The economic and financial research and analysis industry has been busy over the past three months, calculating the devastation that the deadly coronavirus has caused globally and especially in the U.S. economy.
Several opinions are emerging about the time and path of recovery. Some experts have argued that the economy will not stabilize before next year and same for the stock markets while another group of experts believe that the recovery will start from the second half of this year. Many arguments can also be heard about the trajectory of the recovery — V-shaped, U-shaped, W-shaped and many more.
Meanwhile, a closer look into Wall Street reveals that a strong bunch of 245 stocks has advanced more than 100% year to date. Out of these, 33 stocks carry a favorable Zacks Rank. While a large part of these stocks are from the health care industry as the root of the current financial market turmoil is a health hazard, a handful of stocks from other industries are also in the portfolio.
Here we have chosen five stocks, outside of the health care industry, with a favorable Zacks Rank and robust earnings estimates revisions in the past 30 days.
Three Distinct Phases of Wall Street Movement So Far in 2020
Wall Street's movement has been zigzag and can be characterized into three distinct phases so far this year.
The first phase was till mid-February, which saw a continuation of the historic 11-year long bull run. Markets started 2020 where they ended 2019, which marked the best performance in six years. The signing of an interim (phase I) trade deal in mid-January between the United States and China bolstered investors' confidence. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — recorded fresh all-time highs almost regularly.
The second phase was the period between mid-February and Mar 23. The outbreak of the coronavirus in China and its subsequent spread across the world changed the entire landscape of the global financial markets all of a sudden. Lockdowns imposed by all-most all countries put the global economy at a standstill and the United States was no exception. Major stock indexes fell in the bear territory from their all-time highs within three weeks and the stock market downtrend continued till Mar 23.
The third phase started from Mar 24 and is continuing barring some occasional fluctuations. By Apr 14, all three major stock indexes exited the bear market and a new bull-market started. The Dow, the S&P 500 and the Nasdaq Composite have rallied more than 30% till today from their recent lows recorded on Mar 23.
Gradual reopening of the U.S. and the global economy, restoration of normal business activities and an unprecedented stimulus package by the United States and other major European and Asia-Pacific countries should drive the market's northbound movement.
Upward Revision of EPS Estimates - A Crucial Indicator
An upward earnings per share estimate revision for 2020 of any stock simply means that markets are expecting these companies to do good business this year. However, in the past 60 to 30 days, most stocks witnessed either negative EPS revisions or remained flat due to the coronavirus pandemic. Meanwhile, a positive EPS estimate revision during this historic financial turmoil highlights the solid business model and robust growth potential of these companies.
Our Top Picks
We have narrowed down our search to five non-healthcare stocks that skyrocketed more than 100% year to date and witnessed robust EPS estimates revisions in the past 7 to 30 days. Each of our picks carries 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 shows the price performance of our five picks year to date.
Nautilus Inc. (NLS - Free Report) is a fitness solutions company, which designs, develops, sources, and markets cardio and strength fitness products, and related accessories for consumer and commercial use in the United States, Canada and internationally. It operates in two segments, Direct and Retail. The Zacks Consensus Estimate for current-year earnings has improved by 79% over the past 30 days. The stock has jumped 243.4% year to date.
Veritone Inc. (VERI - Free Report) provides artificial intelligence and computing solutions in the United States and the United Kingdom. It develops and operates aiWARE platform, an AI operating system that integrates and orchestrates a range of cognitive engines to reveal multivariate insights from structured and unstructured data. The Zacks Consensus Estimate for current-year earnings has improved by 7.8% over the past 30 days. The stock has rallied 187.5% year to date.
Fiverr International Ltd. (FVRR - Free Report) provides an online marketplace for selling goods and services. It offers logo, poster and brochure designing, as well as photoshop editing, content marketing, web analytics and translation services. The Zacks Consensus Estimate for current-year earnings has improved by 27.1% over the past 30 days. The stock has climbed 169.3% year to date.
Stamps.com Inc. (STMP - Free Report) provides Internet-based mailing and shipping solutions in the United States and Europe. It operates through Stamps.com and MetaPack segments. Its PhotoStamps product allows consumers and businesses to turn digital photos, designs or corporate logos into valid US postage. The Zacks Consensus Estimate for current-year earnings has improved by 8.4% over the past 30 days. The stock has soared 142.1% year to date.
United Natural Foods Inc. (UNFI - Free Report) distributes natural, organic, specialty, produce, and conventional grocery and non-food products in the United States and Canada. It operates through Wholesale and Other segments. The Zacks Consensus Estimate for current-year earnings has improved by 3.1% over the past 7 days. The stock has advanced 107.3% year to date.
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