Wall Street’s fabulous rally came to a halt in January owing to the outbreak of the deadly coronavirus in China and its potential impact on global economic recovery. Wall Street’s two major stock indexes — the Dow and the S&P 500 ended the last month in the red.
However, the third major index — the Nasdaq Composite — witnessed impressive gain in January and has recorded a fresh closing high on Feb 4 as U.S. stock markets recovered from last week’s coronavirus-led pullback. Nasdaq Composite Continues Dream Run The Nasdaq Composite commenced 2020 right from where it left off last year. Notably, the tech-laden index rallied an impressive 35.2% in 2019, marking its best yearly performance in six years. The index followed it up with a 2% gain in January 2020 despite facing severe market volatility thanks to the coronavirus outbreak. While Nasdaq plunged 1.6% on Jan 31, it recovered more than that gaining 1.3% and 2.1%, respectively, in the first two trading days of February. Notably, on Feb 4, the tech-heavy index closed at a fresh all-time high of 9,467.97, its first closing above 9,400. The Nasdaq Composite is up 5.5% year to date. Strong U.S. Economic Data A series of impressive economic data for the month of December and January reaffirms U.S. economic stability and clearly indicates that the expansionary phase is here to stay. Notably, the U.S. economy is expanding for the last 11.5 years — the longest expansion historically. The U.S. GDP grew at 2.3% rate in 2019, buoyed by strong consumer spending, which constitutes more than 70% of the economy. Additionally, a solid labor market and gradual wage growth offset the drop in business spending and manufacturing activities. Strong retail sales and factory data for December confirms improvement in both consumer and business spending. Notably, recovery of the housing market in 2019 was a major positive for the U.S. economy as the sector constitutes nearly 3.1% of GDP. The ISM reported that the U.S. manufacturing index in January came in at 50.9, its highest and first expansion since July 2019. Any reading above 50 equates to expansion of U.S. manufacturing activities. Moreover, the conference board reported that consumer confidence index for the month of January came in at 131.6 — the highest since August 2019. Finally, on Jan 15, the United States and China signed a temporary trade deal popularly known as the phase-one trade deal. Although a complete deal is not likely to be signed before the U.S. presidential election this November, the interim deal will at least help in restoring U.S. business confidence and global economic growth. Invest in Stocks with Solid Momentum Momentum investing calls for a continuous appraisal of stocks, which ensures that an investor does not pick a beaten-down name and overlook a thriving one. Momentum investors buy high on the anticipation that the stock will only ascend in the short to intermediate term. We believe the recent stock market upsurge presents an ideal buying opportunity for momentum investors. The market is highly anticipated to continue its bullish run driven by a stable U.S. economy, an accommodative Fed and the signing of an interim trade deal between the United States and China. Our Top Picks We have narrowed down our search to five Nasdaq Composite stocks that have popped year to date and still hold strong momentum. Each of our Picks carries a Zacks Rank #1 (Strong Buy) and a Momentum Score of A or B. You can see . the complete list of today’s Zacks #1 Rank stocks here The chart below shows the price performance of our five picks year to date. Agilysys Inc. AGYS operates as a developer and marketer of hardware and software products and services to the hospitality industry in North America, Europe, the Asia-Pacific and India. The company has an expected earnings growth rate of 36.8% for the current year (ending March 2020). The Zacks Consensus Estimate for the current year has improved 14.3% over the past 30 days. The stock has rallied 34.5% year to date. SLM Corp. SLM operates as a saving, planning, and paying for college company in the United States. It originates and services private education loans to students or their families. The company has an expected earnings growth rate of 40.2% for the current year. The Zacks Consensus Estimate for the current year has improved 29% over the past 30 days. The stock has jumped 20.5% year to date. Forterra Inc. ( FRTA Quick Quote FRTA - Free Report) manufactures and sells pipe and precast products the United States, Canada, and Mexico. It operates through Drainage Pipe & Products and Water Pipe & Products segments. The company has an expected earnings growth rate of 680% for the current year. The Zacks Consensus Estimate for the current year has improved 141.7% over the past 30 days. The stock has soared 14.7% year to date. Microsoft Corp. MSFT is one of the largest broad-based technology providers globally. Its offerings also include hardware and online services. Additionally, Microsoft offers support services in the form of consultation, training and certification of system integrators and developers. The company has an expected earnings growth rate of 18.7% for the current year (ending June 2020). The Zacks Consensus Estimate for the current year has improved 5.8% over the past 30 days. The stock has surged 14.3% year to date. T. Rowe Price Group Inc. TROW provides investment management services to individuals, institutional investors, retirement plans, financial intermediaries and institutions. The company has an expected earnings growth rate of 9.4% for the current year. The Zacks Consensus Estimate for the current year has improved 7.3% over the past 30 days. The stock has climbed 12.3% year to date. Biggest Tech Breakthrough in a Generation Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity. A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time. See 8 breakthrough stocks now>>