5 Stocks That Surged In 3 Months And Still Hold Potential
Zacks Investment Research | May 13, 2019 08:15AM ET
The last three months were quite eventful for Wall Street. Overall, the stock market continued its bull run buoyed by strong economic data that confirmed the U.S. economy's solid footing. However, volatility reared its ugly face again.
In the last week of March, the stock market was in turmoil due to the yield curve inversion between the 10-year and 3-month U.S. Treasury Notes. Finally, volatility returned in May once trade negotiations between the United States and China halted, just when the parties were about to strike a deal.
Wall Street Tumbles as Trade War Resurfaces
On May 10, the U.S. government hiked existing tariff rates to 25% from 10% on $200 billion of Chinese exports. In 2018, the Trump administration imposed 25% tariff on $50 billion of Chinese goods. Moreover, President Trump threatened to levy 25% tariff on another $325 billion of Chinese goods. Total amount will surpas China's yearly export to the United States.
Consequently, the three major stock indexes -- the Dow, S&P 500 and Nasdaq Composite -- plunged 2.1%, 2.2% and 3%, respectively, in the week ended May 10.
Concerns Regarding Global Economic Slowdown
On Apr 9, the International Monetary Fund (IMF) reduced global economic growth forecasts for 2019. This was the third reduction in the last six months. The new growth projection is 3.3% compared with 3.5% in January and 3.7% in October. The IMF cited trade-related conflict between the United States and China as the primary reason for lowering global growth projections.
Investment management firm Morgan Stanly estimated a 0.3% drop in Chinese GDP and 8-12% erosion of emerging markets valuation if the United States hiked tariffs. Barclays (LON:BARC) predicted that the new tariffs will hurt 3-5% of Chinese exports and 0.5% of its GDP.
The United States will also bear the brunt of tariffs. China is the largest trading partner of the United States. A weak economy in China, the largest market for high-tech products, will generate headwinds for U.S. technology companies.
Moreover, China plays the role of a low-cost supplier of intermediary products and other inputs to high-tech U.S. industries. Tariffs will raise the cost of these products making it very difficult for businesses to formulate long-term plans.
5 Stocks Moving Higher
The recent concerns about global economic slowdown and temporary yield curve inversion have not stalled the market’s growth. We have been able to narrow down our search to five stocks, which have moved higher in the last three months and still have upside left. All five stocks currently sport a Zacks Rank #1 (Strong Buy). You can see Zacks Investment Research
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