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3 Growth Stocks to Buy on Inflation Data, Economic Strength
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The consumer price inflation (CPI) for the month of July, which reflects the general level of price, came in at 5.4%, a bit ahead of the market expectation of 5.3%. Month over month, the increase was 0.5%, which moderated from the 0.9% rise witnessed in June.
A more reliable measure that is core inflation, which excludes petroleum and food prices, inched up 0.3% last month, lower than economists’ assumption of a 0.4% escalation. It was also below the 0.9% climb recorded in June.
Major components that contributed to the high inflation were food, new vehicles and shelter. Prices relented a bit for energy, used cars and trucks, apparel, transportation services and medical care. These areas of the economy saw a price surge due to pent-up demand for travel, shopping and delayed healthcare by Americans due to the COVID-19 pandemic.
Though the general price level is at a 13-year high, the rise slowed down. And that cheered the markets with the Dow and S&P moving up 0.62% and 0.25%, respectively.
Per the latest data on inflation, it was widely perceived that price rise might have already peaked but was transitory at the same time as Fed assured.
Some economists are of the opinion that even though the initial burst in inflation is receding, overall, it may remain elevated due to rising wages, high rent etc.
However, the odds against monetary tightening remain low at the moment and interest rates too may continue to be tepid, thereby supporting businesses. The state of labor market will be the determining factor for Fed’s current monetary policy.
On another positive note, economy seems to be on a strong footing as measured by GDP, which augmented at an annualized rate of 6.5% in the second quarter. Consumer spending jumped 11.8% during the three months ended Jun 30, the second-fastest rate since 1952 as people grew more confident about their disposable income.
Economic growth will sustain as rebuilding of infrastructure sets the ball rolling with regard to economic activities. The $1.2-trillion infrastructure bill is already approved by the Senate and currently awaits a further approval in the House of Representatives.
Stocks to Buy
Against an overall upbeat economic backdrop, we pick three growth stocks that should fetch remarkable returns. Each of these stocks carries a Strong Zacks Rank with a solid Growth Score. They have also witnessed an upward revision in earnings estimates.
United States Steel Corp. (X - Free Report) is a steel manufacturer in the United States and the fifth largest in the world. Another leading producer of structural steel is Nucor Corp. (NUE - Free Report) .
United States Steel is set to benefit from U.S. steel prices that made a strong recovery and hit record levels after seeing the pandemic-induced multi-year lows in August 2020.
With the acquisition of Big River steel in January 2021, the company’s position will expand in the high-margin steel-end markets including energy, infrastructure and automotive. The deal will rake in as much as $1 billion worth capital and drive operational cash improvements by 2022.
The company is also deleveraging its balance sheet, which will reduce its interest expense. A strong balance sheet with adequate financial flexibility will aid it to reap future growth opportunities that will come along with Biden’s infrastructure spending.
The stock currently has a Zacks Rank #1 (Strong Buy) and a Growth Score B. The Zacks Consensus Estimate for its current-year earnings improved 10.2% over the last 30 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Conns Inc. (CONN - Free Report) is set to gain from buoyant demand for its products as consumer spending continues to grow.
The company sells major home appliances and a variety of consumer electronics products. Besides, it deals in home office equipment, lawn and garden products as well as bedding, and continues introducing additional product categories for the home to boost same-store sales and respond to the customers' product needs.
De-risking balance sheet, and expanding its digital and e-commerce capabilities bode well for the long haul. Its strategic initiatives including expansion of its brick-and-mortar footprint and enhancement of its merchandising and marketing strategies will likely contribute to its sales.
Its strong cash flow backs its long-term initiatives. The stock is set for growth in the long run with the economy booming.
The stock currently has a Zacks Rank of 1 and a Growth Score A. The Zacks Consensus Estimate for its current-year earnings improved 27.5% over the last 60 days.
AdvanSix Inc. (ASIX - Free Report) , the chemical manufacturer, which produces nylon 6 resin, chemical intermediates and ammonium sulfate fertilizer, rides high on the strong economy.
The company is expected to gain from an uptick in demand across a number of markets including automotive, building & construction, electronics and packaging. Higher demand is expected to bolster its volumes. Solid agricultural industry fundamentals also bode well.
Its robust balance sheet health provides greater flexibility and more options for further value creation. The company is expecting operational efficiency amid sturdy industry dynamics to lift earnings and cash flows in 2021.
The company presently sports a Zacks Rank #1and has a Growth Score B. The Zacks Consensus Estimate for 2021 earnings has been revised 34.7% upward over the past 30 days.
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3 Growth Stocks to Buy on Inflation Data, Economic Strength
The consumer price inflation (CPI) for the month of July, which reflects the general level of price, came in at 5.4%, a bit ahead of the market expectation of 5.3%. Month over month, the increase was 0.5%, which moderated from the 0.9% rise witnessed in June.
A more reliable measure that is core inflation, which excludes petroleum and food prices, inched up 0.3% last month, lower than economists’ assumption of a 0.4% escalation. It was also below the 0.9% climb recorded in June.
Major components that contributed to the high inflation were food, new vehicles and shelter. Prices relented a bit for energy, used cars and trucks, apparel, transportation services and medical care. These areas of the economy saw a price surge due to pent-up demand for travel, shopping and delayed healthcare by Americans due to the COVID-19 pandemic.
Though the general price level is at a 13-year high, the rise slowed down. And that cheered the markets with the Dow and S&P moving up 0.62% and 0.25%, respectively.
Per the latest data on inflation, it was widely perceived that price rise might have already peaked but was transitory at the same time as Fed assured.
Some economists are of the opinion that even though the initial burst in inflation is receding, overall, it may remain elevated due to rising wages, high rent etc.
However, the odds against monetary tightening remain low at the moment and interest rates too may continue to be tepid, thereby supporting businesses. The state of labor market will be the determining factor for Fed’s current monetary policy.
On another positive note, economy seems to be on a strong footing as measured by GDP, which augmented at an annualized rate of 6.5% in the second quarter. Consumer spending jumped 11.8% during the three months ended Jun 30, the second-fastest rate since 1952 as people grew more confident about their disposable income.
Economic growth will sustain as rebuilding of infrastructure sets the ball rolling with regard to economic activities. The $1.2-trillion infrastructure bill is already approved by the Senate and currently awaits a further approval in the House of Representatives.
Stocks to Buy
Against an overall upbeat economic backdrop, we pick three growth stocks that should fetch remarkable returns. Each of these stocks carries a Strong Zacks Rank with a solid Growth Score. They have also witnessed an upward revision in earnings estimates.
United States Steel Corp. (X - Free Report) is a steel manufacturer in the United States and the fifth largest in the world. Another leading producer of structural steel is Nucor Corp. (NUE - Free Report) .
United States Steel is set to benefit from U.S. steel prices that made a strong recovery and hit record levels after seeing the pandemic-induced multi-year lows in August 2020.
With the acquisition of Big River steel in January 2021, the company’s position will expand in the high-margin steel-end markets including energy, infrastructure and automotive. The deal will rake in as much as $1 billion worth capital and drive operational cash improvements by 2022.
The company is also deleveraging its balance sheet, which will reduce its interest expense. A strong balance sheet with adequate financial flexibility will aid it to reap future growth opportunities that will come along with Biden’s infrastructure spending.
The stock currently has a Zacks Rank #1 (Strong Buy) and a Growth Score B. The Zacks Consensus Estimate for its current-year earnings improved 10.2% over the last 30 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Conns Inc. (CONN - Free Report) is set to gain from buoyant demand for its products as consumer spending continues to grow.
The company sells major home appliances and a variety of consumer electronics products. Besides, it deals in home office equipment, lawn and garden products as well as bedding, and continues introducing additional product categories for the home to boost same-store sales and respond to the customers' product needs.
De-risking balance sheet, and expanding its digital and e-commerce capabilities bode well for the long haul. Its strategic initiatives including expansion of its brick-and-mortar footprint and enhancement of its merchandising and marketing strategies will likely contribute to its sales.
Its strong cash flow backs its long-term initiatives. The stock is set for growth in the long run with the economy booming.
The stock currently has a Zacks Rank of 1 and a Growth Score A. The Zacks Consensus Estimate for its current-year earnings improved 27.5% over the last 60 days.
AdvanSix Inc. (ASIX - Free Report) , the chemical manufacturer, which produces nylon 6 resin, chemical intermediates and ammonium sulfate fertilizer, rides high on the strong economy.
The company is expected to gain from an uptick in demand across a number of markets including automotive, building & construction, electronics and packaging. Higher demand is expected to bolster its volumes. Solid agricultural industry fundamentals also bode well.
Its robust balance sheet health provides greater flexibility and more options for further value creation. The company is expecting operational efficiency amid sturdy industry dynamics to lift earnings and cash flows in 2021.
The company presently sports a Zacks Rank #1and has a Growth Score B. The Zacks Consensus Estimate for 2021 earnings has been revised 34.7% upward over the past 30 days.