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Ignore the "Sell in May And Go Away" Maxim: 5 Top Picks

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It certainly makes sense for investors to disregard the old adage “sell in May and go away.” This is because the month of May hasn’t been a discouraging month for the broader S&P 500 at all. LPL Financials’ market strategist Ryan Detrick, as cited in an investors.com article, said that the S&P 500 advanced an average of 3.8% over the six-month period, from May through October, in the past 10 years. Detrick added that the six-month period following a strong April is usually quite remarkable for stocks. For instance, whenever the S&P 500 climbed more than 5% in April, the index mostly registered average gains of 6.2% in the following six months. This certainly squashes doubts that the stock market isn’t going to perform well from May through October.

And why won’t the stock market perform well now? After all, the U.S. economy has recently given enough signs of recuperating from the beating it took last year due to the coronavirus pandemic. Two pillars of the economy, the manufacturing and service sectors, have shown signs of strengthening in recent times. An increase in demand for new orders boosted the manufacturing side of the economy. Meanwhile, relaxation of coronavirus-induced curbs helped the service side of the economy, especially the leisure and entertainment industry, gain strength.

Meanwhile, consumers have remained confident about their financial positions. This is because jobs have been added at a steady pace, while the unemployment rate has fallen to 6% in March, per the Labor Department, as mentioned in a Bloomberg article. Lest we forget, the jobless rate jumped to 14.7% last April when the pandemic pounded the economy and impacted corporate profits. Nonetheless, consumer confidence indicates that there will be an uptick in spending levels, something that bodes well for economic growth. By the way, consumers have started to spend, with sales at U.S. retailers jumping 9.8% in March on fiscal stimulus measures, as cited in a WallStreet Journal article.

However, an improving economic scenario raised concerns about higher inflation. But the Fed of late has assured to remain accommodative and continue with its easy monetary policy, at least through 2023. The Fed does expect a slight bump in inflation this year but is willing to stick to ultra-low-interest rates for the time being to pep up the economy. The Fed has kept its federal funds rate at zero to 0.25%, where it has been since a year ago.

Interestingly, the US Treasury secretary lately said that the Fed may need to hike rates gradually to keep the economy from overheating. This raised concerns among market pundits. However, later, Janet Yellen confirmed that a near-term hike in rates wasn’t something she was “predicting or recommending,” as quoted in a yahoofinance article.

Thus, with the Fed maintaining its easy monetary policy and the economy showing considerable signs of progress, the stock market is poised to scale northward in the month of May and beyond. Hence, it’s imperative for investors to place their bets on stocks that are positioned to scale up along with the broader market. We have, therefore, selected five such stocks that currently possess a Zacks Rank #1 (Strong Buy) and a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

Beazer Homes USA, Inc. (BZH - Free Report) designs, builds and sells single family homes. The Zacks Consensus Estimate for its current-year earnings has moved up 36.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 58.7%.

Conns, Inc. (CONN - Free Report) is a specialty retailer currently operating retail locations in Texas and Louisiana. The Zacks Consensus Estimate for its current-year earnings has moved up 25.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 2,616.67%.

MarineMax, Inc. (HZO - Free Report) is the nation's largest recreational boat and yacht retailer. The Zacks Consensus Estimate for its current-year earnings has moved up 26.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 60.2%.

Olin Corporation (OLN - Free Report) is a vertically-integrated global producer and distributor of chemical products and U.S. maker of ammunition. The Zacks Consensus Estimate for its current-year earnings has moved up 316.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 473.3%.

TrueBlue, Inc. (TBI - Free Report) is a leading provider of specialized workforce solutions, helping clients improve growth and performance by providing staffing, workforce management, and recruitment process outsourcing solutions. The Zacks Consensus Estimate for its current-year earnings has moved up 17.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 197.7%.

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