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S&P 500 Rally Going Strong: 6 Growth Stocks to Buy

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The S&P 500 index rallied back into the positive territory on Jun 8, closing the trading session at 3,232.39, up 1.2%. On a year-to-date basis, the benchmark is now up 0.05%. Markedly, the index has surged more than 44% from its Mar 23 low of 2237.40.

The index’s rally has been primarily driven by unprecedented government stimulus and the reopening of U.S. and global economies post coronavirus-induced lockdowns and shelter-in-place guidelines.

Notably, U.S. Consumer Confidence recovered slightly in May, buoyed by the gradual re-opening of the economy. The Conference Board’s Consumer Confidence Index inched up to 86.6 in May from 85.7 in April.

Moreover, the surprisingly upbeat jobs report released on Jun 5, which reported a 2.5-million increase in payrolls and unemployment rate dropping to 13.3% in May, further fueled the rally.

Further, the Federal Reserve on Jun 8 expanded the horizon of its Main Street Lending Program by lowering the minimum loan size to $250K and extending the loan terms to five years. This credit program is expected to help small and mid-sized businesses survive the coronavirus crisis.

Optimism Around Swift Economic Recovery

The optimism around swift U.S. economic recovery is anticipated to fuel momentum in the S&P 500, at least in the near term. The reopening of the economy is already benefiting coronavirus-hit sectors like airlines, retailers, hotels and restaurants, theme parks and cruise line operators.

Additionally, the Federal Reserve is expected to continue to its commitment to support the economy, at this week’s scheduled two-day meeting, beginning today.

Here we pick six stocks that apart from boasting strong fundamentals carry a favorable combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Per the Zacks’ proprietary methodology, stocks with such a perfect mix of elements offer solid investment opportunities.

These stocks have also outperformed the S&P 500 composite on a year-to-date basis.

Year-to-date Performance

 
 

Best Buys

Dollar General (DG - Free Report) is riding on healthy demand amid the coronavirus outbreak. Since the end of first-quarter 2020 and through May 26, same-store sales have risen roughly 22% compared with the prior-year period. The company’s top line is expected to benefit from better pricing, private label offering, inventory management and merchandise initiatives in the near term.

Dollar General currently flaunts a Zacks Rank of 1 and a Growth Score of A. The consensus mark for its fiscal 2021 earnings is pegged at $8.11 per share, having moved 8.7% north in the past 30 days. Earnings are expected to increase 20.5% from the prior-year reported number.

MarketAxcess Holdings (MKTX - Free Report) benefits from steady rise in trading volumes that in turn drive commission. Growing adoption of the company’s automated trading tools for both liquidity providers and liquidity takers is a key catalyst. Moreover, this Zacks #1 Ranked stock with a Growth Score of A enjoys strong liquidity position and has witnessed continuous growth in free cash flow.

The Zacks Consensus Estimate for 2020 earnings is pegged at $7.01 per share, having been revised 0.7% upward in the past 30 days. Earnings are expected to grow 29.8% from the figure reported in the previous year.

Domino’s Pizza (DPZ - Free Report) benefits from increased focus on digitalization and international expansion. Consumer behavioral shift toward delivery and carryout has been acting as a tailwind for this Zacks Rank #1 company. Notably, in the first eight weeks of the second quarter, preliminary total Global retail sales increased 2.9% year over year.

Domino’s Pizza has a Growth Score of A. The Zacks Consensus Estimate for its 2020 earnings is pegged at $11.20 per share, having been revised 2.5% upward in the past 30 days. Earnings are expected to increase 17% from the figure reported in the previous year.

Fortinet (FTNT - Free Report) is benefiting from dominance in the Unified Threat Management (UTM) space, which is one of the fastest-evolving segments in the network security space. The rising cyber-attack risks are propelling demand for Fortinet’s products and services. This Zacks Rank #2 company has a Growth Score of A.

The Zacks Consensus Estimate for Fortinet’s 2020 earnings stands at $2.78 per share, having moved 1.1% north over the past 30 days. Earnings are expected to grow 12.6% from the figure reported in the preceding year.

ServiceNow (NOW - Free Report) is advancing on the back of rapid adoption of its wide-ranged application-based products across all industries. This Zacks #2 Ranked company’s expanding global presence, strong partnerships and strategic buyouts are expected to aid its financial performance in the near term.

ServiceNow also has a Growth Score of A. The consensus mark for fiscal 2020 earnings is pegged at $4.24 per share, having been raised 5.5% in the past 30 days. Earnings are expected to grow 27.7% from the figure reported a year earlier.

Synopsys (SNPS - Free Report) is riding on rising demand for advanced technology, design, IP and security solutions. Further, strong momentum in Fusion Design Platform and Verification Continuum platform is a key catalyst.

This Zacks Rank #2 stock has a Growth Score of B. The consensus mark for Synopsys’ fiscal 2020 earnings has inched up 1.2% to $5.27 per share over the past 30 days, suggesting growth of 15.6% from the year-ago reported figure.

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