From the stock market perspective, the U.S.-China trade war, recession fears, interest rate cuts and partial government shutdown were among the key highlights of 2019, resulting in market volatility.
However, the picture appears to be encouraging when we look at how Wall Street performed through the year. The Dow, S&P 500 and Nasdaq are up more than 24%, 30% and 36%, respectively over the past year.
2019: Not as Bad as Expected
Trade war has had some negative impact on economic growth but the economy stayed strong and stable through the year. Per the Bureau of Economic Analysis, GDP increased at an annual rate of 2.1% in the third quarter of 2019, up from 2% in the second quarter.
The Fed had raised interest rates four times in 2018 to normalize the monetary policy but that inverted the yield curve triggering fears of a recession. But an inverted yield curve is not necessarily an indicator of recession, rather a warning that interest rates are too high and could slow down growth if not fixed.
For a correction, the Fed lowered interest rates thrice in 2019 and also injected huge amount of cash into the financial system. That boosted the economy and made stocks even more attractive.And the small 35-daygovernment had modest impact on the economy.
2020: Things to Get Better
There is an air of optimism with easing trade tensions. The United States is going for trade deals with its trading partners. This will help the economy get stronger in 2020.
With job growth soaring, unemployment is at a 50-year low and is likely to decrease further. With wages rising and household income at the highest level in 20 years, consumer sentiment is likely to remain high. Moreover, factory production is rebounding and domestic homebuilding market is taking off, adding to the optimism.
The United States and China are expected to sign the initial phase of a trade deal in the first week of January. The deal, although lacks details, is likely to prevent the trade war from getting worse. Recently, in a positive gesture to Washington, Beijing waived import tariffs on some U.S. soybean and pork shipment.
The CNN Business Fear & Greed Indexis close to its highest levels in the past three years. It currently indicates "extreme greed," a reversal from "extreme fear" in markets a year ago.
Stocks From Top-Ranked Industries
Given the optimism surrounding stock market and upbeat outlook for 2020, it is obvious that stocks from top-ranked industries will perform significantly better.
We have employed the Zacks Stocks Screener to find five stocks from top-ranked industries (top 8%) that are poised to perform in 2020. Our back-testing shows that the top 50% of the Zacks ranked industries outperforms the bottom 50% by a factor of more than two-to-one.
Also, we have picked stocks that have recently witnessed positive estimate revisions.
McGrath RentCorp MGRC is a business to business rental company. The company belongs to the Financial - Leasing Companies industry, which holds #1 rank out of more than 250 industries (top %). The stock currently sports a Zacks Rank #1. Earnings estimates for the current year have moved up 6.8% in the past 60 days to $3.75 per share. You can see the complete list of today’s Zacks #1 Rank stocks here
McGrath RentCorp Price, Consensus and EPS Surprise
Japan-based multinational photography and imaging company FUJIFILM Holdings Corporation FUJIY belongs to the Semiconductor Equipment - Photomasks industry, which is also a #1 ranked industry (Top 1%) The stock currently sports a Zacks Rank #1. Earnings estimates for the current year have moved up 11.7% in the past 60 days to $3.05 per share.
Fujifilm Holdings Corp. Price, Consensus and EPS Surprise