5 Stocks With Decent Growth Potential to Watch Ahead

U.S. markets have gathered steam over the past couple of weeks, thanks to the country’s economy which is slowly coming back on track. As lockdown measures are being lifted across the country and people are venturing out to their favorite stores and restaurants or making travel plans, various parts of the economy are witnessing more activity.

This is why now could be the ideal time to add stocks with good growth potential to one’s watch list.

Markets Significantly Up Since March Lows

U.S. stocks have come a long way from their lowest points on Mar 23. The three major indexes, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite have gained more than 30% since then. Specifically, the Dow Jones, the S&P 500 and the Nasdaq Composite have added 32.9%, 32.6% and 37.9%, respectively, since Mar 23.

Of course, several factors have aided this impressive growth in a little more than two months. Two rate cuts by the central bank in March (once by 0.50% and the second time by 1%) undoubtedly helped industries (current rates are between 0% and 0.25%) along with about $2.3 trillion in several measures that comprise loans to help small- and medium-sized businesses. The government’s $3 trillion in coronavirus relief packages to aid states, local governments and American taxpayers assisted the markets as well.

In fact, last week, the Dow Jones crossed 25,000 points for the first time since March, boosted by optimism over a reviving economy as all 50 states are reopening centers of business. As of Jun 1, the index remains well above 25,000 points, having closed at 25,475.02 at the end of Monday’s trading session. In addition, the S&P 500 crossed the 3,000 mark for the first time since Mar 5 on May 26.

Which Industries Could Gain Ahead and Why?

Keeping in mind the substantial gains the three indexes have raked in since March, one could take a look at the factors that have propelled equities so far and may continue to do so ahead. In addition, delving deeper into the industries that are now well positioned for encouraging movement ahead is prudent.

First, as business hubs, offices, restaurants, hotels and other public places reopen around the country, consumer activity is gathering steam again. This is why businesses such as airlines, hotels, restaurants, retailers of apparel, shoes and other discretionary items that were hit hard during the pandemic are expected to gain momentum.

Although many restrictions remain in place, consumers are getting back to their routines pre lockdown and are visiting restaurants, and making plans to travel and buy new property.

Per a CNBC report, data from online reservation platform Open Table revealed that restaurant bookings declined as much as 100% in the last weeks of March and most of April as compared to 2019. However, as states allowed restaurants to reopen dining instead of just rely on takeout, delivery and curbside pickup, bookings in restaurants started picking up toward May-end again, indicating a revival of the food service industry.

Second, the hotel and travel industries are regaining their lost glory too, as the occupancy rate for U.S. hotels is inching higher. Occupancy rates in April and May began to rise as travelers headed back to executing their travel plans. According to Statista, occupancy in hotels across Americas was 23.5% in April. However, in the week ending May 23, hotels across the United States had occupancy of 35.4%.

Finally, according to data by Transportation Security Administration, total number of travelers rose to 352,947 on May 31 from 87,534 on Apr 14. This indicates increasing activity on the front of airline bookings.

5 Stocks to Watch

Keeping the aforementioned factors in mind, we have, rounded up five stocks from the select industries that have good potential for growth. All these stocks carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Wingstop Inc. WING is an operator of restaurants under the Wingstop brand. The Zacks Consensus Estimate for the company’s current-year earnings has moved 43.7% north in the past 60 days. Its expected earnings growth rate for the current year is 39.7%. Wingstop belongs to the Zacks Retail - Restaurants industry and carries a Zacks Rank #2. The company has a Growth Score of B.

Papa John's International, Inc. PZZA is an operator of pizza delivery and carryout restaurants under the Papa John's trademark. The Zacks Consensus Estimate for the company’s current-year earnings has moved 10.8% north in the past 60 days. Expected earnings growth rate for the current year is 23.1%. Papa John's International belongs to the Zacks Retail - Restaurants industry and carries a Zacks Rank #2. The company has a Growth Score of B.

Ryanair Holdings plc RYAAY is a provider of scheduled-passenger airline services. Ryanair’s expected earnings growth rate for the next five years is 20.5%. Ryanair belongs to the Zacks Transportation - Airline industry and carries a Zacks Rank #2.

Darden Restaurants, Inc. DRI is an owner and operator of full-service restaurants. The Zacks Consensus Estimate for the company’s current-year earnings has moved 11.6% north in the past 30 days. Darden Restaurants’ expected earnings growth rate for the next five years is 10%. The company belongs to the Zacks Retail - Restaurants industry and carries a Zacks Rank #3. It has a Growth Score of A.

Civeo Corporation CVEO is a provider of hospitality services to the natural resource industry. Civeo’s expected earnings growth rate for the current year is 56.5%. It belongs to the Zacks Hotels and Motels industry and carries a Zacks Rank #3. The company has a Growth Score of A.

5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.

See the 5 high-tech stocks now>>

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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
 
Darden Restaurants, Inc. (DRI) : Free Stock Analysis Report
 
Papa Johns International, Inc. (PZZA) : Free Stock Analysis Report
 
Civeo Corporation (CVEO) : Free Stock Analysis Report
 
Wingstop Inc. (WING) : Free Stock Analysis Report
 
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