Super Bowl Results Show Stock Gains In February: 5 Picks
Zacks Investment Research | Feb 03, 2020 06:55AM ET
The Super Bowl Predictor was discovered in 1978 by Leonard Koppett, a sports writer for the New York Times. The Super Bowl effect was later popularized by Robert Stovall, the president of investment firm Stovall Twenty First Advisors. By the way, Super Bowl is the final game in the National Football League (NFL), which generally takes place in the month of February. Champions of the two conferences, the original American Football League (AFL) and the NFL, meet at the Super Bowl.
Theoretically, the Super Bowl Predictor states that the U.S. stock market will climb north if the winner is from the NFL and an AFL win would bring about the opposite. But in reality, the stock market has performed better in the years AFL teams have won than in years when the victors have been from the NFL. Take a look —
And this time, since Kansas City Chiefs from the AFL have won the competition, we can expect the stock market to scale upward. Cheifs won the competition by beating the San Francisco 49ers, 31-20, at Hard Rock Stadium.
Nonetheless, investors have plenty of reasons to be optimistic about the stock market this year. Primarily, investors shouldn’t fret about the coronavirus outbreak. After all, the Chinese government has promised to provide adequate stimulus measures. China’s central bank said it will supply $21.7 billion to money markets and has advised banks to lend more to curb the influence of the virus on markets. Lest we forget, the outbreak shattered the U.S. stock market and has overshadowed a solid earnings season.
The phase-one partial deal between the United States and China, in the meantime, will further drive business confidence, driving capital expenditure and in turn stocks. America’s ailing manufacturing sector could also recover from an uptick in business spending, which took a hit last year due to the trade war.
The current low-interest environment should make the cost of borrowing reasonable, helping companies invest and grow. This in turn should help the economy gain momentum. The Fed has kept its benchmark interest rate steady and has shown no signs of raising rates in the near term. The Fed holds the fed-funds rate at the range of 1.5-1.75%. Fed Chair Jerome Powell has categorically said that the central bank is quite comfortable with its current monetary policy as it provides cushion against weak global economic growth. In fact, the Fed is more likely to trim rates as the central bank continues to find it difficult to achieve the desired inflation target of 2%.
5 Top Stocks to Own This February
Courtesy of the Super Bowl outcome, China’s moves to stimulate the markets, completion of the phase-one deal and Fed’s dovish stance, we are lined up for a strong February rally. We have, thus, selected five fundamentally-sound stocks poised to make the most of the bullish sentiments. These stocks, by the by, have a Zacks Rank #1 (Strong Buy) and a Zacks Investment Research
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