The Zacks Analyst Blog Highlights: Lithia Motors, Universal Forest Products, Spark Energy, DICK'S Sporting Goods And Casey's General Stores

For Immediate Release

Chicago, IL – December 3, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Lithia Motors Inc. (NYSE:LAD) , Universal Forest Products Inc. (NASDAQ:UFPI) , Spark Energy Inc. (NASDAQ:SPKE) , DICK'S Sporting Goods Inc. (NYSE:DKS) and Casey's General Stores Inc. (NASDAQ:CASY) .

Here are highlights from Monday’s Analyst Blog:

Santa Rally or Year-End Pullback in the Offing? 5 Top Picks

U.S. stocks are firing on all cylinders with major stock indexes hitting new highs a record number of times in 2019. Year to date, the three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – have rallied 20.3%, 25.3% and 30.6%, respectively. By any means, this is an impressive performance after a pathetic 2018 when all these indexes finished in the red.

At present, Wall Street seems unstoppable despite any concrete resolution to the more-than-a-year-old U.S.-China trade conflict. However, as we enter in the final month of 2019, the investor circle is busy guessing whether a Santa rally or a year-end pull-back is in store.

Conditions Ripe for a Santa Rally

A Santa Claus rally is a typical Wall Street phenomenon associated with unusually strong stock-market gains during the last five trading days of the year and the first two trading days of the New Year. Per Dow Jones Market Data, the Dow and the S&P 500 have gained 1.4% and 1.3%, respectively, on average since 1950 during this period.

Several economists and financial experts believe that the situation is conducive this year for a Santa rally. A fundamentally stable U.S. economy, which is growing for the longest span of 11 years, albeit with some loss in pace, and a dovish monetary stance adopted by the Fed in 2019 are the two major drivers of Wall Street.

The central bank cut benchmark interest rate by 75 basis points in 2019 and indicated maintaining a stable monetary policy in the near future. Furthermore, the government bond yield curve has steadied, eliminating fears of an impending recession.

Furthermore, 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. Additionally, a solid labor market and gradual wage growth offset drop in business spending and manufacturing activities.

U.S.-China Trade Conflict Remains a Hurdle

At present, the only stumbling block for a smooth Santa rally is the unresolved trade war with China. On Oct 11, President Donald Trump said that the two countries were close to signing a phase-one trade deal. However, nothing concrete happened till the end of November, though both sides expressed their desire to reach an amicable solution soon.

On Nov 27, President Trump signed two bills supporting the Hong Kong protesters, despite China’s repeated objections. China threatened to retaliate. “It is a stark hegemonic practice & a severe interference in Hong Kong affairs, which are China’s internal affairs. China will take strong counter-measures” per the country’s foreign ministry.

Notably, the phase-one deal needs to be signed by Dec 15, which the U.S. government set to impose a new round of tariff on $160 billion of Chinese goods. The Trump administration can also raise tariff rate on $250 billion of Chinese goods already under U.S. tariff. On Nov 29, Reuters reported that the U.S. government may expand its power to stop more foreign shipments of products with U.S. technology to China’s telecom giant Huawei Technologies.

Our Top Picks

While a Santa rally can push stock indexes to finish the year with record high gains, intensification of trade conflict can result in a stock market plunge, at least for a short-period of time. To remain safe at this stage, it will be prudent to invest in growth stocks with good dividend yield. These stocks are likely to capture market’s growth, while in case of a downturn, dividends will provide regular income.

We have narrowed down our search to five stocks that have gained year to date and still have potential for growth. Each of our picks carries a Original post

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Written By: Zacks Investment Research