Wall Street is finally showing signs of stabilizing despite the lingering presence of destabilizing elements. For the week ended Jun 8, all three major indexes – The Dow 30, S&P 500 and Nasdaq Composite – closed in the positive territory. Robust first-quarter 2018 earnings and strong fundamentals of the U.S. economy foreshadow the persistence of uptrend in stock markets.
Robust labor market data for May, recovery of il prices due to supply concern, anticipation of interest rate hike by the Fed which will bode well for the financial sector and easing of trade war fear are primary reasons behind the stabilization of the markets. Major indexes are likely to maintain their northbound movement in the near term. Consequently investment in growth stocks with favorable Zacks Rank will be a prudent move.
Wall Street’s Big Weekly Gain
For the week ended Jun 8, the Dow 30 increased 2.8%, its biggest weekly gain since March. Notably, the index closed at 25,316.53, on Jun 8. This was blue-chip index’s highest level of closing since Mar 12. The S&P 500 and Nasdaq Composite recorded weekly gains of 1.6% and 1.2%, respectively. These reflect third straight weekly advances for both indexes.
Strong weekly gains have placed all three indexes in the green year to date. The Dow 30, S&P 500 and Nasdaq Composite are up 2.4%, 3.9% and 10.8%, respectively.
Robust Earnings Momentum
First-quarter earnings results have been exhibiting strong momentum so far. Total earnings are up 24.4% from the same period last year on 8.7% higher revenues. This is the highest quarterly earnings growth pace in seven years.
For the second quarter, total earnings for the S&P 500 index are expected to be up 17.9% on 7.9% higher revenues. For full-year 2018, total earnings for the S&P 500 index are anticipated to be up 19.6% on 6% higher revenues. (Read more: Looking Ahead to the Q2 Earnings Season)
Oil Prices Recover
Oil prices recovered in June after plunging in May following the news that Saudi Arabia, other OPEC (Oil and Petroleum Exporting Countries) countries, and non-OPEC allies led by Russia are likely to abide by a global pact on cutting oil supplies until the end of 2018. Strong international demand for crude oil, an impending supply shortage from Iran if the Trump administration imposes sanctions and a gradually declining output from Venezuela will bolster oil prices in the near term.
Trade War Fear Overblown
It seems that investors have decided not to attach too much significance to the G-7 summit which took place in Canada on Friday. A strong U.S. macro economy allowed investors to shrug off G-7 trade conflicts.
Meanwhile, China has offered to purchase nearly $70 billion of U.S. farm and energy products if the United States refrains from imposing further tariffs on the country. Moreover, President Trump is scheduled to meet his North Korean counterpart Kim Jong-Un on Jun 12 in Singapore to reach an amicable solution about North Korea’s nuclear ambitions.
Our Top Picks
Stock markets momentum remained largely unhindered despite recent volatility. Gradual fading out of trade conflicts, steady economic activities and business-friendly policies adopted by the government will pave the way for further stock market growth.
At this stage, investment in stocks with strong growth potential will be lucrative. Our selection is backed by a good Zacks Growth Score and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that stocks with a Growth Style Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities in the Growth-investing space. We have handpicked five such stocks with a Zacks Rank #1 and Growth Style Score of A.
The chart below shows price performance of our five picks year to date.
HollyFrontier Corp. HFC is engaged in refining petroleum. It produces and markets gasoline, diesel, jet fuel, asphalt, heavy products and specialty lubricant products. The company is headquartered in Dallas, TX.
HollyFrontier has expected earnings growth of 145.3% for current year. The Zacks Consensus Estimate for the current year has improved by 18.5% over the last 30 days.
Immersion Corp. IMMR develops hardware and software technologies that enable users to interact with computers using their sense of touch. The company is headquartered in San Jose, CA.
Immersion has expected earnings growth of 307.1% for current year. The Zacks Consensus Estimate for the current year has improved by 19.4% over the last 30 days.
Occidental Petroleum Corp. OXY headquartered in Houston, TX, the company is an international oil and gas exploration and production company with operations in the United States, Middle East and Latin America.
Occidental Petroleum has expected earnings growth of 362.9% for current year. The Zacks Consensus Estimate for the current year has improved by 8.7% over the last 30 days.
Enova International Inc. ENVA headquartered in Chicago, IL, the company is a provider of online financial services. It offers loans to customers in the United States, the U.K., Australia and Canada.
Enova International has expected earnings growth of 77.4% for current year. The Zacks Consensus Estimate for the current year has improved by 7% over the last 30 days.
WildHorse Resource Development Corp. WRD is an oil and natural gas company. It focused on the acquisition, exploration, development and production of oil, natural gas and NGL. The company is headquartered in Houston, TX.
WildHorse Resource has expected earnings growth of 309.3% for current year. The Zacks Consensus Estimate for the current year has improved by 8% over the last 30 days.
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Immersion Corporation (IMMR): Free Stock Analysis Report
Enova International, Inc. (ENVA): Free Stock Analysis Report
HollyFrontier Corporation (HFC): Free Stock Analysis Report
Occidental Petroleum Corporation (OXY): Free Stock Analysis Report
Wildhorse Resource Development Corporation (WRD): Free Stock Analysis Report
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