Wall Street has been witnessing wild swings over the past couple of weeks owing to the coronavirus scare. Weeks of panic selling sent the indices into a bear market in less than a month and put an end to the 11-year bull market.
In fact, trading on the three major indexes was halted for the second time this week after a decline of 7% triggered circuit breakers. More specifically, the U.S. stocks saw its worst performance on Mar 12 since the "Black Monday" on Oct 19, 1987. This is especially true as the deadly virus has spread more rapidly outside China leading to a broader sell-off. The sluggish trend is likely to continue as the World Health Organization has declared the outbreak a pandemic. The disease has now spread to 114 countries, infecting nearly 130,000 people worldwide and causing over 4,700 deaths. In the United States, the death toll climbed to 39 with over 1,300 infections.
Additionally, President Donald Trump suspended all travel from Europe to the United States for 30 days beginning Mar 13 midnight, with the exception of the United Kingdom. The latest developments have resulted in further deterioration of fundamentals.
According to Goldman Sachs, supply chain disruptions due to the coronavirus outbreak will hit consumer spending and business activity. Deterioration in financial conditions will weigh heavily on global growth in the coming months. As such, Goldman lowered its year-end forecast for the S&P 500 and trimmed profit estimates for the second time in a month. It expects the benchmark index to drop to 2,450 by the middle of 2020, a 28% slump from its February peak. Earnings will decline at least 12% in each of the next two quarters as plunging oil prices and the spread of the coronavirus continue to hurt businesses.
The Organization for Economic Cooperation and Development (OECD), ratings agency Moody’s and other financial institutions have also lowered their global growth forecasts over the last few days. The OECD cut global GDP by 0.5% to 2.4% for this year while Moody’s revised down its global GDP expectations to 2.1% from 2.4%. Bank of America reduced its 2020 global growth forecast to 2.8%, which marks the lowest reading since 2009.
Amid the weak backdrop, there are some stocks that have survived the market crash. We have highlighted five of them. These stocks have the potential to withstand the storm, as reflected in their Zacks Rank #1 (Strong Buy) or #2 (Buy) and a solid VGM Score of B or better.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Legg Mason Inc. (LM - Free Report) – Up 19.6%
This global asset management firm is focused on the growth and preservation of clients' capital through its proprietary mutual funds and separately-managed accounts. It has an estimated earnings growth rate of 10.55% for the fiscal year ending March 2021 and a market cap of $4.3 billion. The stock carries a Zacks Rank #2 and has a VGM Score of B.
Harmony Gold Mining Company Limited (HMY - Free Report) – Up 10.1%
It is engaged in the exploration, extraction, and processing of gold. The stock saw positive earnings estimate revision of 7 cents over the past month for fiscal year ending June 2020 with an estimated earnings growth of 221.4%. With a market cap of $1.8 billion, Harmony Gold has a
Zacks Rank #2 and a VGM Score of A.
Lumber Liquidators Holdings Inc (LL - Free Report) – Up 8.4%
This company operates as a multi-channel specialty retailer of hard-surface flooring, and hard-surface flooring enhancements and accessories. It saw solid earnings estimate revision of 35 cents over the past month for this year with an estimated earnings growth of 32.8%. The stock has a Zacks Rank #2 and a VGM Score of A. Lumber Liquidators has a market cap of $230.9 million.
Charah Solutions Inc. (CHRA - Free Report) – Up 3.8%
With a market cap of $64.6 million, this company is a provider of environmental and maintenance services to the power generation industry with operations in coal-fired and nuclear power generation. It saw positive earnings estimate revision of a penny over the past seven days for this year with an estimated earnings growth of 134.6%. The stock has a Zacks Rank #2 and a VGM Score of A.
Barrick Gold Corporation (GOLD - Free Report) – Up 2.1%
It is the largest gold mining company in the world. The stock saw positive earnings estimate revision of 7 cents over the past month for this year and has an estimated earnings growth of 49%. With a market cap of $33.4 billion, Barrick Gold has a Zacks Rank #2 and a VGM Score of B.
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