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6 Must-Buy Stocks As Major Indexes Achieve Fresh Milestones
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Wall Street's north bound journey gathered momentum in the first week of January. On Jan 7, all three major stock indexes — the Dow, the S&P 500 and Nasdaq Composite — achieved new milestones of surpassing 31,000, 3,800 and 13,000, respectively, for the first time. All the three indexes recorded all-time and closing highs the day.
The bull run is likely to continue in the near future with the approval of two COVID-19 vaccines last month and their nationwide implementation, starting this month. Consequently, it will be prudent to invest in top-ranked stocks that are members of any of these three indexes.
Other Near-Term Drivers
First, a recently released series of strong economic data have strengthened investors' confidence in the fundamentals of the U.S. economy.
The Institute of Supply Management's (ISM) manufacturing purchasing managers' index (PMI) climbed to 60.7% in December from 57.5% in November, marking the highest level in almost two and a half years. Manufacturing activities have expanded for seven consecutive months defying coronavirus-led economic devastations.
The ISM non-manufacturing (services) PMI for December increased to 57.2% from 55.9% in November, marking its three-month high. This was in contrast to the general view that the resurgence of coronavirus slowed services sector activities the most.
Additionally, 12.7 million units of domestic vehicles were sold in December compared with 12.1 million units in the prior month.
Second, an effective control of the U.S. Congress by the Democrats is likely to result in higher fiscal stimulus and quicker implementation of nationwide vaccination in order to curb the pandemic along with higher allotment of funds for infrastructural developments in the near future.
Several economists and financial experts are concerned that full control of Democrats over the Congress may result in higher corporate taxation and stricter regulations on big technology and communication providers. However, that may not happen immediately.
Consequently, investors have shifted the allotment of funds from safe-haven government bonds to risky equities. On Jan 6, the yield on 10-Year US Treasury Note was closed at 1.049%, The benchmark treasury yield closed above 1% for the first time since March 2020. The yield on 30-year US Treasury Note surged 11.4 basis points to close at 1.832%, its highest in more than eight months. On Jan 7, the yield on 10-Year US Treasury Note was closed at 1.07%.
Third, a second trench of $900 billion coronavirus-aid package approved by the U.S. Congress, an ultra-dovish monetary stance maintained by the Fed, a record low benchmark interest rate of 0-0.25% and robust pent-up demand will bolster corporate profits.
At present, total earnings of the S&P 500 companies are expected to decline 16.7% on 3.6% lower revenues in the pandemic-affected 2020. However, total earnings of the same set of companies are estimated to jump 22.7% on 7.6% higher revenues in 2021.
Our Top Picks
We have narrowed down our search to six stocks that are members of any of the three major indexes based on four selection criteria. First, select large-cap (market cap > $50 billion) stocks as these companies have a stable business model. Second, these stocks skyrocketed in the past six months and still have strong upside left for 2021.
Third, these stocks witnessed solid earnings estimate revisions for 2021 within the last 7 to 30 days. Fourth, each of these stocks 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 six picks in the past six months.
Deere & Co. (DE - Free Report) manufactures and distributes farm equipment worldwide. It operates through three segments: Agriculture and Turf, Construction and Forestry, and Financial Services.
The company has an expected earnings growth rate of 48.5% for the current year (ending October 2021). The Zacks Consensus Estimate for its current-year earnings has improved 1.7% over the last 30 days. The stock price has soared 90.2% in the past six months.
General Motors Co. (GM - Free Report) designs, builds, and sells cars, trucks, crossovers and automobile parts worldwide. It operates through the GM North America, GM International, Cruise and GM Financial segments.
The company has an expected earnings growth rate of 24% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 4.5% over the last 30 days. The stock price has jumped 85% in the past six months.
Micron Technology Inc. (MU - Free Report) designs, manufactures and sells memory and storage products worldwide. It operates through four segments: Compute and Networking Business Unit, Mobile Business Unit, Storage Business Unit, and Embedded Business Unit.
The company has an expected earnings growth rate of 31.1% for the current year (ending August 2021). The Zacks Consensus Estimate for its current-year earnings has improved 1.4% over the last 7 days. The stock price has climbed 58.3% in the past six months.
FedEx Corp. (FDX - Free Report) is the leader in global express delivery services. It provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand.
The company has an expected earnings growth rate of 79.2% for the current year (ending May 2021). The Zacks Consensus Estimate for the current year has improved 10.5% over the last 30 days. The stock price has rallied 58% in the past six months.
JPMorgan Chase & Co. (JPM - Free Report) operates as a leading financial services company worldwide. It operates in four segments: Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management.
The company has an expected earnings growth rate of 23.1% for the current year. The Zacks Consensus Estimate for the current year has improved 2.1% over the last 7 days. The stock price has surged 48.9% in the past six months.
The Goldman Sachs Group Inc. (GS - Free Report) operates as an investment banking, securities, and investment management company worldwide. It operates in four segments: Investment Banking, Global Markets, Asset Management, and Consumer & Wealth Management.
The company has an expected earnings growth rate of 31.5% for the current year. The Zacks Consensus Estimate for the current year has improved 0.4% over the last 7 days. The stock price has advanced 48.2% in the past six months.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Bigstock
6 Must-Buy Stocks As Major Indexes Achieve Fresh Milestones
Wall Street's north bound journey gathered momentum in the first week of January. On Jan 7, all three major stock indexes — the Dow, the S&P 500 and Nasdaq Composite — achieved new milestones of surpassing 31,000, 3,800 and 13,000, respectively, for the first time. All the three indexes recorded all-time and closing highs the day.
The bull run is likely to continue in the near future with the approval of two COVID-19 vaccines last month and their nationwide implementation, starting this month. Consequently, it will be prudent to invest in top-ranked stocks that are members of any of these three indexes.
Other Near-Term Drivers
First, a recently released series of strong economic data have strengthened investors' confidence in the fundamentals of the U.S. economy.
The Institute of Supply Management's (ISM) manufacturing purchasing managers' index (PMI) climbed to 60.7% in December from 57.5% in November, marking the highest level in almost two and a half years. Manufacturing activities have expanded for seven consecutive months defying coronavirus-led economic devastations.
The ISM non-manufacturing (services) PMI for December increased to 57.2% from 55.9% in November, marking its three-month high. This was in contrast to the general view that the resurgence of coronavirus slowed services sector activities the most.
Additionally, 12.7 million units of domestic vehicles were sold in December compared with 12.1 million units in the prior month.
Second, an effective control of the U.S. Congress by the Democrats is likely to result in higher fiscal stimulus and quicker implementation of nationwide vaccination in order to curb the pandemic along with higher allotment of funds for infrastructural developments in the near future.
Several economists and financial experts are concerned that full control of Democrats over the Congress may result in higher corporate taxation and stricter regulations on big technology and communication providers. However, that may not happen immediately.
Consequently, investors have shifted the allotment of funds from safe-haven government bonds to risky equities. On Jan 6, the yield on 10-Year US Treasury Note was closed at 1.049%, The benchmark treasury yield closed above 1% for the first time since March 2020. The yield on 30-year US Treasury Note surged 11.4 basis points to close at 1.832%, its highest in more than eight months. On Jan 7, the yield on 10-Year US Treasury Note was closed at 1.07%.
Third, a second trench of $900 billion coronavirus-aid package approved by the U.S. Congress, an ultra-dovish monetary stance maintained by the Fed, a record low benchmark interest rate of 0-0.25% and robust pent-up demand will bolster corporate profits.
At present, total earnings of the S&P 500 companies are expected to decline 16.7% on 3.6% lower revenues in the pandemic-affected 2020. However, total earnings of the same set of companies are estimated to jump 22.7% on 7.6% higher revenues in 2021.
Our Top Picks
We have narrowed down our search to six stocks that are members of any of the three major indexes based on four selection criteria. First, select large-cap (market cap > $50 billion) stocks as these companies have a stable business model. Second, these stocks skyrocketed in the past six months and still have strong upside left for 2021.
Third, these stocks witnessed solid earnings estimate revisions for 2021 within the last 7 to 30 days. Fourth, each of these stocks 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 six picks in the past six months.
Deere & Co. (DE - Free Report) manufactures and distributes farm equipment worldwide. It operates through three segments: Agriculture and Turf, Construction and Forestry, and Financial Services.
The company has an expected earnings growth rate of 48.5% for the current year (ending October 2021). The Zacks Consensus Estimate for its current-year earnings has improved 1.7% over the last 30 days. The stock price has soared 90.2% in the past six months.
General Motors Co. (GM - Free Report) designs, builds, and sells cars, trucks, crossovers and automobile parts worldwide. It operates through the GM North America, GM International, Cruise and GM Financial segments.
The company has an expected earnings growth rate of 24% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 4.5% over the last 30 days. The stock price has jumped 85% in the past six months.
Micron Technology Inc. (MU - Free Report) designs, manufactures and sells memory and storage products worldwide. It operates through four segments: Compute and Networking Business Unit, Mobile Business Unit, Storage Business Unit, and Embedded Business Unit.
The company has an expected earnings growth rate of 31.1% for the current year (ending August 2021). The Zacks Consensus Estimate for its current-year earnings has improved 1.4% over the last 7 days. The stock price has climbed 58.3% in the past six months.
FedEx Corp. (FDX - Free Report) is the leader in global express delivery services. It provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand.
The company has an expected earnings growth rate of 79.2% for the current year (ending May 2021). The Zacks Consensus Estimate for the current year has improved 10.5% over the last 30 days. The stock price has rallied 58% in the past six months.
JPMorgan Chase & Co. (JPM - Free Report) operates as a leading financial services company worldwide. It operates in four segments: Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management.
The company has an expected earnings growth rate of 23.1% for the current year. The Zacks Consensus Estimate for the current year has improved 2.1% over the last 7 days. The stock price has surged 48.9% in the past six months.
The Goldman Sachs Group Inc. (GS - Free Report) operates as an investment banking, securities, and investment management company worldwide. It operates in four segments: Investment Banking, Global Markets, Asset Management, and Consumer & Wealth Management.
The company has an expected earnings growth rate of 31.5% for the current year. The Zacks Consensus Estimate for the current year has improved 0.4% over the last 7 days. The stock price has advanced 48.2% in the past six months.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>