5 Top-Ranked Growth Stocks For February That Have Jumped YTD
Zacks Investment Research | Jan 30, 2020 07:18AM ET
Wall Street is likely to close the month of January in positive territory after a fabulous 2019 that ended with the best performance in six years. Although stock markets fluctuated in the last few days following the outbreak of coronavirus in China, fundamentals of the U.S. economy remain strong.
Several eco-political positive developments strengthened investors’ confidence in risky assets like equities. Meanwhile, a few top-ranked growth stocks skyrocketed in January and still have strong upside left.
U.S. Economy in Solid Foothold
A series of recently released economic data for December like retail sales, housing and manufacturing output confirms U.S. economic stability and clearly indicates that the historically longest expansionary phase is here to stay. Recovery of the housing industry in 2019 after a sagging 2018 is important since this industry generates around 3% of GDP.
On Jan 28, the conference board reported that its consumer confidence index for the month came in at 131.6, the highest since August 2019. December's index was also revised upward to 128.2 from 126.5 reported earlier. This clearly highlighted firmness in the U.S. economy.
Notably, the Expectations Index, which is a measure of consumers’ short-term (for the next six months) outlook for income, business and labor market conditions, increased to 102.5 in January from 100 in December.
The U.S. GDP growth rate did not fall below 2% in the first three quarters of 2019, buoyed by strong consumer spending, which constitutes more than 70% of the economy. The U.S. economy is expected to grow at 2-2.2% in the fourth quarter of 2019.
Wall Street Bull Run to Continue
Despite market volatility, Wall Street is still in the green in January. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are up 0.7%, 1.3% and 3.4%, respectively, year to date.
On Jan 29, after its FOMC meeting, the Fed stated that the GDP is likely to maintain this moderate growth rate in 2020. The labor market remains robust with strong job creation, a record-low unemployment level and growing labor force participation. The Fed maintained the benchmark lending rate at 1.5-1.75% and reaffirmed that it will not raise it until the inflation rate, which is currently at just 1.6%, crosses the Fed’s target level of 2%.
Moreover, the recently signed phase-one trade deal between the United States and China has significantly cooled down the nearly two year old tariff war. Although a complete deal is not likely to be signed before the U.S. presidential election this November, the interim deal will at least help in restoring U.S. business confidence and global economic growth.
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At this stage, it will be prudent to invest in growth stocks with a favorable Zacks Rank. We have narrowed down our search to five growth stocks with strong EPS estimate revision and future growth potential that popped in January. Each of our picks carries a Zacks Investment Research
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