S&P 500 Index Hits All-Time High: 4 Strong Stocks to Bet On

 
On Aug 21, the S&P 500 touched an all-time high level of  2,873.23 before closing the day at 2,862.96, led by a strong show of the stocks in the consumer discretionary and industrial pace.

The rally in the index was backed by a solid quarterly earnings season, raising hopes that trade talks between the United States and China will spur a positive outcome. Moreover, President Donald Trump’s tax drive has given corporations and individuals an extra financial flexibility to spend more, propelling greater economic growth and pushing indexes higher.

The bull market is in its ninth year and turns 3,453 days old on Wednesday, making it the longest period on record. There seems to be no end to this upside in the near term. In fact, optimistic investors expect this momentum to continue extensively.

Greg Luken, CEO of Luken Investment Analytics, said that the three Ts — Trump, tariffs and trade — are sort of a wet blanket on the embers of growth but the market can still prosper. “Bull markets don't die of old age, they die of euphoria and its nowhere near euphoria,” he stated.  Given the dominant bullish sentiment, let’s invest in stocks from the S&P 500 category of companies/participants that have not only outperformed the current bull market but also show immense scope to scale higher.

The S&P 500 Climbs High Since January

The S&P 500 index, a proxy for gauging the broader market movement, broke the record high of 2872.87 touched on Jan 29.  Despite market volatility, the index is up 6.2% year to date. In the current bull run, the S&P 500 index has witnessed a staggering gain of more than 300% (since Mar 9, 2009).

What is Fuelling the Index Upside?

A Robust Economy

Sturdy economic growth measured by GDP and a positive consumer and business sentiment, low unemployment, wage gains have been a catalyst for this big market boost.

The second quarter of 2018 saw U.S. GDP rising 4.1%, making it the highest gain since the third quarter of 2014 and the third-best growth rate since the Great Recession of 2008-2009 time frame. Moreover, in the second quarter, consumer spending, business investment and government expenditure increased 4%, 7.3% and 3.5%, respectively.

The most recent data, released earlier in the month by the Labor Department, showed a spurt in U.S. non-firm jobs by an additional 157,000. Last month, the unemployment rate dipped 0.1% from June to 3.9%, its lowest level in nearly 50 years. Average hourly earnings inched up 0.3% to 2.7% over the same period a year ago.

Stellar Earnings Show

Strong second-quarter earnings have been one of the vehicles to drive the index run.

U.S. corporate houses have reported impressive earnings results for the second quarter of 2018. So far (as of Aug 17, 2018), 467 S&P 500 members have reported their quarterly financial figures. Total earnings of these companies are up 25.5% on 9.9% higher revenues. On the whole for the S&P 500, the second-quarter bottom line is expected to improve 24.9% from the comparable quarter last year on 9.7% better top line.

On achieving second-quarter earnings expectation for the entire S&P 500 index, highest quarterly growth pace will be registered since 2010. In fact, it will exceed first-quarter 2018’s earnings growth rate of 24.6%.

Renewed Hopes On Impending U.S.-China Talks

Markets got an added impetus, expecting a positive outcome from another round of negotiations due this week. Investors remain optimistic that the delegates will be able to reach some kind of accord to alleviate tensions between the two big economies and ease trade tensions. So far, both countries have imposed $50 billion of tariffs with scores of more tariffs to come under banner of levying of duties on products, escalating fears of a global trade war.

4 Best Stocks to Put Money On

An overall favorable market environment provides the best time to invest in stocks. We have selected five S&P 500 stocks, having showcased a solid performance in the current bull market with potential to progress further.

These stocks also boast a bullish Zacks Rank #1 (Strong Buy) or 2 (Buy).
The search was also simplified with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of all three metrics. Such a score allows you to eliminate the negative aspects of stocks and select the deserving winners.

Each of the below mentioned stock have surpassed the S&P 500 index growth, year to date.

UnitedHealth Group Inc. UNH: The stock delivered a 3.7% positive earnings surprise in the last four quarters. UnitedHealth has expected earnings growth of 26.3% for the current year. The Zacks Consensus Estimate for the current year has been revised 0.8% upward over the past 30 days. The stock carries a Zacks Rank of 2 and a VGM Score of B.

Anthem Inc. ANTM: The stock provided 6.65% positive earnings surprise in the last four quarters. The company has expected earnings growth of 28.6% for current year. The Zacks Consensus Estimate for the current year has improved by 0.6% over the last 30 days. The stock carries a Zacks Rank #2 and a VGM Score of B.

Apple Inc. AAPL : The stock provided 5.5% positive earnings surprise in the trailing four quarters. Apple has expected earnings growth of 26.8% for current year. The Zacks Consensus Estimate for the current year has improved by 2.5% over the last 30 days. The stock carries a Zacks Rank #2.

The Progressive Corp. PGR: The stock delivered a 9.2% positive earnings surprise in the previous four quarters. Progressive has an expected earnings growth rate of 71.1% for this year. The consensus mark for current-year bottom line has improved by 2.5% over the past 30 days. The stock is a #1 Ranked player and has a VGM Score of B.


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