Business activity picked up last year in the United States with economic reopening and has gathered steam in 2021. Now, as the government has started relaxing COVID-related restrictions, economic activity is set to accelerate.
The vaccination drive, which is in full swing, coupled with a new round of stimulus has given people the confidence to spend more and spurred demand for goods and services. Also, jobless claims have been on the decline for the past few weeks now, indicating a rise in manufacturing and services’ activities are leading to new jobs.
Services, Manufacturing Activity Rises
The IHS Markit Flash Services PMI, released on May 21, rose to 70.1 in May from 64.7 in April. This is also the sharpest growth recorded since 2009. Any reading above 50 indicates the expansion of services businesses.
The services sector has been performing well for some time and has perked up further with the government easing restrictions over the past few weeks. The service industry primarily comprises hotels, restaurants, bars, product delivery, travel and leisure.
According to IHS Markit, new orders and backlog of orders are increasing as demand at both domestic and international markets are on the rise.
Airline companies too are expecting a great summer. Sales at restaurants and bars have been growing over the past couple of months. Moreover, business activities related to working and learning from home have seen a boom over the past few months.
Services Activity Poised to Grow
The services sector took a bad hit during the pandemic with the closure of theme parks, movie theaters and restaurants. The nationwide vaccination drive has given back people and corporations due confidence.
This has seen the government moving faster toward reopening the economy. Earlier this month, President Joe Biden said that the target is to get over 160 million Americans fully vaccinated by Jul 4 and have at least 70% of adults receive one dose of vaccine.
Also, the government has pumped in huge money in the form of stimulus, which has given people the power to purchase with ease. Americans have also managed to save a whopping $2.3 trillion in the form of forced saving during the locked-in period. As the economy reopens, they are likely to spend more, which definitely is going to help the services industry.
Given this scenario, it would be prudent to invest in stocks fromthe services industries. We suggest five such stocks, eachwith a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see
. the complete list of today’s Zacks #1 Rank stocks here Vectrus, Inc. ( VEC Quick Quote VEC - Free Report) engages in providing infrastructure asset management, logistics and supply chain management, and information technology and network communication services.
The company’s expected earnings growth rate for the current year is 38.2%. The Zacks Consensus Estimate for current-year earnings has improved 11% over the past 60 days. Vectrus sports a Zacks Rank #1.
Concentrix Corporation ( CNXC Quick Quote CNXC - Free Report) provides technology-enabled business services. The company serves technology & consumer electronics; retail, travel & ecommerce; banking, financial services & insurance; healthcare; communications & media; automotive; and energy & public sector.
The company’s expected earnings growth rate for the current year is 48.8%. The Zacks Consensus Estimate for current-year earnings has improved 13.9% over the past 60 days. Concentrix Corporationhas a Zacks Rank #2.
CoreMark Holding Company, Inc. is one of the largest marketers of fresh and broad-line supply solutions to the convenience retail industry in North America.
The company’s expected earnings growth rate for the current year is 11.6%. The Zacks Consensus Estimate for current-year earnings has improved 9.3% over the past 60 days. CoreMark Holding carries a Zacks Rank #2.
Covenant Logistics Group Inc. ( CVLG Quick Quote CVLG - Free Report) provides transportation and logistics services in the United States. It operates through four segments: Expedited, Dedicated, Managed Freight and Warehousing.
The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 22.6% over the last 30 days. It has a Zacks Rank #1.
Dine Brands Global, Inc. ( DIN Quick Quote DIN - Free Report) is a full-service dining company. It operates and franchises restaurants under both the Applebee's Neighborhood Grill & Bar and IHOP brands.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 40.7% over the past 60 days. Dine Brands sports a Zacks Rank #1.
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