Back to top

Image: Bigstock

US Congress Agrees on New Stimulus: 7 Top-Ranked Stocks

Read MoreHide Full Article

On Dec 20, the U.S. Congress finally reached an agreement to approve $900 billion of a fresh coronavirs-aid package. Notably, the first round of around $2 trillion fiscal stimulus injected by the Trump administration in March, terminated in July. Several economic data showed that lack of a new fiscal stimulus has slowed the pace of U.S. economic recovery to some extent in the last four months.

As the U.S. Congress moves forward to vote in favor of the deal to make it a bill, two major stock market's uncertainties are likely over. First, the FDA has already approved two COVID-19 vaccines and the second is the new tranche of coronavirus-relief package.

Consequently, the stage is set for the continuation of market rally in 2021. At this stage, it will be prudent to invest in reopening stocks that have strong growth potential for next year. Although several stocks in this category will be available, we have selected only those that sport a top Zacks Rank.

Congress Reaches Agreement on Stimulus

After more than four months of failed negotiations, the U.S. Congress has reached an agreement on the second round of fiscal stimulus for pandemic-led devastations. Per The Wall Street Journal, the $900 billion package is expected to include a direct payment of $600 for every adult and child. Moreover, the deal is likely to provide $300 weekly unemployment payments for 11 weeks and extend two other unemployment programs until they begin phasing out in mid-March and end in early April.

Other expected provisions in the deal include approximately $300 billion of the small business paycheck protection program, $15 billion for airline payroll support, $82 billion to schools, $10 billion toward childcare, $25 billion for rental assistance, $13 billion for food-stamp and child-nutrition and $30 billion for the procurement and distribution of vaccine.

Importance of Coronavirus Vaccine Approval

The FDA authorization of COVID-19 vaccines this year means that the economy will reopen and gradually operate at the pre-pandemic level. The news will have a strong impact on the stock market. Since the lockdowns imposed in March, the U.S. economy is operating at a significant sub-optimal level. Approval of vaccines will have a strong impact on the stock market.

Moreover, strong pent-up demand is likely to drive the U.S. economy in 2021. Personal savings rate is high in 2020 due to concerns over coronavirus-led economic uncertainties. Consumers were restrained or restricted by the government to spend on those items that were closed during lockdowns. Reopening of the economy with the easing of the pandemic will significantly boost personal spending, the largest component of the U.S. GDP.

Our Top Picks

We have narrowed down our search to seven reopening stocks with strong growth potential for 2021 and have witnessed solid earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #1 (Strong 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 six months.

 

Crocs Inc. (CROX - Free Report) designs, develops, manufactures, markets and distributes casual lifestyle footwear and accessories for men, women and children worldwide. It offers various footwear products, including clogs, sandals, flips and slides, shoes, and boots under the Crocs brand name. The company has an expected earnings growth rate of 11.7% for next year. The Zacks Consensus Estimate for next-year earnings has improved 1.7% over the last 30 days.

Whirlpool Corp. (WHR - Free Report) manufactures and markets home appliances and related products. It operates through four segments: North America; Europe, Middle East and Africa; Latin America; and Asia. The company has an expected earnings growth rate of 8.4% for next year. The Zacks Consensus Estimate for next-year earnings has improved 21.6% over the last 60 days.

Vista Outdoor Inc. (VSTO - Free Report) designs, manufactures and markets consumer products for outdoor sports and recreation markets in the United States and internationally. It operates in two segments: Shooting Sports and Outdoor Products. The company has an expected earnings growth rate of more than 100% for the current year (ending March 2021). The Zacks Consensus Estimate for the current year has increased 37.1% over the last 60 days.

YETI Holdings Inc. (YETI - Free Report) designs, markets, retails and distributes products for the outdoor and recreation market under the YETI brand in the United States, Canada, Australia and Japan. The company has an expected earnings growth rate of 17.8% for next year. The Zacks Consensus Estimate for next-year earnings has increased 19.2% over the last 60 days.

Acushnet Holdings Corp. (GOLF - Free Report) designs, develops, manufactures and distributes golf products in the United States, Europe, the Middle East, Africa, Japan, Korea, and worldwide. It operates through four segments: Titleist Golf Balls, Titleist Golf Clubs, Titleist Golf Gear and FootJoy Golf Wear. The company has an expected earnings growth rate of 46.8% for next year. The Zacks Consensus Estimate for next-year earnings has increased 0.6% over the last 30 days.

Kontoor Brands Inc. (KTB - Free Report) is a lifestyle apparel company that designs, manufactures, sources, markets, and distributes apparel under the Wrangler and Lee brands in the United States and internationally. The company has an expected earnings growth rate of 42.6% for next year. The Zacks Consensus Estimate for next-year earnings has increased 24.4% over the last 60 days.

Monarch Casino & Resort Inc. (MCRI - Free Report) is dedicated to deliver the ultimate guest experience by providing exceptional services as well as the latest gaming, dining and hospitality amenities. The company has an expected earnings growth rate of more than 100% for next year. The Zacks Consensus Estimate for next year has improved 19.6% over the last 60 days.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>

Published in