Top 5 dynamic stocks for July amid a strong Wall Street rally
Wall Street has completed an impressive first half of 2021, after a meteoric run in 2020, despite the pandemic. The three major stock indexes – the Dow, S&P and Nasdaq Composite – rose 12.7%, 14.4% and 12.5% respectively in the first half of 2021.
National COVID-19 vaccinations, a sharp drop in new coronavirus cases, a faster-than-expected reopening of the economy, an unprecedented fiscal stimulus, the Fed’s ongoing easy money policy and the reiteration of the Inflation by the Fed chairman being transient despite the increase in inflation forecasts for 2021, has significantly boosted market participants’ confidence in risky assets like stocks.
This scenario should prevail in the short term and boost equities. Dynamic investing requires continuous valuation of stocks, ensuring that an investor does not choose a beaten name or forget a flourishing name. Dynamic investors buy high with the expectation that a stock will only rise in the short to medium term.
CBO raises its economic outlook
The Congressional Budget Office (CBO) raised its outlook for the U.S. GDP growth rate in 2021 to 7.4%, a significant jump from the 4.6% forecast on February 1. Thereafter, GDP is expected to grow by around 2.8% per year until 2025.
The core PCE price index – the Fed’s preferred inflation indicator – will rise to 2.8% in 2021 from the Fed’s estimate of 3.1%. The CBO said the unemployment rate would fall to 4% in 2022. The yield on 10-year US Treasuries, which currently hovers around 1.5%, is expected to rise to 2.7% from the end of 2025.
Notably, on June 16, the Fed raised the GDP growth rate for 2021 to 7%, from 6.5% in March. The Fed has reaffirmed that the unemployment rate will drop to 4.5% by the end of 2021.
Strong projections for second quarter results
Profit estimates for the second quarter of 2021 saw positive revisions. As of June 30, total profits of the S&P 500 Index are expected to increase 61.6% year-over-year on revenues up 18.1%. Notably, the first quarter profits of the S&P 500 Index increased 49.3% year-over-year to higher earnings of 10.3%.
One of the reasons for this very high scale of profits and year-over-year revenue growth was last year’s economic devastation due to the global coronavirus outbreak. However, even if we overlook last year’s performance, our current projection of second quarter 2021 earnings for the S&P 500 Index is 9.6% higher than in the second quarter before the 2019 pandemic. know more : Second Quarter Profit Growth Reflects More Than Easy Offsets)
Strong economic data
The struggling labor market shows enough indications to return to normal. On July 1, the Ministry of Labor reported that weekly jobless claims fell from 51,000 to 364,000 for the week ended June 26, marking its lowest level for the week ended March 14, 2020. Data from the previous week were revised up to 415,000. The consensus estimate was 385,000.
However, continuing claims (those who have already received unemployment benefits) increased from 56,000 to 3.47 million for the week ended June 21. The four-week moving average (eliminating weekly volatility) for continuous claims fell from 75,000 to 3.48 million, the lowest since the week ended March 21, 2020.
The total number of Americans receiving benefits under all types of government programs declined from 180,890 to 14.66 million for the week ended June 14. However, nearly 7 million workers have yet to return to the workforce from pre-pandemic levels.
The Institute of Supply Management (ISM) said its manufacturing purchasing managers index (PMI) for June edged down to 60.6% from 61.2% in May. The consensus estimate was 60.8%. Likewise, IHS Markit reported that its June manufacturing PMI declined to 62.1% from a flash estimate of 62.6%, but remained unchanged from the May final reading.
Notably, any reading above 50 signifies an expansion in manufacturing activities while a reading above 55 signifies a strong expansion. Therefore, despite a slight drop in the readings of the ISM and IHS Markit, the US manufacturing sector remained strong in June.
Our top picks
We narrowed down our search to five large-cap stocks (market capital> $ 10 billion) that have seen strong earnings estimate revisions over the past seven to 30 days and still have a big upside for 2021. These stocks have skyrocketed by more than 35% per year. nowadays. Each of our picks carries a rank 1 of Zacks (strong buy) and has a Momentum Score by A. You can see The full list of today’s Zacks # 1 Rank stocks here.
The graph below shows the price performance of our five picks since the start of the year.
Image source: Zacks Investment Research
Continental Resources Inc. CLR explores, develops and produces crude oil and natural gas primarily in the northern, southern and eastern regions of the United States. It sells its production of crude oil and natural gas to energy marketing companies, crude oil refining companies, and natural gas gathering and processing companies.
This Zacks Rank # 1 company is forecasting a profit growth rate of over 100% for the current year. Zacks’ consensus estimate for current year earnings has improved 6% over the past seven days. The share price has climbed 145% since the start of the year.
Exxon Mobil Corp. XOM explores and produces crude oil and natural gas in the United States, Canada / other Americas, Europe, Africa, Asia and Australia / Oceania. It operates through the Upstream, Downstream and Chemicals segments.
The company has an expected profit growth rate of over 100% for the current year. Zacks’ consensus estimate for the current year has improved 0.3% over the past seven days. The share price has jumped 53.5% since the start of the year.
Freeport-McMoRan Inc. FCX is engaged in mining exploration and development; extraction and grinding of copper, gold, molybdenum and silver; as well as the smelting and refining of copper concentrates.
The company has an expected profit growth rate of over 100% for the current year. Zacks’ consensus estimate for the current year has improved 3.9% over the past 30 days. The share price has climbed 42.6% since the start of the year.
General Motors Co. GM designs, builds and sells cars, trucks, crossovers and auto parts around the world. It operates through the GM North America, GM International, Cruise and GM Financial segments.
The company has an expected earnings growth rate of 24.9% for the current year. Zacks’ consensus estimate for current year earnings has improved 15.7% in the past 30 days. The share price has appreciated 42% since the start of the year.
CarMax Inc. KMX operates as a used vehicle retailer in the United States. It operates in two segments, CarMax Sales Operations and CarMax Auto Finance.
The company has an expected profit growth rate of 42.3% for the current year (end of February 2022). Zacks’ consensus estimate for current year earnings has improved 10.7% over the past seven days. The share price has jumped 38.3% since the start of the year.
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