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The Zacks Analyst Blog Highlights: Goldman Sachs, Applied Materials, Charles Schwab, Caterpillar and Abbott Lab

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For Immediate Release

Chicago, IL – February 23, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: The Goldman Sachs Group Inc. (GS - Free Report) , Applied Materials Inc. (AMAT - Free Report) , The Charles Schwab Corp. (SCHW - Free Report) , Caterpillar Inc. (CAT - Free Report) and Abbott Laboratories (ABT - Free Report) .

Here are highlights from Monday’s Analyst Blog:

CEO Confidence Hits 17-Year High: 5 Picks

The U.S. stock market has been having a dream run over the past eleven months, barring some occasional fluctuations. However, a section of economists and financial experts have raised eyebrows over whether the stock market's impressive performance truly reflects U.S. economic recovery from pandemic-led devastations or are markets overvalued.

Meanwhile, results of a recently released study conducted by the Conference Board revealed that the CEO Confidence of corporate America soared in first-quarter 2021, reaching a 17-year high. This indicates that aside from Wall Street, the Main Street is also feeling buoyed by nationwide vaccination, and reduction in COVID-19 infections along with massive fiscal and monetary stimulus.

U.S. CEO Confidence Skyrockets

On Feb 18, the Conference Board in collaboration with Business Council reported that the index of CEO Confidence in first-quarter 2021 soared to 73, marking its highest level since the same period in 2004. The index plunged to 34 a year-ago owing to the global outbreak of the deadly coronavirus.

The sub indexes for current economic conditions, expectations for economy and expectations for own industry jumped to 70, 75 and 74 from 3, 49 and 48, respectively, a year ago. Notably, any reading above 50 means that positive responses from CEOs of U.S. companies are higher than negative responses.

Moreover, more than 33% CEOs expect that the wage rate will rise by more than 3% over the next year compared with 22% in the last survey conducted in fourth-quarter 2020. Nearly 50% CEOs responded positively to job additions while just 12% anticipated job reductions. In the previous survey, 34% CEOs had anticipated job cuts. Most important, 82% of the CEOs expect the economy to improve in the next six months as against 63% in the previous survey.

Future Catalysts

First, on Feb 11, President Joe Biden said that by the end of the summer, the United States will have adequate doses of COVID-19 vaccines to administer to more than 300 million citizens. Per Johns Hopkins University, as of Feb 19, nearly 57.4 Americans were vaccinated at a rate of 1.61 million doses per day. Moreover, average new cases for COVID-19 infections in the United States in the past week declined 43% from the average two weeks ago.

Second, the Democrats are moving forward with President Biden’s proposed $1.9 trillion COVID-19 relief package after the U.S. Congress approved a $900 billion coronavirus-aid package  in December 2020. Notably, the tenure of the previous Trump administration's $2.2 billion CARES Act ended in July 2020.

Third, on Feb 10, Fed chairman Jerome Powell said that the central bank will patiently pursue accommodative monetary policies until the labor market reaches near-full employment levels that prevailed prior to the pandemic.

Fed's new strategy of giving unemployment more importance over inflation is a game changing one, which along with benign inflation will enable it to continue with a record-low interest rate of 0-0.25% for a longer period. Moreover, the central bank will continue to buy at least $120 billion of bonds per month to sustain adequate liquidity in the economy.

Fourth, nationwide vaccinations will gradually reopen the U.S. economy that has been operating at suboptimal levels since the lockdowns of last year. The extreme low market interest rate will enable businesses to borrow and refinance at cheap rates.

Last week,  Goldman Sachs reported that currently U.S. citizens have nearly $1.5 trillion in "excess" or "forced" savings that could climb to $2.4 trillion by mid-2021. Reopening of the economy with massive savings is likely to boost personal spending, which in turn will raise demand for business entities.

Our Top Picks

At this stage, it will be prudent to invest in stocks of U.S. corporate behemoths (market capital > $100 billion) as these companies have robust business models and a powerful brand value. We have narrowed our search to five such stocks with strong growth potential for 2021 and have witnessed solid earnings estimate revisions in the past seven to 30 days.

Moreover, all these stocks have strong long-term (3-5) growth prospects and are regular dividend payers providing an important income stream during market downturn. 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 Goldman Sachs Group has an expected earnings growth rate of 15.8% for the current year. The company has a long-term growth rate of 19.2% compared with the S&P 500's estimated long-term growth rate of 9.7%.

The Zacks Consensus Estimate for the current year has improved 8.2% over the past 30 days. This Zacks Rank #1 company has a current dividend yield of 1.58% and the stock price has climbed 19.7% year to date.

Applied Materials has an expected earnings growth rate of 22.1% for the current year (ending October 2021). The company has a long-term growth rate of 10.1% compared with the S&P 500's estimated long-term growth rate of 9.7%.

The Zacks Consensus Estimate for the current year has improved 1.6% over the past seven days. This Zacks Rank #2 company has a current dividend yield of 0.74% and the stock price has rallied 38.5% year to date.

The Charles Schwab has an expected earnings growth rate of 17.1% for the current year. The company has a long-term growth rate of 11.3% compared with S&P 500's estimated long-term growth rate of 9.7%.

The Zacks Consensus Estimate for the current year has improved 0.7% over the past seven days. This Zacks Rank #2 company has a current dividend yield of 1.16% and the stock price has appreciated 16.8% year to date.

Caterpillar has an expected earnings growth rate of 21.3% for the current year. The company has a long-term growth rate of 12% compared with S&P 500's estimated long-term growth rate of 9.7%.

The Zacks Consensus Estimate for the current year has improved 4.5% over the past 30 days. This Zacks Rank #2 company has a current dividend yield of 1.96% and the stock price has surged 15.4% year to date.

Abbott Laboratories has an expected earnings growth rate of 38.9% for the current year. The company has a long-term growth rate of 14.1% compared with the S&P 500's estimated long-term growth rate of 9.7%.

The Zacks Consensus Estimate for the current year has improved 4.5% over the past 30 days. This Zacks Rank #2 company has a current dividend yield of 1.46% and the stock price has advanced 12.4% year to date.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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