The U.S. stock markets have been reeling from severe volatility since February primarily owing to inflationary concerns and global trade war fears. Additionally, significant hike in U.S. government bond, geopolitical conflicts in the Middle East, political turmoil in Europe and oil price fluctuations also fueled volatility in the Wall Street.
Despite the presence of several destabilizing elements in the markets, a closer look of the performance of the three major indexes – the Dow 30, S&P 500 and Nasdaq Composite – will give us a positive view. All three stock market barometers have actually witnessed northbound movement in the last two months. At this stage, investment in growth stocks with favorable Zacks Rank and significant growth potential will be a lucrative option.
Major Indexes Showing Upward Trend
| Index | January | February | March | April | May |
| Dow 30 | +5.8% | -4.3% | -3.5% | +0.3% | +1.1% |
| S&P 500 | +5.6% | -3.9% | -2.7% | +0.3% | +2.2% |
| Nasdaq | +7.4% | -1.9% | -2.9% | +0.1% | +5.3% |
The table above clearly shows that stock market fluctuations which put all three indexes in the negative territory in February gradually diminishing in the last three months.
For the month of April, all three major stock market indexes witnessed marginal gains reversing the overall negative trend observed in the last two months. In May, these indexes are also in positive zone extending their gains from the previous month.
Robust Earnings Momentum
First-quarter earnings results have been exhibiting strong momentum so far. Total earnings are expected to be up 24.2% from the same period last year on 8.6% higher revenues. This is the highest quarterly earnings growth pace in seven years. For full-year 2018, total earnings for the S&P 500 index are anticipated to be up 19.6% on 5.9% higher revenues. (Read more: Earnings Picture Good, But Not Improving)
Healthy Consumer Confidence
For May, the Conference Board's measure of U.S. consumer confidence index is pegged at 128.0 compared with April’s revised reading of 125.6. On May 11, the Commerce Department reported that U.S. retail sales rose 0.3% for the month of April, at par with the consensus estimate. Retail sales are up for two straight months and also advanced 4.7% year over year.
Our Top Picks
This high level of confidence indicates that consumers and enterprises are expecting U.S. economic expansion to continue in the near-term. Improvement in income, jobs and after-tax pay of U.S. consumers are most likely to negate worries about geopolitical conflicts and stock market volatility.
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.
Chart below shows price performance of our five picks in he last three months.
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 the current year. The Zacks Consensus Estimate for the current year has improved by 30% over the last 30 days.
Geopark Ltd. GPRK headquartered in Santiago, Chile, the company is an explorer, operator and consolidator of oil and gas. It operates primarily in Chile, Colombia, Brazil and Argentina.
Geopark has expected earnings growth of 745.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 65.3% over the last 30 days.
Immersion Corp. IMMR headquartered in San Jose, CA, the company develops hardware and software technologies that enable users to interact with computers using their sense of touch.
Immersion has expected earnings growth of 307.1% for the current year. The Zacks Consensus Estimate for the current year has improved by 51.5% over the last 30 days.
Lindblad Expeditions Holdings Inc. LIND headquartered in NY, the company is an expedition travel company. It arranges marine expedition programs and promotes conservation and sustainable tourism.
Lindblad Expeditions has expected earnings growth of 155.6% for the current year. The Zacks Consensus Estimate for the current year has improved by 76.9% over the last 30 days.
Cheniere Energy Inc. LNG headquartered in Houston, TX, the company primarily engaged in liquefied natural gas related businesses. The company owns and operates the Sabine Pass liquefied natural gas terminal in Louisiana.
Cheniere Energy has expected earnings growth of 216.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 32.6% over the last 30 days.
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