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Why "Sell in May?" Instead, Buy These 5 Growth Stocks Now
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Wall Street’s age-old adage “sell in May and go away” highlights that the summer months between May and October is the worst period for investors to put money in the stock market. Especially after an outstanding winter, it’s hard to digest that there won't be any profit-taking in the weaker summer months.
But astute investors shouldn’t completely unload stocks because of seasonal trends. This is because 2024 is a presidential election year, and stocks tend to perform better in the months leading up to the election compared to nonelection years. By the way, the stock market has already defied the sell-in-May trend, with all the major indexes trading in the positive territory for the month.
The Dow Jones Industrial Average scaled upward for the eighth successive trading session on May 10 and registered its best week since December. The 30-stock index posted a fourth consecutive winning week and is now tantalizingly close to the coveted 40,000 mark. The broader S&P 500 and the tech-laden Nasdaq Composite also recorded their third positive week (read more: Dow's 40,000 on the Way: 3 Blue Chip Stocks to Buy Now).
The stock market, in reality, is well-poised to gain traction as the Federal Reserve has ruled out any interest rate hike in the upcoming policy meetings. To top it, despite sticky inflation, the cooling of the labor market raised hopes of interest rate cuts soon. New job additions were the lowest in April since November and the unemployment rate is hovering near the 4% mark. Wage growth, on the other hand, declined to its lowest level in April in three years.
Thus, consumers’ intent to spend will decline amid fewer jobs and weaker wage growth, which should curb price pressures. The Fed, in turn, will be compelled to trim interest rates. This will lead to a decline in the cost of borrowing and boost consumer outlays.
Hence, with the economy well-positioned to chug along and the stock market set to defy discouraging seasonal factors, investors should place bets on fundamentally sound growth stocks such as Agnico Eagle Mines Limited (AEM - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) , Amazon.com, Inc. (AMZN - Free Report) , Alphabet Inc. (GOOGL - Free Report) and Hess Corporation (HES - Free Report) for solid returns.
Agnico Eagle Mines is a gold producer having exploration activities in Canada, Europe, Latin America and the United States. Agnico Eagle Mines presently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 39.7% over the past 60 days. AEM’s expected earnings growth rate for the current year is 42.2%.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids. Abercrombie & Fitch currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 3.2% over the past 60 days. ANF’s expected earnings growth rate for the current year is 20.1%.
Amazon is one of the largest e-commerce providers. Amazon currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 11.8% over the past 60 days. AMZN’s expected earnings growth rate for the current year is 56.6%.
Alphabet is one of the most innovative companies in the modern technological age. Alphabet presently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 11.8% over the past 60 days. GOOGL’s expected earnings growth rate for the current year is 30.5% (read more: Bill Ackman's Favorite "Magnificent 7" Stock is a Big Winner).
Hess is a leading oil and natural gas exploration and production company. Hess currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 25.3% over the past 60 days. HES’ expected earnings growth rate for the current year is 81.6%.
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Why "Sell in May?" Instead, Buy These 5 Growth Stocks Now
Wall Street’s age-old adage “sell in May and go away” highlights that the summer months between May and October is the worst period for investors to put money in the stock market. Especially after an outstanding winter, it’s hard to digest that there won't be any profit-taking in the weaker summer months.
But astute investors shouldn’t completely unload stocks because of seasonal trends. This is because 2024 is a presidential election year, and stocks tend to perform better in the months leading up to the election compared to nonelection years. By the way, the stock market has already defied the sell-in-May trend, with all the major indexes trading in the positive territory for the month.
The Dow Jones Industrial Average scaled upward for the eighth successive trading session on May 10 and registered its best week since December. The 30-stock index posted a fourth consecutive winning week and is now tantalizingly close to the coveted 40,000 mark. The broader S&P 500 and the tech-laden Nasdaq Composite also recorded their third positive week (read more: Dow's 40,000 on the Way: 3 Blue Chip Stocks to Buy Now).
The stock market, in reality, is well-poised to gain traction as the Federal Reserve has ruled out any interest rate hike in the upcoming policy meetings. To top it, despite sticky inflation, the cooling of the labor market raised hopes of interest rate cuts soon. New job additions were the lowest in April since November and the unemployment rate is hovering near the 4% mark. Wage growth, on the other hand, declined to its lowest level in April in three years.
Thus, consumers’ intent to spend will decline amid fewer jobs and weaker wage growth, which should curb price pressures. The Fed, in turn, will be compelled to trim interest rates. This will lead to a decline in the cost of borrowing and boost consumer outlays.
Hence, with the economy well-positioned to chug along and the stock market set to defy discouraging seasonal factors, investors should place bets on fundamentally sound growth stocks such as Agnico Eagle Mines Limited (AEM - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) , Amazon.com, Inc. (AMZN - Free Report) , Alphabet Inc. (GOOGL - Free Report) and Hess Corporation (HES - Free Report) for solid returns.
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.
Agnico Eagle Mines is a gold producer having exploration activities in Canada, Europe, Latin America and the United States. Agnico Eagle Mines presently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 39.7% over the past 60 days. AEM’s expected earnings growth rate for the current year is 42.2%.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids. Abercrombie & Fitch currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 3.2% over the past 60 days. ANF’s expected earnings growth rate for the current year is 20.1%.
Amazon is one of the largest e-commerce providers. Amazon currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 11.8% over the past 60 days. AMZN’s expected earnings growth rate for the current year is 56.6%.
Alphabet is one of the most innovative companies in the modern technological age. Alphabet presently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 11.8% over the past 60 days. GOOGL’s expected earnings growth rate for the current year is 30.5% (read more: Bill Ackman's Favorite "Magnificent 7" Stock is a Big Winner).
Hess is a leading oil and natural gas exploration and production company. Hess currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 25.3% over the past 60 days. HES’ expected earnings growth rate for the current year is 81.6%.