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5 Growth ETFs & Stocks Set to Flourish in Spring

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Halfway through the spring season, the global stock markets have regained momentum buoyed by easing coronavirus pandemic as well as unprecedented fiscal and monetary stimulus.

This is especially true as COVID-19, which resulted in a bloodbath in the stock market last month, has shown signs of stabilizing lately, indicating that the stay-at-home and social distancing measures to contain the spread are paying off. The improving situation has raised hopes for re-opening of the economy anytime soon. President Donald Trump is targeting reopening of the economy before May 1 (read: ETFs Set to Benefit from Social Distancing, Stay-At-Home).

In particular, the major U.S. indices have recovered about half of the losses made in late March. The S&P 500 is now up more than 27% from the lows on Mar 23.

The Federal Reserve has made great efforts to keep the markets liquid and fluid. In rolled out a massive $2.3-trillion program last week to aid local governments and businesses impacted by the coronavirus pandemic. This is in addition to the aggressive actions taken by the central bank last month. After slashing interest rates to near zero and offering to buy more government bonds and mortgage-backed securities as needed to support smooth market functioning, the central bank vowed to lend against student loans and credit card loans, as well as back the purchase of corporate bonds and direct loans to companies. This represents the most extreme intervention in the economy by the central bank in its history of more than 100 years.

Meanwhile, the Trump administration approved the $2.2-trillion stimulus package last month to rescue the economy ravaged by the coronavirus. The slew of latest developments has led to bullishness in the stock market. And if the slowdown in coronavirus infections continue, then April could repeat its history of positive returns for the stocks. Per Stock Trader's Almanac, the S&P 500 has gained 1.5%, on average in April since 1950, making the month the second best for the index. Investors should note that most of the gains generally comes at the back end of the month. On the other hand, April is the best month of the year for the Dow Jones Industrial Average (read: 10 Stocks Leading the Rally in the S&P 500 ETF).

Given the recovering sentiments, growth stocks have the potential to outperform the value counterparts. This is especially true as growth investing is basically a momentum play and a great strategy in a trending market (a market characterized by a prolonged uptrend). Growth stocks refer to high-quality stocks that are likely to witness revenue and earnings increase at a faster rate than the industry average. These stocks harness their momentum in earnings to create a positive bias in the market, resulting in rocketing share prices. As such, growth stocks tend to outperform during an uptrend.

Given this, investors should reposition their portfolio for more exposure to the growth space to obtain a nice momentum play. For them, we have presented five ETFs and stocks that are ready to bloom this spring.

ETF Picks

Using our database, we have selected growth ETFs that provide exposure to the broad stock market instead of a particular sector and have a Zacks Rank #1 (Strong Buy) or 2 (Buy). This is because these ranks suggest strong fundamentals and superior weighting methodologies that could lead them higher than their counterparts in a booming market. Further, these funds have expense ratio of less than 10%, making them lower cost products in the growth space.

iShares Core S&P U.S. Growth ETF (IUSG - Free Report)

This product provides low-cost exposure to a broad range of U.S. growth stocks, whose earnings are expected to grow at an above-average rate relative to the market.

Zacks ETF Rank: #1
Expense Ratio: 0.04%
AUM: $7.4 billion
No. of Stocks: 506

SPDR Portfolio S&P 500 Growth ETF (SPYG - Free Report)

This fund offers exposure to S&P 500 companies that display the strongest growth characteristics based on sales growth, earnings change to price ratio, and momentum (read: 5 Surprising ETF Winners Amid Stimulus-Fed Wall Street Rally).

Zacks ETF Rank: #1
Expense Ratio: 0.04%
AUM: $6.3 billion
No. of Stocks: 273

Schwab U.S. Large-Cap Growth ETF (SCHG - Free Report)

This ETF offers exposure to large-cap U.S. equities that exhibit growth style characteristics.

Zacks ETF Rank: #1
Expense Ratio: 0.04%
AUM: $8.4 billion
No. of Stocks: 351

Vanguard Growth ETF (VUG - Free Report)

This product tracks the performance of the CRSP US Large Cap Growth Index.

Zacks ETF Rank: #1
Expense Ratio: 0.04%
AUM: $44.4 billion
No. of Stocks: 279

Vanguard Mega Cap Growth ETF (MGK - Free Report)

This ETF targets the mega-cap segment of the broad U.S. stock market and follows the CRSP US Mega Cap Growth Index (read: 5 Sector ETFs at the Forefront of Wall Street Rally).

Zacks ETF Rank: #1
Expense Ratio: 0.07%
AUM: $5.6 billion
No. of Stocks: 112

Stock Picks

For stocks, we have chosen five stocks using the Zacks Screener that have a Zacks Rank #1 or 2, a Growth Score of A and double-digit earnings growth for the current fiscal year. Moreover, they belong to the top-ranked Zacks Industry (in the top 20%). You can see the complete list of today’s Zacks #1 Rank stocks here.
 
1-800 FLOWERS.COM Inc. FLWS

This is a leading e-commerce provider of floral products and gifts, in terms of number of customers and revenue.

Zacks Rank: #2
Zacks Industry Rank: Top 1%
Market Cap: $911.7 million
Fiscal Year Earnings Growth: 15.4%

Corcept Therapeutics Incorporated CORT

This company is focused on the discovery, development and commercialization of drugs for the treatment of severe metabolic, psychiatric and oncology disorders (read: Healthcare Stocks & ETFs to Gain on Coronavirus Test Progress).

Zacks Rank: #2
Zacks Industry Rank: Top 6%
Market Cap: $1.4 billion
Fiscal Year Earnings Growth: 10.4%

LendingTree Inc. TREE

It is an operator of online consumer platform in the United States.

Zacks Rank: #2
Zacks Industry Rank: Top 6%
Market Cap: $2.5 million
Fiscal Year Earnings Growth: 19%

Kinross Gold Corporation KGC

This company is primarily involved in the exploration and operation of gold mines.

Zacks Rank: #1
Zacks Industry Rank: Top 9%
Market Cap: $7.9 billion
Fiscal Year Earnings Growth: 41.2%

NeoPhotonics Corporation NPTN

It is engaged in the design and manufacture of photonic integrated circuit based modules and subsystems for bandwidth-intensive, high-speed communications networks.

Zacks Rank: #2
Zacks Industry Rank: Top 9%
Market Cap: $395.4 million
Fiscal Year Earnings Growth: 3300%

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