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5 High-Flying Corporate Behemoths With More Upside Left

Nalak Das

Wall Street rebounded gloriously from the coronavirus-induced mayhem in March, closing both April and May on a strong rally. This was the first time this year that the market witnessed back-to-back monthly gains. Notably, stock market has started June from where it ended May, with a lot of enthusiasm about long-term prospects and appetite for risky asset like equities.

Meanwhile, a large section of economists and financial experts, who were skeptical about the growth of the U.S. economy just a month ago, are now expressing views of  quicker-than-expected recovery from the coronavirus-induced devastations.

Three Distinct Phases of Wall Street  Movement So Far in 2020

Wall Street's movement has been zigzag and can be characterized into three distinct phases so far this year.

The first phase was till mid-February, which saw a continuation of the historic 11-year long bull run. Markets started 2020 where they ended 2019, which marked the best performance in six years. The signing of an interim (phase I) trade deal in mid-January between the United States and China bolstered investors' confidence. The three major stock indexes —  the Dow, the S&P 500 and the Nasdaq Composite —  recorded fresh all-time highs almost regularly.

The second phase was the period between mid-February and Mar 23. The outbreak of coronavirus in China and its subsequent spread across the world changed the entire landscape of the global financial markets all of a sudden. Lockdowns imposed by almost all countries put the global economy at a standstill and the United States was no exception. Major stock indexes fell into bear territory from their all-time highs within three weeks and the stock market downtrend continued till Mar 23.

The third phase started from Mar 24 and is continuing barring some occasional fluctuations. By Apr 14, all three major stock indexes exited the bear market and a new bull-market started. The Dow, the S&P 500 and the Nasdaq Composite have rallied 44.2%, 41.7% and 46%, respectively till Jun 3 from their recent lows recorded on Mar 23.

The gradual reopening of the U.S. and the global economy, restoration of normal business activities, stabilization of economic data and an unprecedented stimulus package by the United States and other major European and Asia-Pacific countries should drive the market's northbound movement.

5 Corporate Giants Flying High

Here we have applied a three-tier selection for our top picks. First, these are large-cap (market capital >50 billion) stocks with a strong business model and long history of operation.

Second, these stocks have robust growth potential for the rest of the year and witnessed solid earnings revisions in the past 30 days. Finally, each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The chart below shows the price performance of our five picks in the past month.

 

Lowe's Companies Inc. LOW is one of the world’s leading home improvement retailers, offering services to homeowners, renters and commercial business customers. Home improvement market has robust growth potency, with consumers becoming increasingly motivated to invest in homes. We believe that home improvement business is likely to remain strong driven by rising income, real residential investment and growth in home price.

The company has an expected earnings growth rate of 13.5% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved by 10.8% over the past 30 days. The stock has soared 23.8% in the past month.

Applied Materials Inc. AMAT provides manufacturing equipment, services and software to the semiconductor, display and related industries. Moreover, it has been gaining considerable success in expanding beyond semiconductors. The company is in a very good position to take advantage of the transition from LCD to OLED technology. Rapid growth in large-format TVs has opened up opportunities for Applied Materials.

The company has an expected earnings growth rate of 25.3% for the current year (ending October 2020). The Zacks Consensus Estimate for current-year earnings has improved by 1.9% over the past 30 days. The stock has surged 21.5% in the past month.

NVIDIA Corp. NVDA is gaining decent market share among the gaming service providers. The 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 benefiting from the proliferation of artificial intelligence.

The company has an expected earnings growth rate of 34.4% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved by 1.2% over the past 7 days. The stock has advanced 20.4% in the past month.

Tesla Inc. TSLA designs, develops, manufactures, and sells electric vehicles, and energy generation and storage systems in the United States, China, Netherlands and Norway among other countries. The company operates in two segments, Automotive and Energy Generation and Storage. Tesla is making continued efforts to increase vehicle deliveries.

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 0.1% over the past 30 days. The stock has appreciated 16% in the past month.

NextEra Energy Inc. NEE generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear and natural gas-fired facilities.

The company has an expected earnings growth rate of 8.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 0.1% over the past 7 days. The stock has gained 12.8% in the past month.

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>>