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Strong January is a Good Omen for Wall Street: 5 Growth Picks
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The S&P 500, after posting a whopping 24% gain in 2023, is continuing its winning streak this year. The S&P 500 enjoys a bull market and has touched record highs after spinning in a tight trading range for quite some time.
The broader index gained more than 3% in January, as solid economic growth crushed recession fearmongering while inflationary pressure cooled down to levels that encouraged the Federal Reserve to take a dovish stance.
The uptick in consumer outlays and strength in the labor market helped the U.S. economy expand at an annualized rate of 3.3% in the fourth quarter of 2023, which followed an annual growth of 4.9% in the third quarter, per the Commerce Department. Strong back-to-back readings came in despite the Fed’s monetary tightening measures.
In reality, consumer spending increased by 2.8% in the final quarter of 2023, while business investments and government spending also improved. On the other hand, jobs are being added to the economy at a steady clip and the jobless rate remains low.
Needless to say, economic slowdown fears are now on the back burner, with most of the respondents surveyed by the National Association of Business Economics agreeing that there is a 50% or less chance of the U.S. economy heading into a recession in the upcoming one-year span as prices pressures have eased and supply-chain issues have ebbed.
Talking about inflation, the Fed’s preferred measure of inflation, the personal consumption expenditures price index, increased only 1.7% in the fourth quarter, less than the 2.6% increase in the third quarter, and very much around the Fed’s target of 2%. With price pressures falling, the Fed is expected to trim interest rates this year, which boosts consumer spending and business investments.
Thus, with things looking up for the economy, the stock market is poised to gain for the rest of the year. Historically, the rest of the year’s performance is dependent on how stocks performed in January, better known as the “January barometer.” If the S&P 500 finishes in the green in January, then it's expected to post positive results for the remainder of the year.
Moreover, Bespoke Investment Group stated that when the S&P 500 gained more than 2% in January, its median performance for the remaining year was an increase of 13.5%. Hence, on this heartening note, it is prudent for investors to place their bets on fundamentally sound growth stocks that can make the most of the stock market’s upward journey.
Arista Networks is engaged in providing cloud networking solutions. Arista Networks currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 0.6% over the past 90 days. ANET’s expected earnings growth rate for the current year is 43%.
Chipotle Mexican Grill operates quick-casual and fresh Mexican food restaurant chains. Chipotle Mexican Grill currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 0.2% over the past 60 days. CMG’s expected earnings growth rate for the current year is 34.6%.
Netflix is considered a pioneer in the streaming space. Netflix currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 6.3% over the past 60 days. NFLX’s expected earnings growth rate for the current year is 40.7%.
DaVita is a leading provider of dialysis services in the United States. DaVita currently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 9.2% over the past 90 days. DVA’s expected earnings growth rate for the current year is 22.3%.
Royal Caribbean Cruises is a cruise company. Royal Caribbean Cruises currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 0.6% over the past 60 days. RCL’s expected earnings growth rate for the current year is 188.4%.
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Strong January is a Good Omen for Wall Street: 5 Growth Picks
The S&P 500, after posting a whopping 24% gain in 2023, is continuing its winning streak this year. The S&P 500 enjoys a bull market and has touched record highs after spinning in a tight trading range for quite some time.
The broader index gained more than 3% in January, as solid economic growth crushed recession fearmongering while inflationary pressure cooled down to levels that encouraged the Federal Reserve to take a dovish stance.
The uptick in consumer outlays and strength in the labor market helped the U.S. economy expand at an annualized rate of 3.3% in the fourth quarter of 2023, which followed an annual growth of 4.9% in the third quarter, per the Commerce Department. Strong back-to-back readings came in despite the Fed’s monetary tightening measures.
In reality, consumer spending increased by 2.8% in the final quarter of 2023, while business investments and government spending also improved. On the other hand, jobs are being added to the economy at a steady clip and the jobless rate remains low.
Needless to say, economic slowdown fears are now on the back burner, with most of the respondents surveyed by the National Association of Business Economics agreeing that there is a 50% or less chance of the U.S. economy heading into a recession in the upcoming one-year span as prices pressures have eased and supply-chain issues have ebbed.
Talking about inflation, the Fed’s preferred measure of inflation, the personal consumption expenditures price index, increased only 1.7% in the fourth quarter, less than the 2.6% increase in the third quarter, and very much around the Fed’s target of 2%. With price pressures falling, the Fed is expected to trim interest rates this year, which boosts consumer spending and business investments.
Thus, with things looking up for the economy, the stock market is poised to gain for the rest of the year. Historically, the rest of the year’s performance is dependent on how stocks performed in January, better known as the “January barometer.” If the S&P 500 finishes in the green in January, then it's expected to post positive results for the remainder of the year.
Moreover, Bespoke Investment Group stated that when the S&P 500 gained more than 2% in January, its median performance for the remaining year was an increase of 13.5%. Hence, on this heartening note, it is prudent for investors to place their bets on fundamentally sound growth stocks that can make the most of the stock market’s upward journey.
Some of the prominent names are Arista Networks (ANET - Free Report) , Chipotle Mexican Grill (CMG - Free Report) , Netflix (NFLX - Free Report) , DaVita (DVA - Free Report) and Royal Caribbean Cruises (RCL - Free Report) . These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of A or B, a combination that offers the best opportunities in the growth investing space. You can see the complete list of today’s Zacks Rank #1 stocks here.
Arista Networks is engaged in providing cloud networking solutions. Arista Networks currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 0.6% over the past 90 days. ANET’s expected earnings growth rate for the current year is 43%.
Chipotle Mexican Grill operates quick-casual and fresh Mexican food restaurant chains. Chipotle Mexican Grill currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 0.2% over the past 60 days. CMG’s expected earnings growth rate for the current year is 34.6%.
Netflix is considered a pioneer in the streaming space. Netflix currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 6.3% over the past 60 days. NFLX’s expected earnings growth rate for the current year is 40.7%.
DaVita is a leading provider of dialysis services in the United States. DaVita currently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 9.2% over the past 90 days. DVA’s expected earnings growth rate for the current year is 22.3%.
Royal Caribbean Cruises is a cruise company. Royal Caribbean Cruises currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 0.6% over the past 60 days. RCL’s expected earnings growth rate for the current year is 188.4%.