Wall Street is on the verge of completing its most-disastrous month so far this year. Volatility resurfaced in Wall Street since the beginning of August after two months of bull run.
A less-than-expected dovish monetary stance taken by the Fed in its FOMC meeting at July end, heightened tariff war between United States and China, the global economic slowdown, especially in manufacturing and, exports together with frequent inversion of the main yield curve of the U.S. Treasury Notes, resulted in a stock market rout.
The three major stock indexes ---- the Dow, the S&P 500 and the Nasdaq Composite --- have so far lost 3.1%, 3.1% and 3.9%, respectively, in August. Despite these negatives, a few stocks have surged in the past month and still carry strong momentum for further upside.
U.S.-China Trade Conflict Intensified
On Aug 23, China announced that it will impose 5% to 10% tariff on another $75 billion of U.S. goods in two tranches, on Sep 1 and Dec 15. Additionally, a 25% tariff on U.S. auto products and auto parts will be imposed effective Dec 15.
In retaliation, President Donald Trump decided to raise tariff to 30% from the existing 25% on $250 billion Chinese goods. Moreover, he also raised the tariff from 10% to 15%, which is to be levied on an additional $300 billion of Chinese exports effective Sep 1. Consequently, tariff on $550 billion Chinese goods will cover total U.S. imports from China per annum.
Furthermore, Trump tweeted by issuing an order to U.S. companies to look for an alternative to China for their operations including returning home. President Trump also hinted that prolonging the U.S.-China trade conflict can lead to the imposition of national emergency, though not immediately.
The GDP of the Eurozone economy as a whole declined to 0.2% in the second quarter compared with 0.4% in the first. Notably, Germany, the fourth-largest economy in the world, witnessed a 0.1% contraction in its second-quarter 2019 GDP, the first time since the third quarter of 2018.
Germany’s industrial output in July also declined 5% year over year. The German Ifo Institute reported that business sentiment in July came in at a reading of 94.3, the lowest level since November 2012.
The second-quarter 2019 GDP of the U.K. contracted 0.2% for the first time since late 2012. The manufacturing sector declined 2.3% in the second quarter, marking its biggest quarterly fall since the first quarter of 2009.
Moreover, U.K. Prime Minister Boris Johnson decided to suspend the parliament until Oct 14, raising the concern of no-deal Brexit as Britain is scheduled to exit from the European Union on Oct. 31.
In China, industrial output grew 4.8% in July, marking its lowest growth in more than 17 years. Retail sales in China were up 7.6% in July, reflecting the second-lowest rate of growth since 2003. Meanwhile, political unrest for democracy heightened in Honk Kong, the financial hub of Asia. Hong Kong’s close financial proximity with Europe and several Asian emerging markets may result in global financial turmoil if political unrest continues for an indefinite time period.
5 Top Momentum Stocks Flying High in August
We have narrowed down our search to five such stocks, which popped in August and still have strong momentum. Each of our picks carries a Zacks Rank #1 (Strong Buy) and a Zacks Momentum Style Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bristol-Myers Squibb Co. BMY discovers, develops, licenses, manufactures, markets, distributes and sells biopharmaceutical products worldwide. The company offers drugs in oncology, immunoscience, cardiovascular and fibrotic diseases.
Bristol-Myers Squibb also has a presence in other core therapeutic areas including immunoscience and cardiovascular beside cancer. Eliquis is expected to drive further growth in 2019, after a strong 2018, propelled by increases in market share in the novel oral anticoagulant (NOAC) market.
The Zacks Consensus Estimate for current-year earnings has moved 0.5% north over the last 30 days. The stock price has jumped 9.2% for the past month.
Alamos Gold Inc. AGI is engaged in the acquisition, exploration, development, and extraction of gold deposits in North America. It also explores for silver and precious metals.
Alamos Gold’s flagship project is the Young-Davidson mine, which includes contiguous mineral leases and claims totaling 11,000 acres located in Northern Ontario, Canada. The company is likely to benefit from soaring gold prices in the rest of 2019. Concerns about a global recession have skyrocketed prices of gold and other precious metals
The Zacks Consensus Estimate for current-year earnings has moved up 16.7% over the last 30 days. The stock price has jumped 8.6% for the past month.
Americold Realty Trust COLD is the world's largest publicly traded REIT focused on the ownership, operation and development of temperature-controlled warehouses. It has operations in the United States, Australia, New Zealand, Canada and Argentina.
Americold's facilities are an integral component of the supply chain connecting food producers, processors, distributors and retailers to consumers. The company is likely to benefit from the global low interest rate scenario.
The Zacks Consensus Estimate for current-year earnings has moved up 4.9% over the last 30 days. The stock price has soared 7.6% for the past month.
TransDigm Group Inc. TDG is a leading global designer, producer and supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft in service today. It operates in three segments: Power & Control, Airframe, and Non-aviation.
Apart from serving the commercial aerospace market, TransDigm’s products also holds a significant position in the U.S. defense aerospace market. Impressively, the company witnessed a solid 69.1% annual revenue growth in the last reported quarter, backed by strong bookings growth in the past few quarters.
The Zacks Consensus Estimate for current-year earnings has moved up 5.8% over the last 30 days. The stock price has soared 7.1% for the past month.
frontdoor Inc. FTDR provides home service plans in the United States. Its home service plans cover the repair or replacement of components of up to 21 household systems. The company's customizable home service plans help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances.
The Zacks Consensus Estimate for current-year earnings has moved up 20.3% over the last 30 days. The stock price has gained 6% for the past month.
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