What Pandemic? These 5 Large Caps Are Up More Than 25% YTD

The first half of 2020 will be over in just a week and Wall Street is still reeling under the coronavirus pandemic. Systematic reopening of the U.S. economy since the last week of May and a series of better-than-expected economic data raised hopes for a V-shaped recovery. However, the second wave of COVID-19 in as many as 24 states, as those governments tried to reopen economies, significantly dampened several analysts' expectations of a quicker-than-expected economic recovery.

Despite the present uncertainties, not all stocks have suffered due to the pandemic-induced economic devastations. Several corporate behemoths have skyrocketed during the first half of 2020 while the broad market is yet to fully recover from the impacts of coronavirus. Notably, a handful these corporate giants carries a favorable Zacks Rank.

Market Yet to Fully Recover Despite Impressive Rally

Wall Street is witnessing an impressive turnaround for the last three months barring some occasional fluctuations that helped it to exit the coronavirus-led bear market. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — jumped 42.9%, 42.3% and 51.7%, respectively, from their recent lows recorded on Mar 23.

However, year to date, only Nasdaq Composite is in green with a gain of 12.1% buoyed by the  fabulous performance of the technology sector. Meanwhile, both the Dow and the S&P 500 are still in negative territory year to date. The S&P 500 managed to become green on Jun 8 but fell in negative territory the next day. At present, the Dow and the S&P 500 are down 8.8% and 3.5%, respectively, year to date.

Silver Lining

Despite the resurgence of the deadly coronavorus in various states, it is unlikely that a second round of lockdown will be imposed. Better-than-expected economic data, despite the fact that the aggregate economy is still way below its pre-lockdown level of activities, have shown fundamental stability.

Impressive job additions, a jump in retail sales and a quickly recovering housing market clearly indicate that consumer spending, which constitutes nearly 68% of the U.S. economy is gaining momentum. Moreover, the sagging U.S. manufacturing sector, which generates around 12% of the GDP, is slowly returning to its own track.

Moreover, the U.S. government has injected around $3 trillion in fiscal stimulus into the economy and the Federal Reserve’s balance sheet skyrocketed to $7.21 trillion as of Jun 3 as it poured money into the economy. On Jun 16, Bloomberg reported that the Trump administration is preparing a $1 trillion infrastructure project including construction of roads, bridges, 5G wireless networks and rural broadband.

Additionally, the benchmark interest rate has been reduced to the range of 0-0.25% by the Fed and is likely to stay within it till 2022. All these stimulli are likely to expedite quick economic recovery.

Our Top Picks

We have narrowed down our search to five stocks using three selection criteria. First, we have selected corporate giants (market capital > 50 billion) as these companies have solid business model and brand names.

Second, the stocks have strong growth potential for the rest of this year and witnessed robust earnings estimate revisions in the last 30 to 60 days. Third, each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks year to date.

 

Tesla Inc. TSLA has acquired a substantial market share within the electric car segment. Strong performance and impressive design of the firm’s products are ramping up sales volumes. Increasing Model 3 delivery, which forms a major chunk of the automaker’s overall deliveries, is aiding the company’s top-line. Along with Model 3, Model Y is set to boost its prospects, going forward.

Tesla is making continued efforts to increase vehicle deliveries. The company's first-quarter 2020 deliveries remained robust despite coronavirus woes. Higher volumes should enable it to achieve cost and production efficiencies, thereby strengthening margins.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 14.8% over the past 60 days. The stock has rallied 137.7% year to date.

NVIDIA Corp. NVDA is gaining decent market share among gaming service providers. A strong line-up of advanced graphics cards has made it a favorite graphics card provider among PC makers.

Datacenter presents solid growth opportunity for the company. Its foray into the autonomous vehicles and other automotive electronics space is a positive. NVIDIA’s GPUs are rapidly gaining from the proliferation of artificial intelligence.

The company has an expected earnings growth rate of 36.4% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved by 1.4% over the past 30 days. The stock has jumped 62% year to date.

ServiceNow Inc. NOW provides cloud computing services that automate digital workflows to accelerate enterprise IT operations. The company continues to win ITSM market share by replacing legacy on-premise systems with cloud-based processes.

ServiceNow is rapidly expanding into non-ITSM markets like human resource and security solutions by launching new products and services. Shorter-sales cycle of these new products as compared with the traditional ITSM business is driving top-line growth.

The company has an expected earnings growth rate of 27.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 7.3% over the past 60 days. The stock has climbed 42.7% year to date.

Vertex Pharmaceuticals Inc. VRTX is focused on the discovery, development, and commercialization of small molecule drugs targeting serious diseases. Its main area of focus is cystic fibrosis (CF), which has huge commercial potential. Vertex enjoys a strong position in this market, being the first company to successfully develop a drug that treats the underlying cause of CF.

The company has an expected earnings growth rate of 67.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 16.1% over the past 60 days. The stock has soared 33.9% year to date.

Activision Blizzard Inc. ATVI develops and distributes content and services on video game consoles, personal computers and mobile devices. It operates through three segments: Activision Publishing Inc., Blizzard Entertainment Inc., and King Digital Entertainment.

The company has an expected earnings growth rate of 23.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the past 60 days. The stock has surged 28.1% year to date.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>

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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
 
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ServiceNow, Inc. (NOW) : Free Stock Analysis Report
 
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