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Markets End Robust July in Green: 5 Top-Ranked Growth Picks

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Wall Street has witnessed a strong July with all three major stock market indexes comfortably closing in the positive territory. In fact, U.S. stocks have observed robust performance despite Wall Street reeling under several trade-related and geopolitical concerns.

Robust U.S. economy, strong labor market, solid consumer and business spending along with government’s deregulation policies is likely to pave the way for further upside. Massive tax cut and fiscal stimulus will act as catalysts. At this stage, investment in growth stocks with a favorable Zacks Rank, significant growth potential and northbound estimate revisions will be a lucrative option.

Major Indexes Exhibiting Upward Trend

Bull’s had an edge in the Wall Street in July. All three major indexes – the Dow 30, S&P 500 and Nasdaq Composite – ended in the green.  Year to date, the indexes were up 2.8%, 5.3% and 11.1%, respectively.

The Dow was up in three of the last four months. In April, May and July the blue-chip index gained 0.3%, 1.1% and 4.7%, respectively. Only in June, the index lost 0.6%. Notably, 4.7% gain in July was the Dow’s second highest monthly jump in 2018 after a gain of 5.8% in January.

The S&P 500 gained in the trailing four months. From April to July, the benchmark index was up 0.3%, 2.2%, 0.5% and 3.6%, respectively. Likewise, tech-laden Nasdaq Composite also advanced in the last four months by of 0.1%, 5.3%, 0.9% and 2.2%, respectively.

U.S. GDP for Second-Quarter Soars

The U.S. GDP grew at 4.1% in the second-quarter of 2018, marking its highest gain since the third quarter of 2014 and the metric’s third-best growth rate since the Great Recession of 2008-2009.

In the second quarter, consumer spending increased 4%, business investment grew 7.3% and government spending rose 3.5%. Notably, first-quarter 2018 GDP growth rate was revised to 2.2% from 2% reported earlier.

U.S. Economy Remains Robust

On Jul 6, the Department of Labor reported that the U.S. economy added 213,000 non-farm jobs in June outpacing the consensus estimate of 196,000. June’s job market data alleviates concerns that the United States is in the late stage of economic expansion offering little sweetness for market participants.

Moreover, ISM manufacturing and services data for June, Commerce Department’s encouraging data on U.S. trade deficit in May as well as strong consumer credit data for May released by the Fed raised investors’ confidence. Meanwhile, on Jul 26, the Commerce Department reported that the U.S. durable goods orders rose 1% in June, after declining for two consecutive months.

For July, the Conference Board's measure of U.S. consumer confidence index is pegged at 127.4 compared with June’s revised reading of 127.1. July’s reading was also better than the consensus estimate of 126.3.

Our Top Picks

This high level of confidence indicates that consumers and enterprises are expecting U.S. economic expansion to continue in the near term. Improvement in income, jobs and after-tax pay of U.S. consumers are most likely to mitigate worries about global trade war concerns and geopolitical conflicts.

At this stage, investment in stocks with strong growth potential will be lucrative. Our selection is backed by a good Zacks Growth Score and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Our research shows that stocks with a Growth Style Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities in the Growth-investing space. We have handpicked five such stocks with a Zacks Rank #1 and Growth Style Score of A.

The chart below shows price performance of our five picks in the last six months.

Mammoth Energy Services Inc. (TUSK - Free Report) is engaged in the exploration and development of North American onshore unconventional oil and natural gas reserves and energy infrastructure. The company has expected earnings growth of 301.4% for current year. The Zacks Consensus Estimate for the current year has improved by 9.8% over the last 30 days.

Penn Virginia Corp. (PVAC - Free Report) is an oil and gas company. It is engaged in exploration, development and production of oil, NGLs and natural gas. The company has expected earnings growth of 252.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 9.8% over the last 30 days.

W.W. Grainger Inc. (GWW - Free Report) is the leading broad line supplier of facilities maintenance products serving businesses and institutions throughout North America. The company has expected earnings growth of 39.7% for current year. The Zacks Consensus Estimate for the current year has improved by 7.5% over the last 30 days.

The Progressive Corp. (PGR - Free Report) provides personal and commercial property-casualty insurance, other specialty property-casualty insurance and related services primarily in the United States. The company has expected earnings growth of 66.9% for current year. The Zacks Consensus Estimate for the current year has improved by 6% over the last 30 days.

Echo Global Logistics Inc. (ECHO - Free Report) is a leading provider of technology enabled transportation and supply chain management services. The company has expected earnings growth of 86.1% for current year. The Zacks Consensus Estimate for the current year has improved by 9.6% over the last 30 days.

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