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Spring Has Come to Warm Us All: 5 Top Stocks to Blossom

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Spring is officially in the air. And it isn’t only about cleaning your closet, but also cleaning up your portfolio. So, it’s time to buy such stocks that have the potential to bloom. Financial and energy-oriented stocks have historically performed better than the general market this warmer season.

Spring breaks, in the meantime, are great for family vacations and trips. Thus, companies that do business in sectors catering to warm weather activities like travel and leisure also tend to do well.

How Will the Stock Market Fare This Spring?

Facebook’s worst drop in nearly four years over data breach has made a lot of noise lately. This in turned has sparked a selloff in technology shares, which by the way has been the best performing sector so far this year.

Recent political worry that led to a number of high-profile departures from the Trump administration and a potential global trade war is also keeping a lid on the broader market upside. Trade friction escalated after the White House planned to levy hefty tariffs on Chinese imports, and foreign steel and aluminum.

The economic backdrop, however, paints a rosy picture. Steady rise in wages, record low jobless rate and upbeat consumer confidence will certainly help the stock market return to its winning ways this spring season. Trump’s business-friendly policies including tax cuts and repealing regulations will also add to stock market gains. Needless to say, we are heading into April which has been historically good for stocks.

Financial & Energy Shares Outperform

While the spring season bodes well for the broader market, financial and energy sectors have traditionally performed even better. As per CNBC.com, both these sectors have given a staggering return of more than 20% over the past 10 warmer seasons, while the S&P 500 managed an average gain of only 5%.

This time around it won’t be different either. Financials are poised to gain as the Fed is widely expected to raise rates by a quarter percentage point this month. As per the CME Group, investors see a 94.4% probability that the central bank will hike rates as near-term inflation expectations climb in March to its highest level in three years.

Higher interest rates will boost bank profits as they increase the spread between what banks earn by funding longer-term assets, such as loans, with shorter-term liabilities. A rise in rates will also enable insurance firms to invest in higher-yielding government securities, thereby leading to greater returns, while brokerage firms and asset managers benefit immensely from rising-rate environments since an increase in rates generally concurs with periods of economic strength and investor enthusiasm.

Coming to the energy sector, it is true that rapid increase in oil supply is leading to the current mismatch between supply and demand. But energy still remains a big growth contributor in Q1, with total earnings for the sector expected to be up 65.7% from the year-earlier period on 15.4% higher revenues (read more: Q1 Earnings Season to Show Growth Acceleration).

Travel & Leisure Activities Increase in Warm Weather

With the advent of spring, many people spend on outdoor activities and travel is very much on their minds. After all, very few can travel in the harsh winter months. Thus, stocks related to the travel and leisure sector will do well.

Needless to say that consumer sentiment touched a 14-year high this month, as households felt more optimistic about the economy. An uptick in consumer sentiment generally leads to a rise in outlays, eventually benefiting companies related to travel and leisure activities.

5 Stocks to Buy This Spring

If you are looking for some stocks to buy the spring, look no further. Here are five to consider from the aforesaid sectors. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

BancFirst Corporation (BANF - Free Report) operates as the bank holding company for BancFirst that provides a range of commercial banking services to retail customers, and small to medium-sized businesses. Currently, the stock has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings moved up 7.6% in the last 60 days. The company’s expected growth rate for the current and next quarter is 20.6% and 15.5%, respectively. The stocks projected growth rate for the current year is 24.3%, more than the industry’s rally of 19.7%.

Health Insurance Innovations, Inc. (HIIQ - Free Report) operates as a cloud-based technology platform and distributor of individual and family health insurance plans, and supplemental products in the United States. Recently, the stock has a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its current-year earnings moved up 26.7% in the last 60 days. The company’s expected growth rate for the current and next quarter is 41.7% and 30.4%, respectively. The stocks projected growth rate for the current year is 46.7%, more than the industry’s rally of 19.6%.

EOG Resources, Inc. (EOG - Free Report) explores for, develops, produces, and markets crude oil and natural gas. Currently, the stock has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings soared 49.8% in the last 60 days. The company’s expected growth rate for both the current and next quarter is more than 100%. The stocks projected growth rate for the current year is 278.6%, more than the industry’s rally of 25%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Wynn Resorts, Limited (WYNN - Free Report) develops, owns, and operates destination casino resorts. Recently, the stock has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings moved up 15% in the last 60 days. The company’s expected growth rate for the current and next quarter is 54% and 71.2%, respectively. The stocks projected growth rate for the current year is 43.2%, more than the industry’s rally of 13.8%.

American Airlines Group Inc. (AAL - Free Report) through its subsidiaries operates as a network air carrier. Currently, the stock has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings moved up 15.4% in the last 60 days. The company’s expected growth rate for the next quarter is a steady 8.3%. The stocks projected growth rate for the current year is 21.5%, more than the industry’s rally of 16.4%.

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