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Top 5 Growth Picks on Expectations of Higher Fiscal Stimulus
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Wall Street closed higher on Tuesday, a day before President elect Joe Biden formally takes charge as the next U.S. President. Last week was a disappointing one as the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — posted their worst weekly performance since the week ended Oct 30.
Investors' confidence was boosted by positive signal for higher fiscal stimulus and a faster nationwide vaccination process. Meanwhile, Wall Street is maintaining its northbound journey after finishing an impressive 2020 defying the pandemic.
At this stage, it will be prudent to invest in growth stocks with a favorable Zacks Rank. Notably, growth investors are primarily focused on stocks with aggressive earnings or revenue growth, which should propel their stock price higher in the future. Higher fiscal stimulus and vaccination process are likely to drive the overall growth of the economy.
Expectations for Higher Fiscal Stimulus
On Jan 19, during her Senate confirmation hearing, Janet Yellen, President-elect Joe Biden’s designated nominee for Treasury Secretary and a former chairperson of the Federal Reserve, said that with interest rates at historic lows, the best way to counter the coronavirus-led economic devastations is to inject a big relief package although that will increase the U.S. debt burden.
On Jan 14, President elect Joe Biden proposed a new $1.9 trillion coronavirus-aid package called “American Rescue Plan.” The proposed plan will include increasing direct payments to $2,000 from the existing $600 and supplemental unemployment benefits to $400 per week through September. The proposal also mentions that the minimum wage rate would be hiked to $15 per hour and moratoriums on eviction and foreclosure on mortgages would be extended to Sep 30.
The plan will include $20 billion for a national vaccination program, $50 billion for COVID testing, and $350 billion aid to state and local governments. In addition, the plan will provide $130 billion for reopening of schools, $35 billion for higher education and $5 billion for a “Hardest Hit Education Fund.”
Faster Vaccination Process
On Jan 19, Dr. Rochelle Walensky, Biden’s nominee to Head the Centers for Disease Control and Prevention, expressed her confidence that the country has enough COVID-19 vaccine doses to meet the Trump administration’s goal of immunizing 100 million people in 100 days despite a slower-than-expected rollout.
Our Top Picks
We have narrowed down our search to five large-cap (market capital > $10 billion) stocks as these companies have an established business model and a solid brand value.
These stocks have strong growth potential for 2021 and witnessed robust earnings estimate revisions in last 7 to 30 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Growth Score A. 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.
Tesla Inc. (TSLA - Free Report) has acquired 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 contributing to its revenues.
The company has an expected earnings growth rate of 60.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 7 days. It has a long-term (3-5 years) growth rate of 37.5% compared with 9.1% of the benchmark S&P 500 Index.
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 81.5% for the current year (ending May 2021). The Zacks Consensus Estimate for current-year earnings has improved 10.5% over the last 30 days. It has a long-term growth rate of 12% compared with 9.1% of the benchmark S&P 500 Index.
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 23.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 7 days. It has a long-term growth rate of 9.9% compared with 9.1% of the benchmark S&P 500 Index.
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 50.9% for the current year (ending October 2021). The Zacks Consensus Estimate for current-year earnings has improved 16.3% over the last 7 days. It has a long-term growth rate of 16% compared with 9.1% of the benchmark S&P 500 Index.
Lennar Corp. (LEN - Free Report) operates as a homebuilder primarily under the Lennar brand in the United States. It operates through Homebuilding East, Homebuilding Central, Homebuilding Texas, Homebuilding West, Financial Services, Multifamily, and Lennar Other segments.
The company has an expected earnings growth rate of 8.3% for the current year (ending November 2021). The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the last 30 days. It has a long-term growth rate of 8.7% compared with 9.1% of the benchmark S&P 500 Index.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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Top 5 Growth Picks on Expectations of Higher Fiscal Stimulus
Wall Street closed higher on Tuesday, a day before President elect Joe Biden formally takes charge as the next U.S. President. Last week was a disappointing one as the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — posted their worst weekly performance since the week ended Oct 30.
Investors' confidence was boosted by positive signal for higher fiscal stimulus and a faster nationwide vaccination process. Meanwhile, Wall Street is maintaining its northbound journey after finishing an impressive 2020 defying the pandemic.
At this stage, it will be prudent to invest in growth stocks with a favorable Zacks Rank. Notably, growth investors are primarily focused on stocks with aggressive earnings or revenue growth, which should propel their stock price higher in the future. Higher fiscal stimulus and vaccination process are likely to drive the overall growth of the economy.
Expectations for Higher Fiscal Stimulus
On Jan 19, during her Senate confirmation hearing, Janet Yellen, President-elect Joe Biden’s designated nominee for Treasury Secretary and a former chairperson of the Federal Reserve, said that with interest rates at historic lows, the best way to counter the coronavirus-led economic devastations is to inject a big relief package although that will increase the U.S. debt burden.
On Jan 14, President elect Joe Biden proposed a new $1.9 trillion coronavirus-aid package called “American Rescue Plan.” The proposed plan will include increasing direct payments to $2,000 from the existing $600 and supplemental unemployment benefits to $400 per week through September. The proposal also mentions that the minimum wage rate would be hiked to $15 per hour and moratoriums on eviction and foreclosure on mortgages would be extended to Sep 30.
The plan will include $20 billion for a national vaccination program, $50 billion for COVID testing, and $350 billion aid to state and local governments. In addition, the plan will provide $130 billion for reopening of schools, $35 billion for higher education and $5 billion for a “Hardest Hit Education Fund.”
Faster Vaccination Process
On Jan 19, Dr. Rochelle Walensky, Biden’s nominee to Head the Centers for Disease Control and Prevention, expressed her confidence that the country has enough COVID-19 vaccine doses to meet the Trump administration’s goal of immunizing 100 million people in 100 days despite a slower-than-expected rollout.
Our Top Picks
We have narrowed down our search to five large-cap (market capital > $10 billion) stocks as these companies have an established business model and a solid brand value.
These stocks have strong growth potential for 2021 and witnessed robust earnings estimate revisions in last 7 to 30 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Growth Score A. 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.
Tesla Inc. (TSLA - Free Report) has acquired 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 contributing to its revenues.
The company has an expected earnings growth rate of 60.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 7 days. It has a long-term (3-5 years) growth rate of 37.5% compared with 9.1% of the benchmark S&P 500 Index.
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 81.5% for the current year (ending May 2021). The Zacks Consensus Estimate for current-year earnings has improved 10.5% over the last 30 days. It has a long-term growth rate of 12% compared with 9.1% of the benchmark S&P 500 Index.
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 23.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 7 days. It has a long-term growth rate of 9.9% compared with 9.1% of the benchmark S&P 500 Index.
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 50.9% for the current year (ending October 2021). The Zacks Consensus Estimate for current-year earnings has improved 16.3% over the last 7 days. It has a long-term growth rate of 16% compared with 9.1% of the benchmark S&P 500 Index.
Lennar Corp. (LEN - Free Report) operates as a homebuilder primarily under the Lennar brand in the United States. It operates through Homebuilding East, Homebuilding Central, Homebuilding Texas, Homebuilding West, Financial Services, Multifamily, and Lennar Other segments.
The company has an expected earnings growth rate of 8.3% for the current year (ending November 2021). The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the last 30 days. It has a long-term growth rate of 8.7% compared with 9.1% of the benchmark S&P 500 Index.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>