Thanks to easing trade tensions and the U.S.-Mexico deal, the country’s stock market continues to enjoy the longest bull run since World War II. Notably, the S&P 500 hit 2,900 for the first time in history and closed at record highs for the third consecutive session. The index is up 8.4% so far this year.
The surge was driven by the dual tailwinds of solid corporate earnings and a booming economy as suggested by rounds of upbeat data. The U.S. economy is witnessing the fastest pace of growth in nearly four years with a nearly two-decade low unemployment rate of 3.9% and 18-year high consumer confidence. Historic tax cuts, higher government spending and deregulation are fueling exceptional growth.
For the quarter as a whole, total Q2 earnings for the index are expected to be up 24.9% from the same period last year on 9.7% higher revenues. This exceeds 24.6% earnings growth in first quarter 2018, which was the highest quarterly growth pace since 2010.
Additionally, the Fed is on track for gradual rate hikes this year, citing that the economy is strong and can handle a tighter monetary policy. The central bank, which began to tighten monetary policy in 2015, has raised rates twice this year in quarter-point increments and is widely expected to do so again next month and in December. A rising rate scenario also signals a strengthening economy, which is spurring growth in the stock market.
While there are winners from various corners of the space, we have highlighted five stocks on the S&P 500 that have outperformed so far this year. Additionally, their strong performance is expected to continue given that these have a solid Zacks Rank #1 (Strong Buy) or 2 (Buy), a VGM Score of A or B, above-average estimated earnings growth for this year and positive estimate revisions over the past 90 days. Moreover, these stocks belong to top-ranked Zacks industry. You can see the complete list of today’s Zacks #1 Rank stocks here.
Advance Auto Parts Inc. AAP – Up 62.5%
With a market cap of $12 billion, Advance Auto Parts is a leading automotive aftermarket parts provider in North America, serving both professional installers and do-it-yourself customers. The stock has seen positive earnings estimate revision of 14 cents for this year over the past three months, with an expected earnings growth rate of 28.86%, much higher than the industry’s average growth of 26.63%. It has a Zacks Rank #2 and VGM Score of A.
HCA Healthcare Inc. HCA – Up 49.4%
This is a non-governmental hospital in the United States, providing healthcare and related services. The Zacks Consensus Estimate for this year has moved up from $8.83 to $9.23 over the past three months, representing an earnings growth rate of 40.06%, much higher than the industry’s average growth of 26.20%. The stock has a market cap of $45.42 billion and carries a Zacks Rank #2. It flaunts a top VGM Score of A.
Broadridge Financial Solutions Inc. BR – Up 47.8%
The global fintech leader provides investor communications and technology-driven solutions to banks, broker-dealers, mutual funds and corporate issuers globally. With a market cap of $15.57 billion, the stock has witnessed positive earnings estimate revision of 14 cents for the year (ending June 2019) in the past three months. It has estimated earnings growth of 10.74%, higher than the industry’s average growth of 8%. The stock has a Zacks Rank #2 and VGM Score of B.
Robert Half International Inc. RHI – Up 40.9%
It is a recognized leader in professional staffing and consulting services. The stock has seen positive earnings estimate revision of 8 cents for this year over the past three months, with an expected earnings growth rate of 32.69%, much higher than the industry’s average growth of 24.88%. RHI has a market cap of $9.58 billion and carries a Zacks Rank #2. Its VGM Score stands at B.
Archer Daniels Midland Company ADM – Up 26.7%
It procures, transports, stores, processes, and merchandises agricultural commodities and products. The stock has seen solid earnings estimate revision of 45 cents for this year over the past three months and has an expected growth rate of 40.33% — higher than the industry’s average growth of 28.37%. It has a Zacks Rank #1 and VGM Score of A. Archer Daniels has a market cap of $28.42 billion.
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