5 Top Stocks to Buy as Bull Market Turns Eight

You won't miss out on the continuing bull run with these growing picks

Had investors taken a leap of faith eight years ago when the broader markets had bottomed out, most would have been seating on a pile of cash today.

5 Top Stocks to Buy as Bull Market Turns EightMarch 9, 2017 marks the eighth anniversary of the U.S. stock market’s Bull Run after the terrifying decline triggered by the Great Recession.

The markets endured a lot of gyrations and have come a long way from the rock bottom levels, with some of the latest gains being attributed to President Donald Trump’s market-friendly policies. Trump has also hardly inherited any mess; rather, things are looking pretty bright.

The imminent rate hike shows underlying strength in the economy, while the nearly full-employment level and relatively high corporate profit margins are adding to the bullishness. This calls for investing in some rock-solid stocks that have not only outperformed in the current bull market but also have scope to scale higher.

Markets Have Made a Comeback

The bull market had come into existence on March 9, 2009, when the S&P 500 had seen a steep slide to a low of around 677, plunging 57% due to the financial crisis. The upward trajectory, however, hasn’t been a smooth sail. Even though the markets climbed 30% in 2013 and 11% the next year, the S&P 500 was more or less flat in 2015. In fact, stocks started 2016 on a rocky note fueled by worries of a global recession and drags of cheap oil.

Thankfully, stocks recovered from the panic, with the current Bull Run turning out to be an astonishing one, about 60% longer than an average Bull Run.

Since the dark days of Mar 2009, the S&P 500 has more than tripled, while the tech-laden Nasdaq breezed past the physiologically important 5,000 mark. The market value of U.S. stocks, in fact, soared a whopping $21.2 trillion, as per Wilshire Associates.

A lot many big names hogged the limelight during this eight year of bull run, with Incyte Corporation (INCY) climbing a staggering 6,455% from the market’s low on Mar 9, 2009.

Following the drug maker, companies that made the cut with quadruple-digit gains included United Rentals, Inc. (URI), American Airlines Group Inc (AAL) as well as Amazon.com, Inc. (AMZN).

But, for the daring, investing in blue chip stocks eight years ago should have paid off splendidly.

Investing in the Dow Paid Has Off

The Dow Jones Industrial Average, benchmark of 30 large U.S. companies and a barometer of broader market conditions, surged roughly 200%, while gold gained a meagre 30.8% and crude oil advanced 17.5% in the last eight year period.

The Dow fell short of 21,000 after crossing the milestone for the first time in history.

Among the Dow components remaining from 2009, Home Depot Inc (HD) is the undisputed winner, rallying more than 600%, while American Express Company (AXP) and Walt Disney Co (DIS) surged over 500%.

Apple, Inc. (AAPL), the youngest member of the blue-chip index, has shot up almost 1,000% since 2009.

However, it rose only 9.3% since it became a Dow component two years back.

The table below shows the five best Dow gainers since the beginning of the bull market:

Dow Components

8-Year Return

Home Depot

608%

American Express

564%

Walt Disney

559%

Boeing

482%

DuPont

347%

Trump Adds to the Rally

The Bull Run was no fluke, since the current stock prices are well supported by the Trump induced rally. Trump’s polices including tax cuts, repealing regulations and increased infrastructure outlays restored expectations of a pro-growth agenda that helped the broader market push further into record territory.

Trump plans to overhaul tax codes for business and individuals over the next two to three weeks. He plans a multi-trillion-dollar tax cut that will boost the U.S. economy and lift corporate profits.  Trump, in the meantime, signed an executive order designed to scale back the Dodd-Frank Act. Trump views the Dodd-Frank regulatory overhaul as a harsh measure, especially, on banks as they had to beef up compliance compartments to deal with a list of new rules.

Additionally, Republicans introduced a healthcare replacement bill called “World’s Greatest Healthcare Plan of 2017”.

Trump also keeps discussing about how he wants to reconstruct America’s roads, bridges and other infrastructures, which led his administration to unveil a proposal to spend $1 trillion over the next 10 years (read more: Top Stock Picks for Trumps Trillion Dollar Infrastructure Plan).

Trump’s pledge to significantly increase federal spending on national security was cheered by the Republicans while his team is preparing to create an infrastructure “task force” that will help carry out the ambitious federal spending program (read more: 5 Stocks to Buy as Trump Promises to Spend Big on Defense).

5 Bull Market Winners

Until and unless the new administration stumbles into a trade war, the broader markets are expected to move further north. Investors have also scooped up shares, especially from the financial sector, on expectations of a rate hike as early as March (read more: Yellen Increases Odds of March Rate Hike: 5 Top Winners).

The Q4 earnings results also showed another solid quarter for U.S. corporates. Total earnings for the companies that have reported so far are up 7.4% on 4.9% higher revenues, with 68.4% beating EPS estimates and 54.1% coming ahead of top-line expectations (read more: Record Quarterly Earnings in Q4).

Banking on such positives, we have selected five solid stocks that have outperformed in the current bull market and have the scope to gain further traction. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). Such stocks also boost 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 these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.

Broadcom Ltd (AVGO) is a designer, developer and global supplier of a range of semiconductor devices.  The company has a Zacks Rank #1 and a VGM score of ‘B’. Broadcom’s estimated growth rate for the current year is 32%, more than the Electronics – Semiconductors industry’s estimated gain of 5.1%. The company has given a huge return of 1372.17% in the Mar 9, 2009–Mar 9, 2017 period.

Kate Spade & Co (KATE) is engaged in the design and marketing of a range of accessories and apparel. The company has a Zacks Rank #2 and a VGM score of ‘A’. Kate Spade’s estimated growth rate for the current year is 26.7%, while the Retail – Apparel and Shoes industry is projected to decline 6.1%. The company has yielded a stellar return of 842.46% in these eight years.

Kforce Inc. (KFRC) is engaged in providing professional and technical specialty staffing services and solutions. The company has a Zacks Rank #2 and a VGM score of ‘A’. Kforce’s estimated growth rate for the current year is 27.2%, higher than the Staffing Firms industry’s addition of 8.6%. The company has given a superb return of 269.75% since Mar 9, 2009. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores Inc (BURL) is a retailer of branded apparel. The company has a Zacks Rank #2 and a VGM score of ‘A’. Burlington Stores’ estimated growth rate for the current year is 19.6%, more than the Retail – Discount Stores industry’s projected gain of 9.4%. The company has given a solid return of 262.57% in the Mar 9, 2009–Mar 9, 2017 time frame.

SkyWest, Inc. (SKYW) is a holding company for approximately two scheduled passenger airline operations and an aircraft leasing company. The carrier has a Zacks Rank #2 and a VGM score of ‘A’. SkyWest’s estimated growth rate for the current year is 12.2%, in contrast to the Transportation – Airline industry’s projected decline of 5.9%. The company has given an encouraging return of 203.73% in these eight years.

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SkyWest, Inc. (SKYW): Free Stock Analysis Report

Walt Disney Company (The) (DIS): Free Stock Analysis Report

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

United Rentals, Inc. (URI): Free Stock Analysis Report

Home Depot, Inc. (The) (HD): Free Stock Analysis Report

Apple Inc. (AAPL): Free Stock Analysis Report

Broadcom Limited (AVGO): Free Stock Analysis Report

American Express Company (AXP): Free Stock Analysis Report

Incyte Corporation (INCY): Free Stock Analysis Report

Kforce, Inc. (KFRC): Free Stock Analysis Report

American Airlines Group, Inc. (AAL): Free Stock Analysis Report

Kate Spade & Company (KATE): Free Stock Analysis Report

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

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