Trade Optimism Powers Wall Street to Record High: 5 Winners

Both the United States and China have recently agreed on phase-one of the trade deal. Such fresh optimism over trade helped major benchmarks hit record highs on Nov 4. Thus, investors might be interested in stocks that are set to make the most of the bullish scenario.

U.S.-China Trade Resolution

Both U.S. and Chinese officials are looking to cut a few tariffs to finalize the partial trade deal. The countries have agreed to settle the trade dispute, which has affected billions of dollars of trade, squeezed corporate profit margins and impeded global economic growth.

Manufacturing has especially been affected while business investments have also taken a hit. The Fed has also acknowledged weakness in business investments and exports.

According to Myron Brilliant, executive vice president and head of international affairs at the U.S. Chamber of Commerce, “the two sides are nonetheless really close to a deal but it will come down to the presidents to make the final call.” U.S. Commerce Secretary Wilbur Ross, in the meantime, said that the world’s largest economies are making “”good progress” on the U.S.-China trade front.

The so-called phase-one agreement would entail China’s purchase of $40-$50 billion of U.S. agricultural commodities. It will also discourage China from devaluing its currency and protect intellectual property rights.

If the phase-one deal is successful, President Trump won’t impose new tariffs on Dec 15 as planned and officials would roll back some of the existing tariffs. The Financial Times, by the way, has reported that the Trump administration was considering trimming tariffs on nearly $11-billion Chinese goods imposed on Sep 1.

Lest we forget, retailers and apparel producers had expressed disapproval of such tariffs some time back. What’s more, many economists criticized the tariffs imposed on Sep 1 as they directly affect the price of imported consumer products.

Rolling back of such tariffs could easily improve the rapport between both the sides, eventually leading them to pursue a phase-two or phase-three deal.

Stocks at Record Highs

Hopes of at least a partial U.S.-China trade deal helped the stock market scale higher. The Dow Jones Industrial Average rose 114.75 points, or 0.4%, to 27462.11 on Nov 4, notching its first record since July.

The S&P 500 index gained 11.36 points, or 0.4%, to end at 3,078.27, while the Nasdaq rose 46.80 points, or 0.6%, to close at 8,432.20. Both the major bourses finished at record highs for the second consecutive session.

All three primary indexes, in fact, hit an all-time intraday high. The last time the indexes closed at record highs on the same day was Jul 15, per Dow Jones Market Data. But why just U.S. indexes, stocks around the world scaled north as well. Stoxx Europe 600 was up 1%, Hong Kong’s Hang Seng ended 1.6% up and South Korea’s Kospi rose 1.4%, to name a few.

5 Best Growth Stocks to Buy

With the global stock markets gaining traction on trade optimism, astute investors should cash in on this bullish trend by investing in stocks that have immense growth potential. Lest we forget, better-than-expected October jobs report coupled with upbeat third-quarter earnings have buoyed sentiments on Wall Street.

We have used the Zacks Stock Screener to narrow down on such stocks that also sport a Zacks Rank #1 (Strong Buy) along with Growth Score A. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zumiez Inc. ZUMZ operates as a specialty retailer of apparel, footwear, accessories, and hard goods for young men and women. The Zacks Consensus Estimate for its current-year earnings has increased 10.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 20.7%, way more than the Retail - Apparel and Shoes industry’s projected rally of 1.7%.

Anixter International Inc. AXE distributes enterprise cabling and security solutions, electrical and electronic wire and cable solutions, and utility power solutions. The Zacks Consensus Estimate for its current-year earnings has moved up 7.1% over the past 90 days. The company’s expected earnings growth rate for the current year is 18.9%, in contrast to the Electronics - Parts Distribution industry’s projected decline of 10.3%.

Career Education Corporation CECO operates colleges, institutions, and universities that provide education to student population in various career-oriented disciplines through online, campus based, and blended learning programs in the United States. The Zacks Consensus Estimate for its current-year earnings has risen 9.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 19.1%, higher than the Schools industry’s projected rally of 2.8%.

Tennant Company TNC designs, manufactures and markets floor cleaning equipment. The Zacks Consensus Estimate for its current-year earnings has increased 5.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 29.8%, higher than the Manufacturing - General Industrial  industry’s estimated rally of 8.6%.

Copart, Inc. CPRT provides online auctions and vehicle remarketing services. The Zacks Consensus Estimate for its current-year earnings has moved 5.1% north over the past 60 days. The company, which is part of the Auction and Valuation Services industry, is expected to record earnings growth of 23.4% and 18.7% in the current quarter and year, respectively.

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