Investors kept an eye on President Trump’s State of the Union address for hints on whether the U.S. stock market will be able to maintain the upward trajectory established this year. In his last State of the Union address before the 2020 election, Trump said that since he has been elected the President of the United States, the stock market has climbed 70%, adding more than $12 trillion to the country’s wealth. And that’s certainly a record that every country is aspiring to achieve.
He added that the latest trade agreements helped the broader stock market gain. After all, the Trump administration’s recent phase-one trade deal with China lessened the burden on global economic growth created by trade imbalances, and in turn boosted factory activities. 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 has improved, driving capital expenditure and in turn stocks.
The United States said that China has agreed to increase import of commodities in 2020. China has also agreed to protect U.S. intellectual property rights and has given the assurance of not manipulating its currency. The United States, in the meanwhile, has agreed not to impose extra tariffs on nearly $160 billion of Chinese consumer electronics and toys. And China has also agreed to cut tariffs on $75 billion of U.S. goods.
The House of Representatives also saw both the Democrats and Republicans united in passing an updated version of the 25-year-old NAFTA that many economists believe will eventually prove favorable for the U.S. economy.
He also claimed that years of economic decay are over, and consumers’ confidence is rising. Needless to say, both manufacturing and service activities have picked up. According to the Institute of Supply Management, its manufacturing index climbed to 50.9 in January from an upwardly revised 47.8 in December. The index scaled beyond the 50 mark, which separates expansion from contraction. Analysts, by the way, were expecting a reading of 48.5.
The non-manufacturing index came in at 55.5 in January, topping analysts’ estimates of 55. It was also more than the December reading of 54.9. Notably, 12 non-manufacturing industries reported expansion, led by hospitals, retailers and restaurants. The non-manufacturing sector, thus, saw uninterrupted expansion for the 120th consecutive month and indicated that the broader economy is on track for steady growth.
American consumers, by the way, continue to be confident about their well-being. Per the Conference Board, the consumer confidence index jumped to 131.6 in January from 128.2 in December. Consumer confidence touched the highest level in five months, indicating the economy’s regaining momentum. Americans’ assessment about the economy for the next six months is also promising. The expectations index edged up to 102.5 from 100.
Lynn Franco, director of economics at the Conference Board, added “optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020.” And Trump also claimed in his speech that since his election, he has created 7 million jobs, and the unemployment rate remained at its lowest level in over half a century. What’s more, the jobless rate for African-Americans, Hispanic-Americans, and Asian-Americans has touched new lows. The veteran’s jobless rate has also dropped to a record low.
Top 5 Gainers
Trump touted stock market’s record run in the State of the Union speech and painted a rosy picture of the economy. Given the positives, investing in growth stocks won’t be a bad proposition. After all, economic fundamentals do remain encouraging, while the U.S. stock market is certainly moving north in recent times.
Thus, to outdo market returns as well as take advantage of the aforesaid factors, we have used the Zacks Stock Screener to narrow down on stocks with solid prospects, sporting a Zacks Rank #1 (Strong Buy) along with Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Meritage Homes Corporation (MTH - Free Report) designs and builds single-family homes in the United States. The company operates through two segments, Homebuilding and Financial Services. The Zacks Consensus Estimate for its current-year earnings has moved up 0.1% over the past 60 days. The company’s expected earnings growth rate for the current quarter is 70.8% compared with the Building Products - Home Builders industry’s expected decline of 1.3%.
Cable One, Inc. (CABO - Free Report) owns and operates cable systems that provide data, video, and voice services. The Zacks Consensus Estimate for its current-year earnings has risen 0.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 9.4% compared with the Cable Television industry’s projected drop of 1.6%.
GoDaddy Inc. (GDDY - Free Report) designs and develops cloud-based technology products for small businesses, Web design professionals, and individuals in the United States. The Zacks Consensus Estimate for its next-year earnings has moved up 0.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 25.4% versus the Internet - Delivery Services industry’s projected decline of 19.6%.
Pacira BioSciences, Inc. (PCRX - Free Report) provides non-opioid pain management and regenerative health solutions for health care practitioners and their patients in the United States. The Zacks Consensus Estimate for its current-year earnings has advanced 2.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 49% compared with the Medical - Drugs industry’s expected increase of 10.8%.
Great Lakes Dredge & Dock Corporation (GLDD - Free Report) provides dredging services in the United States. The Zacks Consensus Estimate for its current-year earnings has moved up 5.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 358.8% compared with the Building Products - Heavy Construction industry’s estimated increase of 3.2%.
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