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5 Stocks to Buy as Jobs Report Allays Inflation Fears

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The U.S. economy is showing signs of recovery from the coronavirus-led drubbing last year. In fact, many market pundits have started to believe that the economy is now running too hot, boosted by the relaxation of business restrictions, improvement in the pace of vaccination and adequate stimulus measures provided by the government.

As a result, inflation fears gripped investors, leading to a lot of gyrations in the stock market. What’s more, the inflation scare might compel the Fed to tighten its monetary policy earlier than expected. Needless to say, the central bank’s accommodative monetary policy played a significant role in helping the stock market stay afloat amid the coronavirus pandemic.

To put things into perspective, prices of essential commodities jumped at the fastest pace in April since September of 2008. According to the Labor Department, as cited in a CNBC article, the Consumer Price Index (CPI) climbed 4.2% in April compared to a year earlier and was also more than analysts’ expectations of an increase of 3.6%. Notably, the CPI rose 0.8% month over month compared to analysts’ expectation of a 0.2% increase.

Nonetheless, investors breathed a sigh of relief after May’s nonfarm payroll report was weaker than expected. Such a report allayed worries that the U.S. economy was overheating, ebbed inflation concerns and made investors believe that the Fed will maintain its easy monetary policies.

The Labor Department added that 559,000 jobs were created in the U.S. economy, falling short of the estimated job addition of 671,000, per a poll of economists by the Wall Street Journal and Dow Jones, as mentioned in a MarketWatch article. By the way, the article further stated that the Labor Department mentioned that only 266,000 new jobs were added on a seasonally adjusted basis in April, way short of economists’ expectations of around 1 million.

The weaker-than-expected jobs report confirms that the Fed won’t be raising rates quickly and there won't be further spike in commodity prices soon. The Fed, by the by, confirmed earlier that a bump in inflation will anyhow be transitory. Thus, with inflation jitters on the back burner, stocks are certainly expected to do well in the near term.

This is because lower inflation relates to a lower interest rate environment, leading to more spending, thereby boosting revenues of companies vis-à-vis share prices. Most importantly, growth stocks tend to do well when inflation expectations diminish. Hence, we have highlighted five solid growth stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of A or B.

Advanced Micro Devices, Inc. (AMD - Free Report) has strengthened its position in the semiconductor market on the back of its evolution as an enterprise-focus company from a pure-bred consumer-PC chip provider. The company currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 11.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 67.4%.

Bloomin Brands, Inc. (BLMN - Free Report) is a casual dining restaurant company with a portfolio of differentiated restaurant concepts. The company currently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 81.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 391.3%.

Boyd Gaming Corporation (BYD - Free Report) is a multi-jurisdictional gaming company. The company currently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 54% over the past 60 days. The company’s expected earnings growth rate for the current year is 2,266.67%. You can see the complete list of today’s Zacks #1 Rank stocks here.

3D Systems Corporation (DDD - Free Report) is a leading provider of 3D content-to-print solutions, including 3D printers, print materials, on-demand custom parts services and 3D authoring solutions for professionals and consumers worldwide. The company currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 48% over the past 60 days. The company’s expected earnings growth rate for the current year is 436.4%.

Apple Inc. (AAPL - Free Report) designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 15.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 57.6%.

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