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5 Growth Stocks to Buy as US Stock Markets Hit Record Highs

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U.S. stocks saw a dramatic rebound last week, starting with a massive selloff on Jul 19. However, by Jul 23, benchmarks not only recouped the losses, they in fact ended at all-time highs. The COVID-19 delta variant outbreak across the globe had dampened investors’ sentiment at the beginning of the week.

After all, investors feared that the outbreak of the more contagious version of coronavirus may lead to the shutdown of business activities and impact economic growth. The delta variant, no doubt, has shown signs of spreading in many parts of the United States, especially where the vaccination rates are comparatively low.

Incidentally, the Dow shed more than 700 points on Jul 19 to see its worst trading session in almost nine months. The S&P 500 and the Nasdaq also closed in the negative territory and saw their worst performance since May.

But thankfully, the major indexes were back up by the end of the week. The Dow successfully closed above the coveted 35,000 mark on Jul 23, while the S&P 500 and the Nasdaq finished at new highs. This is because investors eventually ignored the delta variant and instead cheered the positive corporate earnings results.

Mostly, the upbeat earnings results came from big tech names like Twitter and Snap. The companies have been able to register solid earnings and revenue beats, underlining the strength in the Internet advertising market. Notably, both companies’ active users grew more than expected in the second quarter. This is an encouraging sign for ad-driven companies like Alphabet and Facebook, which are poised to report earnings results this week.

But it’s not just tech majors, other S&P 500 members have also reported promising quarterly results so far. To put things into perspective, 120 S&P 500 members have reported second-quarter results so far, with earnings up 118.9% compared with the same period last year on 18.4% lower revenues. In fact, total earnings of the S&P 500 companies are expected to rise 74.3% from the year-ago period on 20% higher revenues (read more: Big Tech Earnings Preview: Apple, Amazon and Other Market Movers).

Investors, by the way, are also concerned about an increase in inflation. Inflation actually leads to a rise in bond yields, thereby affecting the allure of growth stocks. The consumer price index (CPI) had in reality jumped 5.4% in June compared to the same period a year ago, added the Labor Department, citing a MarketWatch article. The producer price index (PPI) too increased last month.

However, let’s admit that the Fed had already soothed fears about inflation. Fed Chair Jerome Powell believes that the bump in inflation is transitory and that the central bank intends to continue its accommodative monetary policy for the time, which undoubtedly bodes well for the stock market (read more: 5 Top Growth Stocks to Buy as Fed Soothes Inflation Fears).

Thus, with the broader market expected to chug along in the near future as the variant and inflation fears somewhat ebb, it’s prudent to invest in fundamentally sound growth stocks for big gains in the near future. We have, thus, selected five such stocks that at present flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of A or B.

AutoNation, Inc. (AN - Free Report) is the largest automotive retailer in the United States. 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 29.8% over the past 60 days. The company’s expected earnings growth rate for the current year is almost 85%.

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 3.1% over the past 60 days. The company’s expected earnings growth rate for the current year is a whopping 2,326.67%.

Ford Motor Company (F - Free Report) designs, manufactures, markets and services cars, trucks, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles. The company currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has risen 30.5% over the past 60 days. The company’s expected earnings growth rate for the current year is a 202.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ruths Hospitality Group, Inc. (RUTH - Free Report) is one of the largest fine dining steakhouse companies in the United States. The company currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved 18.9% north over the past 60 days. The company’s expected earnings growth rate for the current year is a 381.6%.

3M Company (MMM - Free Report) develops, manufactures and markets various products. The company currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has climbed 0.5% over the past 60 days. The company’s expected earnings growth rate for the current year is a 11.9%.

Shares of AutoNation, Boyd Gaming, Ford Motor, Ruths Hospitality Group and 3M have already gained 67.2%, 30.9%, 57.2%, 14.5% and 14.7%, respectively, on a year-to-date basis.

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