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Stellar November Paves the Way for a Solid December: 5 Picks

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Wall Street recently witnessed a blockbuster November rally, with the three major benchmarks notching record monthly returns. The Dow, in particular, recorded its best monthly gain since January 1987. The blue-chip index climbed almost 11.9% in November and touched the coveted 30,000 mark for the first time ever.

The broader S&P 500 and the tech-laden Nasdaq logged their best monthly performance since April, when the coronavirus pandemic had ravaged the U.S. economy. For November, the S&P 500 and the Nasdaq were up nearly 10.8% and 11.8%, respectively. Small-cap stocks too posted strong gains, with the Russell 2000 index registering record monthly performance.

The stock market, no doubt, was boosted by vaccine-related optimism. A possible breakthrough on the vaccine front, leading to an economic revival, prompted investors to mostly buy economically-sensitive cyclical stocks that had to bear the brunt of the deadly virus and its devastating impact on the economy. Prominent stocks from cyclical sectors like energy and financials did extremely well in November.

While the energy sector climbed almost 30% last month, the financials were up 16.8%, per Dow Jones Market Data, as quoted in a MarketWatch article. Energy’s blockbuster performance, by the way, was mostly due to expectations of an uptick in air travel, leading to demand for fuel oil. Needless to say, emergency approval of a vaccine will curb the spread of the virus, buoy overall economic growth and lead to more travel activities. Nonetheless, other beaten-down cyclical sectors like consumer discretionary and industrials were also up 10% and 16%, respectively, in the month of November (read more: Cyclical Stocks Pop on Vaccine Progress: 5 Solid Buys).

Coming back to vaccine news, a trifecta of vaccine candidates has reached late-stage clinical trials. While AstraZeneca PLC (AZN - Free Report) claims that its vaccine candidate has an average efficacy of 70%, Pfizer and Moderna are a bit ahead in the race to a coronavirus vaccine with both claiming their respective vaccine candidates to be about 95% effective. Pfizer Inc. (PFE - Free Report) and Moderna, Inc. (MRNA - Free Report) have asked for emergency authorization from the regulatory body as soon as possible (read more: 3 Stocks to Win Big as Race for Coronavirus Vaccine Heats Up).

But its just not cyclical sectors that have gained last month, in fact, all S&P 500 sectors ended in the green. This is because investors welcomed the news that former Fed Chair Janet Yellen is likely to be the next Treasury Secretary. She has earned the reputation of being market friendly. After all, she has helped the economy vis-a-vis the stock market to stay afloat during challenging periods, including the financial crisis. Also, she is widely anticipated to take unparalleled moves to lend a new lease of life to the U.S. economy and put a stop to the persistent increase in coronavirus infections.

Interestingly, positive factors such as vaccine optimism and Yellen for a top position should help the stock market move ahead in December, if not beyond. Moreover, the month of December has a reputation for being good for stocks as markets tend to be less volatile. Chief investment strategist at CFRA, Sam Stovall, noted that the broader S&P 500 has witnessed an average December return of almost 1.5% since 1945, and in post-election Decembers, the index has risen 83% of the time, as mentioned in a MarketWatch article.

5 of the Best Stocks to Buy for December

With the stock market perceived to scale north in December, investing in growth-oriented stocks seems to be a viable option as of now (read more: Thanksgiving Brings Strong Seasonal Market Trends: 5 Picks).

Thanks to our style score system, we have been able to identify five growth stocks. Our research shows that stocks with a Growth Score of A or B when combined a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best opportunities in the growth investing space.

HIGHPOINT RESOURCES CORP is an exploration and production company. The company currently flaunts a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has risen 17.4% over the past 60 days. The company’s expected earnings growth rate for the current quarter is 208.8%.

Mvb Financial Corp. (MVBF - Free Report) provides banking and mortgage products and services to individuals and corporate clients. The company currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has risen 13.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 9.3%.

General Motors Company (GM - Free Report) is one of the world’s largest automakers that lead the U.S. market share with around 17% of the industry’s total sales in 2019. The company currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 83.2% over the past 60 days. The company’s expected earnings growth rate for the current quarter is more than 100%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Malibu Boats, Inc. (MBUU - Free Report) operates as a designer, manufacturer and marketer of sport boats, primarily in the United States. The company currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has risen 10.3% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 10.8% and 46.8%, respectively.

LaZBoy Incorporated (LZB - Free Report) is one of the world's leading residential furniture producers. The company currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has risen 18.7% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 12.5% and 26.4%, respectively.

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