As we are entering 2020, the market is showing signs of a looming worldwide economic slowdown. The U.S. economy, which witnessed the longest bull-run (or uninterrupted economic expansion) till July 2019, is now under scrutiny of market watchers, who strongly feel that this bull-run will end soon.
Per a report by Kiplinger (an American publisher of business forecasts and personal finance advice, and a subsidiary of Dennis Publishing), the U.S. manufacturing industry has witnessed the third straight quarter of decline on uncertainties related to the U.S.-China trade war. This can be taken as an early indication of any slackening in 2020.
What the Market Watchers Are Saying?
Per the December poll by Wolters Kluwer Blue Chip Economic Indicators (published in USA Today), there is a 33.1% chance of a downturn in 2020.
Per a report by Morgan Stanley published on CNBC, real GDP growth in the United States, which is clearly in the late-cycle, will slow down from 2.3% in 2019 to 1.8% in 2020. Notably, per a report by Deloitte, the U.S. economy is witnessing a slowdown in late 2019, which is also anticipated to continue in early 2020, as it gradually reaches its long-run potential growth rate of 1.5-2%. As the economy is already weak, a financial crisis, resulting from tariff impacts and lower investment spending, will likely push it into recession.
This apart, per a report by Duncan Rolph published on Forbes, the upcoming U.S. presidential elections are likely to have a moderating effect on the investments front, as the public may become wary of where to invest their money. Per a report on Business Insider, the recent tax cuts also failed to generate the desired rates of job creation, which instead led to companies’ increasing their stock buybacks. This is also expected to negatively impact the economy.
Although around 266,000 jobs had been added this year, resulting from the easing trade tensions and interest rate cuts, per USA Today, an overall economic slowdown still looms large.
Growth Stocks in Focus Now
Amid the financial instability and uncertainty, it is a prudent idea to pick solid growth stocks as these companies are financially stable, accruing profits in established markets. These stocks, with their solid fundamentals, allow investors to hedge their funds from any economic downturn.
This apart, the Fed kept interest rate unchanged in December and signaled no plans of further change in 2020. This will further increase prospects of growth investing, making the following companies attractive bets for 2020.
Picking the Right Stocks
Growth stocks are fundamentally strong businesses that ensure solid portfolio returns. We have used the Zacks Growth Score to pick such stocks. Our research shows that stocks with the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer good investment opportunities.
You can see the complete list of today’s Zacks #1 Rank stocks here.
We have taken the help of the Zacks Stock Screener to zero in on seven stocks with favorable Zacks Rank and Growth Score.
Here are seven solid bets for the coming year.
Jazz Pharmaceuticals plc (JAZZ - Free Report) , with a Zacks Rank #2, is a specialty biopharmaceutical company that focuses on the areas of sleep and hematology/oncology. This $8.4-billion company has a Growth Score of B. Its long-term historical growth rate was 15.9%. The company’s long-term expected earnings growth rate is pegged at 11.3%.
LHC Group, Inc. (LHCG - Free Report) currently has a Zacks Rank #1 and a Growth Score of A. It serves as a post-acute care partner for hospitals, physicians and families in the United States. From home health and hospice care to long-term acute care and community-based services, the company delivers high-quality, cost-effective care that helps patients manage their health at home. The company, with a market capitalization of $4.3 billion, had a five-year historical growth rate of 19.7%. It expects a long-term earnings growth rate of 13.9%.
Align Technology, Inc. (ALGN - Free Report) presently has a Zacks Rank of 2 and a Growth Score of A. The company manufactures and markets a system of clear aligner therapy, intra-oral scanners and CAD/CAM (computer-aided design and computer-aided manufacturing) digital services used in dentistry, orthodontics and dental records storage. The stock, with a market capitalization of $22 billion, had a long-term historical earnings growth rate of 26.5%. It expects growth of 22.1% for the next 5 years.
Amedisys, Inc. (AMED - Free Report) currently has a Zacks Rank #1 and a Growth Score of B. The company, with a $5.4-billion market cap, is a key provider of home health and hospice services. It has reported earnings growth of 38.3% over the past 5 years. Its long-term projected growth rate is 16.4%.
Amedisys, Inc. Price
Veeva Systems Inc. (VEEV - Free Report) presently has a Zacks Rank #2 and a Growth Score of B. The company, which offers cloud-based software applications and data solutions for the life sciences industry, has a market capitalization of $21 billion. It reported long-term historical rate of growth of 41.5%. It now projects a long-term growth rate of 21.9%.
Mastercard Incorporated (MA - Free Report) has a Zacks Rank #2 and a Growth Score of B at present. The renowned global payment solutions company has a market capitalization of $300 billion. It provides an array of services in support of credit, debit, mobile, web-based and contactless payments, and other related electronic payment programs to financial institutions and other entities. The company’s long-term historical growth rate was 19.3%. Its long-term projected growth rate is 16%.
Moody's Corporation (MCO - Free Report) currently carries a Zacks Rank #2 and has a Growth Score of B. The company is a provider of credit ratings, research, data & analytical tools, software solutions & related risk management services, quantitative credit assessment services, credit training services, and credit process software to banks and other financial institutions. It currently has a market capitalization of $45 billion. Its historical rate of growth was 15.1%. Its long-term projected growth rate is pegged at 10%.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>