the unemployment rate fell and consumers increased their outlays. The Fed’s accommodative monetary policy and the government’s economic relief package provided the necessary boost to business houses and consumers.
 
The expectation of this sharp rebound in the July-September quarter can also be corroborated by the pick-up in both manufacturing and service side activity that constitutes the bulk of broader economic activity. Both ISM manufacturing purchasing manager’s index (PMI) and services PMI have reported a reading of above 50 for all the three months of the quarter, indicating growth. The manufacturing PMI registered a reading of 54.2%, 56% and 55.4% for the months of July, August and September, respectively. The services PMI came in at 58.1%, 56.9% and 57.8% in July, August and September, respectively. Particularly, September’s services PMI reading surpassed the pre-COVID-19 reading of 57.3% in February.

3 Big Gainers to Invest In

With the U.S. economy pretty much on track to register a bounce back in the third-quarter GDP report, it will be prudent to invest in manufacturing and services stocks that have made the most of the rebound. It’s worth pointing out that these stocks are also fundamentally sound to grow in the near future. Notably, they have a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Ampco-Pittsburgh Corporation (AP - Free Report) manufactures and sells custom-designed engineering products to commercial and industrial users in the United States. The Zacks Consensus Estimate for its current-year earnings increased more than 100% over the past 60 days. The company's expected earnings growth rate for the current year is 35.1%. Its shares gained 15.9% in the July-September quarter.
 
ExlService Holdings, Inc. (EXLS - Free Report) provides operations management and analytics services in the United States. The Zacks Consensus Estimate for its current-year earnings increased 16.2% over the past 60 days. The company's expected earnings growth rate for the next quarter is 26.7%. Its shares gained 4.2% in the July-September quarter.
 
Copart, Inc. (CPRT - Free Report) provides a range of services for processing and selling vehicles on the Internet to vehicle sellers, insurance companies and banks among others in the United States. The Zacks Consensus Estimate for its current-year earnings increased 10.3% over the past 60 days. The company’s expected earnings growth for the current year is 12.1%. Its shares added 26.3% in the July-September quarter.

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Download Marijuana Moneymakers FREE >>The Bureau of Economic Analysis is set to release the third-quarter GDP numbers on Oct 29, 2020, five days ahead of the U.S. presidential elections. Analysts have predicted a sharp rebound from the historic lows of the second quarter. Economists are largely predicting an annualized growth rate of about 30% for the third quarter, which would be the highest since the 16.7% increase witnessed in the first quarter of 1950 under Harry Truman’s presidentship, as quoted in a CNBC article.
Moreover, per the latest estimate based on the GDPNow model, the Federal Reserve Bank of Atlanta predicted third-quarter GDP to come in at a healthy 35.2%. Analysts at Goldman Sachs have also upgraded their GDP forecast to 35%, while Bloomberg economists predicted GDP of 21% for the third quarter, as quoted in a Business Insider article. The University of California Los Angeles (“UCLA”) Anderson Forecast too suggests an annualized growth rate of 28.3%, as mentioned in a Staffing Industry Analysts article.
Notably, the third-quarter growth estimates come against the backdrop of a record fall which had occurred in the second-quarter when GDP had plunged 31.4%, a revised estimate from the initial figure of 32.9%, the largest decline since the Great Depression. The Bureau of Economic Analysis had cited a decline in state and local government expenditure, personal consumption expenditure (PCE), exports and private inventory investment as the reason behind the plunge.
Nevertheless, the economy is widely predicted to have seen double-digit growth in the third quarter as it reopened, businesses resumed and people got back to work despite a surge in COVID-19 cases. Reflective of this, the unemployment rate fell and consumers increased their outlays. The Fed’s accommodative monetary policy and the government’s economic relief package provided the necessary boost to business houses and consumers.
The expectation of this sharp rebound in the July-September quarter can also be corroborated by the pick-up in both manufacturing and service side activity that constitutes the bulk of broader economic activity. Both ISM manufacturing purchasing manager’s index (PMI) and services PMI have reported a reading of above 50 for all the three months of the quarter, indicating growth. The manufacturing PMI registered a reading of 54.2%, 56% and 55.4% for the months of July, August and September, respectively. The services PMI came in at 58.1%, 56.9% and 57.8% in July, August and September, respectively. Particularly, September’s services PMI reading surpassed the pre-COVID-19 reading of 57.3% in February.
3 Big Gainers to Invest in
With the U.S. economy pretty much on track to register a bounce back in the third-quarter GDP report, it will be prudent to invest in manufacturing and services stocks that have made the most of the rebound. It’s worth pointing out that these stocks are also fundamentally sound to grow in the near future. Notably, they have a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ampco-Pittsburgh Corporation (AP - Free Report) manufactures and sells custom-designed engineering products to commercial and industrial users in the United States. The Zacks Consensus Estimate for its current-year earnings increased more than 100% over the past 60 days. The company's expected earnings growth rate for the current year is 35.1%. Its shares gained 15.9% in the July-September quarter.
ExlService Holdings, Inc. (EXLS - Free Report) provides operations management and analytics services in the United States. The Zacks Consensus Estimate for its current-year earnings increased 16.2% over the past 60 days. The company's expected earnings growth rate for the next quarter is 26.7%. Its shares gained 4.2% in the July-September quarter.
Copart, Inc. (CPRT - Free Report) provides a range of services for processing and selling vehicles on the Internet to vehicle sellers, insurance companies and banks among others in the United States. The Zacks Consensus Estimate for its current-year earnings increased 10.3% over the past 60 days. The company’s expected earnings growth for the current year is 12.1%. Its shares added 26.3% in the July-September quarter.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.  
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration. 
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Copart, Inc. (CPRT) - free report >>

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AmpcoPittsburgh Corporation (AP) - free report >>