Wall Street defeated the coronavirus-led pandemic last year. The year was rather dramatic with the termination of the largest bull market in early March, formation of the shortest bear market and the confirmation of a new bull market. Stock markets maintained their rally in the first week of 2021 too and are likely to remain northbound in the long term.
Several corporate behemoths (market capital > $100 billion) have skyrocketed in 2020. A handful of them are also well poised on the growth trajectory for this year. At this stage, it will be fruitful to invest in those stocks with a favorable Zacks Rank.
Major Catalysts of 2021
The FDA has already authorized two COVID-19 vaccines, which means that the economy will reopen and gradually operate at the pre-pandemic level. Last month, the U.S. Congress approved another $900 billion fiscal stimulus, which may increase in 2021.
Moreover, the Fed is pursuing a remarkable ultra-dovish monetary policy to ensure sufficient liquidity in the market. The benchmark interest rate had been reduced to 0-0.25% in March 2020 and is likely to stay there at least up to 2023.
Strong pent-up demand is likely to drive the U.S. economy in 2021. Personal savings rate was high last year 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 U.S. GDP.
Finally, the U.S. economy remained stable despite the global outbreak of coronavirus and its devastations. The first trench of fiscal stimulus — the CARES ACT — ended in July. However, the economy has grown in the last five months albeit at a slow pace despite the lack of a fresh round of fiscal stimulus.
Our Top Picks
We have narrowed down our search to seven corporate behemoths that have strong growth potential in 2021. Moreover, these stocks have long-term (3-5 years) growth of more than 10% compared with the benchmark S&P 500 Index's estimated long-term growth rate of 9%.
Additionally, these stocks witnessed solid earnings estimate revisions for 2021 within the last 7 days reflecting their strong business potentials in 2021. Finally, 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 seven picks in the past year.
Tesla Inc. ( TSLA Quick Quote TSLA - Free Report) has acquired a substantial market share within the electric car segment. Strong performance and impressive design of the firm’s products are ramping up sales volumes. Increasing Model 3 delivery, which forms a major chunk of the automaker’s overall deliveries, is aiding the company’s top line. Along with Model 3, Model Y is also contributing to its revenues.
The Zacks Rank #1 company has an expected earnings growth rate of 60.5% for the current year. It has a long-term growth rate of 32.9%. The Zacks Consensus Estimate for current-year earnings has improved 2% over the last 7 days.
Square Inc. ( SQ Quick Quote SQ - Free Report) offers financial and marketing services in the United States and internationally through its comprehensive commerce ecosystem that helps sellers to start, run and grow their businesses.
The Zacks Rank #2 company has an expected earnings growth rate of 40.6% for the current year. It has a long-term growth rate of 33%. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the last 7 days.
NVIDIA Corp. ( NVDA Quick Quote NVDA - Free Report) is gaining a decent market share among gaming service providers. The strong line-up of advanced graphics cards has made it a favorite graphics card provider among PC makers. Its foray into the autonomous vehicles space is a major positive. NVIDIA’s GPUs are rapidly gaining from the proliferation of artificial intelligence.
The Zacks Rank #1 company has an expected earnings growth rate of 20% for next year (ending January 2022). It has a long-term growth rate of 18.3%. The Zacks Consensus Estimate for next-year earnings has improved 1.1% over the last 7 days.
QUALCOMM Inc. ( QCOM Quick Quote QCOM - Free Report) designs, develops, manufactures and markets digital communication products worldwide. It operates through three segments: Qualcomm CDMA Technologies, Qualcomm Technology Licensing, and Qualcomm Strategic Initiatives.
The Zacks Rank #2 company has an expected earnings growth rate of 71.4% for the current year (ending September 2021). It has a long-term growth rate of 19.6%. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 7 days.
Danaher Corp. ( DHR Quick Quote DHR - Free Report) designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide. It operates through three segments; Life Sciences, Diagnostics, and Environmental & Applied Solutions. Based on the recent market trends, Danaher sees healthy demand for bioprocessing products to be beneficial for the Life Sciences segment.
The Zacks Rank #2 company has an expected earnings growth rate of 18.1% for the current year. It has a long-term growth rate of 17.5%. The Zacks Consensus Estimate for the current year has improved 0.6% over the last 7 days.
Broadcom Inc. ( AVGO Quick Quote AVGO - Free Report) is the premier designer, developer and global supplier of a broad range of semiconductor devices. Its strong relationships with leading OEMs across multiple target markets have helped it to gain key insights into the requirements of customers. In addition, Broadcom maintains an efficient global supply chain with a variable, low-cost operating model.
The Zacks Rank #2 company has an expected earnings growth rate of 18.5% for the current year (ending October 2021). Its long-term growth rate is 15%. The Zacks Consensus Estimate for the current year has improved by 0.1% over the last 7 days.
Alphabet Inc. ( GOOGL Quick Quote GOOGL - Free Report) has been showing increased appetite in the Home Assistant space. It made its foray into this market in 2016 with the launch of Google Home. The company has been growing rapidly in this fast-growing highly-competitive cloud market. The Google search engine is the dominant player in both laptop and mobile platforms. Moreover, Alphabet is strongly positioned with the YouTube platform for online and mobile video.
The Zacks Rank #2 company has an expected earnings growth rate of 11.9% for the current year. Its long-term growth rate is 18.5%. The Zacks Consensus Estimate for the current year has improved 0.3% over the last 7 days.
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