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5 Good Reasons to Buy These 5 Strong Buy Stocks

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Alright, I know that all the major indexes are in the red all of a sudden. And investors are less confident of projected growth rates, given the way the Delta variant of the virus is spreading, the scheduled Fed meetings that could bring forward interest rate hikes and the slump in 10-year treasury yields.

The impact of the virus is practically impossible to predict and any comments on the rest can only be pure conjecture at this point. But the facts pretty much speak for themselves. So as far as the interest rate is concerned, there could be two factors, i.e. one, the need to steady/slow down the growth rate and two, contain inflation.

On the growth issue, it’s clear that the recovery is still uneven. There are segments of the economy that are still struggling, and many smaller players (including many of the restaurants that are supposedly seeing a strong rebound) still depending on a status quo. Additionally, employment is not where it needs to be and first-time applicants for unemployment benefits just jumped last week. Wage cost inflation is likely in the cards given the number of positions going vacant despite the higher unemployment rate (currently 5.9%). Rising costs for companies will mean higher prices for consumers. But this whole thing is not translating into a high-enough inflation rate yet. Inflation is still under the targeted 2%. Additionally, both the Fed and market watchers believe that the cost inflation is a temporary supply-side issue that will eventually straighten itself out. And finally, the fact that the virus is still up and about means that some risk remains, despite the growing number of vaccinations.

So my guess is that the Fed may continue to talk about raising rates, but that won’t actually happen any time soon.

The 10-year treasury yield is an obvious indicator that investors are concerned, so they’re pulling money out of the market and into the safe haven.

But you really don’t need to do that. The markets have been highly rewarding over the past year and now that things are improving, there are still opportunities, even if you want to play it safe.

And what can be safer than Zacks #1 Rank (Strong Buy) stocks that have been proven to generate strong above-market growth in the last 20+ years? So that’s what I’ve focused on for this article. You can see the complete list of today’s Zacks #1 Rank stocks here.

So the 5 reasons for choosing these stocks are their rank, their value-growth-momentum (VGM) score of A, the attractive industries they are a part of that offer the environment/factors to generate strong growth rates, the company’s growth potential and its estimate revision trend. And since the earnings season will soon be in full swing, I’ve also considered the earnings Expected Surprise Prediction (ESP), which when positive and supported by a Buy or Hold rating, indicates an above average chance of beating estimates (which again raises share prices). So, here we go-

Number one on my list is ArcBest Corporation (ARCB - Free Report) , which provides freight transportation services and solutions, and belongs to the Transportation – Truck industry (top 13%). Its earnings are currently expected to grow 60.1% and 5.3%, respectively in 2021 and 2022. But since the Zacks Consensus Estimates for the two years are up a respective 26.1% and 19.3% in the last 90 days, we could be looking at much higher actual growth rates down the road (if the trend continues). It also has an earnings ESP of 6.0%, so the chances of a beat and raise quarter can’t be ruled out. The company reports on August 2.

Antero Resources Corporation (AR - Free Report) , being one of the faster-growing natural gas producers in the United States with natural gas, natural gas liquids and oil resources in the Appalachian Basin, belongs to the Oil and Gas - Exploration and Production - United States industry (top 14%). It is expected to grow 369.6% in 2021, dropping off in the following year. The estimate revision trend for both years is however on the rise, so 2022 could also ultimately be a growth year. The 2021 estimate is up 41.1% while the 2022 estimate is up 95% in the last 90 days. The ESP of 35.2% when coupled with the Zacks #1 rank of the stock, indicates an earnings beat when the company reports on August 4.

Casino, distribute gaming and lottery services provider Golden Entertainment, Inc. (GDEN - Free Report) belongs to the Gaming Industry (top 30%). I’m seeing expected earnings growth rates of 125.6% and 35.1% in 2021 and 2022, respectively. The 2021 estimate has moved from a loss of 30 cents to a profit of 95 cents in the last 90 days. The 2022 estimate moved from 32 cents to $1.29 in the same time period. The ESP of 0.0%, along with the Zacks #1 rank supports an earnings beat when the company reports on Aug 5.

Next, we have another member of the Gaming Industry, Boyd Gaming Corporation (BYD - Free Report) , which owns and operates 29 properties, offering 1.77 million square feet of casino space, 36,977 slot machines, 809 table games and 11,090 hotel rooms. It also has 320 food and beverage outlets. The company made a 15-cent loss in 2020, and it’s expected to come back strongly to a $3.25 profit this year. In 2022, it’s expected to grow another 7.6%. The 2021 estimate is up 54.0% in the last 90 days while the 2022 estimate is up 35.1%. The earnings ESP is 0.0% which together with the Zacks #1 rank of the stock, indicates an earnings beat when the company reports on Jul 27.

And finally, we have Alto Ingredients, Inc. (ALTO - Free Report) , a producer of specialty alcohols and essential ingredients. The company, which belongs to the Consumer Products – Discretionary industry (top 31%), is expected to generate triple-digit EPS growth in both 2021 and 2022. The Zacks Consensus Estimates for the two years are up 780% and 13.4%, respectively in the last 90 days. The ESP of 0.0% when coupled with the Zacks #1 rank indicates a fair chance of beating estimates when the company reports on Aug 10.

Year-to-Date Price Appreciation

Zacks Investment ResearchImage Source: Zacks Investment Research

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