Back to top

Image: Shutterstock

Year of the Rat Spells Good Times for Wall Street: 5 Picks

Read MoreHide Full Article

If Chinese zodiac interests you, then you might want to know that the calendar will soon change from the Year of the Pig to the Year of the Rat. But does that also mean a change in the performance of the U.S. stock market? After all, the Year of the Pig, mostly considered to be a symbol of fortune and opulence, has been favorable for the U.S. stock market. In fact, U.S. stocks scaled north during the period, defying skeptics who expected the bull market to be upended by trade war threats and global economic slowdown. While the broader stock market, as predominantly measured by the S&P 500 rallied almost 30% last year, it seems to be gaining momentum this year as well.

But, will Year of the Rat bring good tidings as well? Historically, during the Year of the Rat, the S&P 500’s performance has been slightly better than the index’s overall average of 11.4%, according to Stansberry Pacific Research.  

 

What’s more, there is an array of positive factors that should help the U.S. stock market continue its upward journey. The Trump administration’s recent phase-one trade deal with China will lessen the burden on global economic growth created by trade imbalances. Lest we forget, the United States and China together account for 35% to 40% of the world’s economy, and thus have a significant influence on international growth. And since the negotiations have gone well between the countries, business confidence will improve, driving capital expenditure and in turn stocks.

Consumer outlays have also remained healthy, led by record low unemployment rate and wage gains, and should certainly help the economy expand this year. Per the Commerce Department, consumer outlays increased 0.3% in December from a month earlier. At the same time, retail sales for the November-December period increased 4.1% to $730.2 billion, added the National Retail Federation. All these indicate that households have enough spending capabilities to keep the economy expanding at a steady pace in the near term.

By the way, the current low interest environment should make borrowing manageable helping companies invest and grow. This in turn should help the economy gain momentum. To top it, the Fed is expected to keep its monetary policy on hold after trimming rates three consecutive times last year to stimulate the economy. Fed Chair Jerome Powell had said that there is no immediate need to hike the federal fund’s rate unless there is a constant rise in inflation.

Some skeptics, meanwhile, may say that the recent spread of a contagious disease in China may weigh heavily on stocks. But China’s efforts to control the viral outbreak and the World Health Organization’s decision to refrain from declaring China’s coronavirus outbreak a global emergency bolstered investors’ sentiments.

5 Biggest Gainers

Given the bullishness, investing in stocks that can make the most of the Year of the Rat seems judicious. We have, thus, selected five stocks that are poised to yield stellar returns this calendar year that constitute bulk of the Year of the Rat. These stocks also have a Growth Score of A along with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enphase Energy, Inc. (ENPH - Free Report) designs, develops, and sells home energy solutions for the solar photovoltaic industry. The Zacks Consensus Estimate for its current-year earnings has moved 12.7% north over the past 90 days. The company’s expected earnings growth rate for the current year is 790% versus the Solar industry’s projected rise of 12.8%.

Brookfield Business Partners L.P. (BBU - Free Report) is a private equity firm. The firm typically invests in business services, construction, energy and industrials sector. The Zacks Consensus Estimate for its current-year earnings has moved up 6% over the past 60 days. The company’s expected earnings growth rate for the current year is 581.1%, in contrast to the Business - Services industry’s expected decline of 6%.

Amedisys, Inc. (AMED - Free Report) provides home health and hospice services throughout the United States. The Zacks Consensus Estimate for its current-year earnings has climbed 5.5% over the past 90 days. The company’s expected earnings growth rate for the current year is 20.9% versus the Medical - Outpatient and Home Healthcare industry’s estimated rise of 8.6%.

Pure Storage, Inc. (PSTG - Free Report) provides software-defined all-flash solutions that are uniquely fast and cloud-capable. The Zacks Consensus Estimate for its current-year earnings has risen 4.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 19.1% against the Computer- Storage Devices industry’s projected decline of 2.1%.

Match Group, Inc. (MTCH - Free Report) is the world’s foremost provider of dating products and operates a portfolio of more than 45 brands. The Zacks Consensus Estimate for its current-year earnings has moved 6.6% north over the past 90 days. The company’s expected earnings growth rate for the current year is 38.2% versus the Medical - Outpatient and Home Healthcare industry’s projected rise of 1.4%.

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?

Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.

Access Zacks Top 10 Stocks for 2020 today >>

Published in