5 Top Growth Stocks to Buy as Fear of Recession Ebbs

The U.S. economy expanded robustly in the final three months of 2023 and crushed recession fearmongering. Despite the Federal Reserve’s aggressive tightening measures to curb inflationary pressure, the economy accelerated at an annualized pace of 3.3% in the final quarter of 2023 and expanded 2.5% last year.

The economy is now well-poised to trounce recession concerns this year as well and chug along. The Federal Open Market Committee, in its latest policy meeting, kept the benchmark overnight borrowing rate unchanged and reiterated three quarter-percentage-point interest rate cuts by the end of this year. This would mean the first interest rate cuts since the beginning of the Covid-19 pandemic in March 2020.

Now, interest rate cuts are a blessing in disguise for economic growth. After all, it helps in increasing consumer outlays and reduces the cost of borrowing. Talking about consumer spending, American shoppers did open up their wallets in recent times despite sticky inflation and dwindling pandemic savings. Consumers remained resilient, banking on strength in the labor market, a tell-tale sign that the economy continues to stay healthy.

Sales at retail outlets rose 0.6% in February from a decline of 1.1% in January, according to the Commerce Department. Notably, spending at retail outlets increased in the seven of the past 10 months through February. Spending at retail outlets primarily improved as employers added jobs at a steady clip last month, while average hourly earnings increased.

Most importantly, the Conference Board’s leading indicator for the economy advanced 0.1% in February, its first increase since February 2022. The gauge is known for predicting whether the economy is improving or getting worse.

Hence, with the economy booming amid little sign of a recession, the stock market is well-positioned to scale northward. This calls for investing in growth stocks such as American Woodmark AMWD, Burlington Stores BURL, Central Garden & Pet CENT, DHI Group DHX, and Amazon.com AMZN.

These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of A or B, a combination that offers the best opportunities in the growth investing space. You can see the complete list of today’s Zacks Rank #1 stocks here.

American Woodmark is the third-largest manufacturer of kitchen and bath cabinets. American Woodmark currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 3% over the past 60 days. AMWD’s expected earnings growth rate for the current year is 14.4%.

Burlington Stores is a retailer of branded apparel products. Burlington Stores currently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 4.5% over the past 60 days. BURL’s expected earnings growth rate for the current year is 22.1%.

Central Garden & Pet is one of the leading companies in the U.S. pet supplies and lawn and garden supplies space. Central Garden & Pet currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 13.4% over the past 60 days. CENT’s expected earnings growth rate for the current year is 10.6%.

DHI Group offers specialized websites that focus on select professional communities. DHI Group currently has a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 12.5% over the past 60 days. DHX’s expected earnings growth rate for the current year is 80%.

Amazon.com is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. Amazon currently has a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 12.1% over the past 60 days. AMZN’s expected earnings growth rate for the current year is 40.7%.
 

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

Central Garden & Pet Company (CENT) : Free Stock Analysis Report

American Woodmark Corporation (AMWD) : Free Stock Analysis Report

Burlington Stores, Inc. (BURL) : Free Stock Analysis Report

DHI Group, Inc. (DHX) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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