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5 Top Picks to Tap the Dow and S&P 500's Back-to-Back Rally

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Wall Street mayhem, which commenced on Feb 19, eased a bit on Mar 25 with 30-stock Dow and the S&P 500 indexes’ rallying for two consecutive days. The free fall of the markets finally halted on expectations of the Senate clearing the U.S. government’s massive $2 trillion coronavirus stimulus package.

Although it’s too early to say that the market has bottomed out but it is a fact that stocks have fallen significantly in a short period of time and several of them offer lucrative buying opportunity. Consequently, investment in stocks with a favorable Zacks Rank and positive growth potential will be a prudent decision.

Back-to-Back Rally

On Mar 25, the Dow advanced 495.64 points or 2.4% while the S&P 500 gained 1.2%. This marked two successive days of rally for the blue-chip Dow first time since Feb 6. The benchmark S&P 500 recorded the same for the first time since Feb 12. Notably,  on Mar 24, the Dow rallied 2,112.98 points or 11.37% — its biggest single-day gain after 1933. Likewise, the S&P 500 jumped 209.93 points or 9.38%.

On Mar 25, the Senate lawmakers cleared the Trump administration's stimulus package of $2 trillion to boost the U.S. economy amid the coronavirus-induced turmoil. The package will include $250 billion for direct payments to individuals, $367 billion for loans to small businesses, $250 billion in unemployment insurance benefits and $500 billion in loans for distressed companies. Per the deal, hospitals would receive around $150 billion.

Stocks in Deep Discount

Currently, the Dow is down 28.3% from its all-time high recorded on Feb 12 while the S&P 500 is down 27% from its all-time high posted on Feb 19. Moreover, the tech-laden Nasdaq Composite is down 25% from its recent high on Feb 19.

Consequently, plenty of goods stocks are trading at ultra-cheap prices despite the fact that the market may remain choppy in the next few weeks. Nevertheless, unprecedented fiscal provided by the U.S. government and monetary stimulus by the Fed will definitely enhance the moral of market participants. This, in turn, will aid investors reap rewards in the long term.

Our Top Picks

We have narrowed down our search to five large-cap (market capital > 10 billion) stocks that have strong business model and solid brand recognition and are member of either the Dow or the S&P 500. These stocks witnessed robust earnings per share estimate revision in the past 30 days and provide dividends regularly. Each of our picks carry either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below the price performance of our five picks in the past month.

 

HP Inc. (HPQ - Free Report) provides personal computing and other access devices, imaging and printing products, and related technologies, solutions and services in the United States and globally. It operates through three segments: Personal Systems, Printing, and Corporate Investments.

The Zacks Rank #1 company has an expected earnings growth rate of 7.6% for the current year (ending October 2020). The Zacks Consensus Estimate for the current year has improved by 5.2% over the past 30 days. It has a dividend yield of 4.56%.

Cardinal Health Inc. (CAH - Free Report) operates as an integrated healthcare services and products company in the United States and internationally. It provides customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, and physician offices.

The Zacks Rank #1 company has an expected earnings growth rate of 1% for the current year (ending June 2020). The Zacks Consensus Estimate for the current year has improved by 0.2% over the past 30 days. It has a dividend yield of 4.42%.

Bristol-Myers Squibb Co. (BMY - Free Report) discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers drugs in hematology, oncology, immunology, cardiovascular, and fibrotic diseases.

The Zacks Rank #2 company has an expected earnings growth rate of 30.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.7% over the past 30 days. It has a dividend yield of 3.66%.

UnitedHealth Group Inc. (UNH - Free Report) is the largest health care services company globally, serving over 50 million individuals in the United States and over 5 million internationally. It operates through four segments: UnitedHealthcare, OptumHealth, OptumInsight, and OptumRx.

The Zacks Rank #2 company has an expected earnings growth rate of 9% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.1% over the past 30 days. It has a dividend yield of 1.97%.

MarketAxess Holdings Inc. (MKTX - Free Report) is a leading multi-dealer trading platform that offers institutional investors access to global liquidity in products like U.S. high-grade corporate bonds, emerging markets and high-yield bonds, European bonds, U.S. agency bonds credit derivatives and other fixed-income securities.

The Zacks Rank #2 company has an expected earnings growth rate of 13.3% for the current year. The Zacks Consensus Estimate for the current year has improved by 2.3% over the past 30 days. It has a dividend yield of 0.73%.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>