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Shrugging off the initial skepticism, the equity market continued its steady ascent since the elections, sending major indices to record highs. Although several critics have doubted the recent bull run as an aftereffect of Donald Trump’s victory, experts widely believe that the stock market euphoria is largely attributable to some of the sweeping policy changes proposed by the President elect.
As we mark the first month of his unexpected win, let's dig a little deep to have a broad overview about the catalysts to the stock market uptrend.
Investor-Friendly Policies
Infrastructure Thrust: Trump intends to spend $1 trillion in infrastructure projects over a period of 10 years, primarily driven by private financing. In order to lure more capital investment, he aims to offer significant tax breaks to those investors who park a sizable capital in these projects. He envisions that the lost tax revenue would be more than balanced by new income tax revenue from construction workers and business-tax revenue from contractors.
As the U.S. reportedly needs to spend about 0.7% of its GDP in infrastructure projects till 2030 (according to the McKinsey Global Institute) to meet the increasing demands of the economy, a focused roadmap with thrust on the development of key infrastructure facilities is likely to benefit the overall industry.
Tax Overhaul: In order to augment consumer spending, Trump intends to overhaul the tax structure. This includes the restructuring of the seven individual tax brackets into three and lowering the corporate tax rate to 15% from 35%. He expects the lower tax regime to spur higher consumer spending and create about 25 million new jobs over a decade.
The U.S. corporate tax rate is reportedly the highest among the Organization for Economic Co-operation and Development countries. Consequently, Trump’s proposed tax regime is likely to be a boon for those companies that are reeling under a high tax burden.
Regulatory Rollbacks: The Trump regime is likely to have a series of regulatory rollbacks aimed to boost the profitability of small and medium sized companies. Investors continue to turn to banks as the regulatory burden is likely to ease under Trump presidency. One such change will be the raising of the minimum asset threshold for banking behemoths to $250 billion from $50 billion. This will lend more flexibility, boost valuations, strengthen consolidation and increase lending. Trump has also called for repealing parts of the Dodd-Frank Act, which has for a considerable period of time limited operational flexibility.
Screening Parameters
As the equity markets brace for the Trump era with a relentless surge in major benchmark indices, we have zeroed in on five stocks based on certain screening parameters. These include an average return in excess of 50% in the last 30 days along with a Zacks Rank of #2 (Buy) or better and a Value Growth Momentum score (VGM score) of ‘B’ or better.
Our research shows that stocks with a VGM score of ‘A’ or ‘B,’ when combined a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors.
5 Top Picks that Trumped Market
AK Steel Holding Corp. : Ohio-based AK Steel is a leading producer of flat-rolled carbon, stainless, electrical steel and tubular products. It operates eight steel-making and finishing plants, two coke plants and two tube manufacturing plants in Ohio, Pennsylvania, Indiana, Kentucky, Michigan and West Virginia. This Zacks Rank #2 stock has a VGM score of ‘A’ and an average return of 56.2% in the last 30 days.
China Automotive Systems Inc. (CAAS - Free Report) : This Zacks Rank #2 stock manufactures and sells automotive systems and components in the People’s Republic of China. The stock has a VGM score of ‘A’ and boasts an average return of 89.4% in the last month.
Hovnanian Enterprises, Inc. (HOV - Free Report) : Headquartered in Red Bank, NJ, Hovnanian is one of the nation's largest homebuilders and develops single-family detached homes, attached townhomes and condominiums, urban infill, and active lifestyle homes. This Zacks Rank #2 stock has a VGM score of ‘A’ and an average return of 51.6% in the last 30 days.
KEMET Corp. (KEM - Free Report) : Headquartered in Simpsonville, SC, KEMET is reportedly the world's largest manufacturer of solid tantalum capacitors and one of the world's largest manufacturer of multilayer ceramic capacitors that are used in the automotive, communications, computer-related, industrial, consumer, military/aerospace, and alternative energy industries. It has a VGM score of ‘A’ and an average return of 66.8% in the last 30 days. KEMET sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Technical Institute, Inc. (UTI - Free Report) : Universal Technical is a leading provider of post-secondary education in the U.S. offering degree, diploma and certificate programs in the fields of professional automotive, diesel, collision repair, motorcycle and marine. This Zacks Rank #2 stock has a VGM score of ‘B’ and an average return of 57.8% in the last month.
Moving Forward
Jeremy Zirin, chief equity strategist at UBS Wealth Management Americas, perfectly summed up, “Things were already improving before the election. What’s happened since is that many of the pro-growth trends have been exacerbated, and the market is looking at Trump’s policies as likely to continue to boost growth.” Backed by a favorable Zacks Rank and a health VGM score with a solid 4-week return, these stocks could form an integral part of your portfolio to profit from the growth wave.
Zacks' Best Investment Ideas for Long-Term Profit
Today you can gain access to long-term trades with double and triple-digit profit potential rarely available to the public. Starting now, you can look inside our stocks under $10, home run and value stock portfolios, plus more. Want a peek at this private information? Click here >>
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5 Highest Growth Stocks Since Trump Victory
Shrugging off the initial skepticism, the equity market continued its steady ascent since the elections, sending major indices to record highs. Although several critics have doubted the recent bull run as an aftereffect of Donald Trump’s victory, experts widely believe that the stock market euphoria is largely attributable to some of the sweeping policy changes proposed by the President elect.
As we mark the first month of his unexpected win, let's dig a little deep to have a broad overview about the catalysts to the stock market uptrend.
Investor-Friendly Policies
Infrastructure Thrust: Trump intends to spend $1 trillion in infrastructure projects over a period of 10 years, primarily driven by private financing. In order to lure more capital investment, he aims to offer significant tax breaks to those investors who park a sizable capital in these projects. He envisions that the lost tax revenue would be more than balanced by new income tax revenue from construction workers and business-tax revenue from contractors.
As the U.S. reportedly needs to spend about 0.7% of its GDP in infrastructure projects till 2030 (according to the McKinsey Global Institute) to meet the increasing demands of the economy, a focused roadmap with thrust on the development of key infrastructure facilities is likely to benefit the overall industry.
Tax Overhaul: In order to augment consumer spending, Trump intends to overhaul the tax structure. This includes the restructuring of the seven individual tax brackets into three and lowering the corporate tax rate to 15% from 35%. He expects the lower tax regime to spur higher consumer spending and create about 25 million new jobs over a decade.
The U.S. corporate tax rate is reportedly the highest among the Organization for Economic Co-operation and Development countries. Consequently, Trump’s proposed tax regime is likely to be a boon for those companies that are reeling under a high tax burden.
Regulatory Rollbacks: The Trump regime is likely to have a series of regulatory rollbacks aimed to boost the profitability of small and medium sized companies. Investors continue to turn to banks as the regulatory burden is likely to ease under Trump presidency. One such change will be the raising of the minimum asset threshold for banking behemoths to $250 billion from $50 billion. This will lend more flexibility, boost valuations, strengthen consolidation and increase lending. Trump has also called for repealing parts of the Dodd-Frank Act, which has for a considerable period of time limited operational flexibility.
Screening Parameters
As the equity markets brace for the Trump era with a relentless surge in major benchmark indices, we have zeroed in on five stocks based on certain screening parameters. These include an average return in excess of 50% in the last 30 days along with a Zacks Rank of #2 (Buy) or better and a Value Growth Momentum score (VGM score) of ‘B’ or better.
Our research shows that stocks with a VGM score of ‘A’ or ‘B,’ when combined a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors.
5 Top Picks that Trumped Market
AK Steel Holding Corp. : Ohio-based AK Steel is a leading producer of flat-rolled carbon, stainless, electrical steel and tubular products. It operates eight steel-making and finishing plants, two coke plants and two tube manufacturing plants in Ohio, Pennsylvania, Indiana, Kentucky, Michigan and West Virginia. This Zacks Rank #2 stock has a VGM score of ‘A’ and an average return of 56.2% in the last 30 days.
China Automotive Systems Inc. (CAAS - Free Report) : This Zacks Rank #2 stock manufactures and sells automotive systems and components in the People’s Republic of China. The stock has a VGM score of ‘A’ and boasts an average return of 89.4% in the last month.
Hovnanian Enterprises, Inc. (HOV - Free Report) : Headquartered in Red Bank, NJ, Hovnanian is one of the nation's largest homebuilders and develops single-family detached homes, attached townhomes and condominiums, urban infill, and active lifestyle homes. This Zacks Rank #2 stock has a VGM score of ‘A’ and an average return of 51.6% in the last 30 days.
KEMET Corp. (KEM - Free Report) : Headquartered in Simpsonville, SC, KEMET is reportedly the world's largest manufacturer of solid tantalum capacitors and one of the world's largest manufacturer of multilayer ceramic capacitors that are used in the automotive, communications, computer-related, industrial, consumer, military/aerospace, and alternative energy industries. It has a VGM score of ‘A’ and an average return of 66.8% in the last 30 days. KEMET sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Technical Institute, Inc. (UTI - Free Report) : Universal Technical is a leading provider of post-secondary education in the U.S. offering degree, diploma and certificate programs in the fields of professional automotive, diesel, collision repair, motorcycle and marine. This Zacks Rank #2 stock has a VGM score of ‘B’ and an average return of 57.8% in the last month.
Moving Forward
Jeremy Zirin, chief equity strategist at UBS Wealth Management Americas, perfectly summed up, “Things were already improving before the election. What’s happened since is that many of the pro-growth trends have been exacerbated, and the market is looking at Trump’s policies as likely to continue to boost growth.” Backed by a favorable Zacks Rank and a health VGM score with a solid 4-week return, these stocks could form an integral part of your portfolio to profit from the growth wave.
Zacks' Best Investment Ideas for Long-Term Profit
Today you can gain access to long-term trades with double and triple-digit profit potential rarely available to the public. Starting now, you can look inside our stocks under $10, home run and value stock portfolios, plus more. Want a peek at this private information? Click here >>