5 Growth Stocks To Buy As Markets Rally Over Last 4 Weeks

Markets rebounded from the steep losses it suffered on Brexit woes, with U.S. stocks climbing to record highs, marking four straight weeks of gains. Corporate results came in better than expected, while reassuring domestic economic data raised confidence in the strength of the economy. From homebuilding to retail sales to job creation, all showed signs of improvement.

Stocks also surged on stimulus hopes from central banks around the world to counter economic gloom. Thanks to this upward movement, it makes sense to invest in stocks with solid upside potential.

Stocks Continue Bull Run, S&P 500 Hits Record

U.S. stocks continued to move higher, ending in the green for the fourth straight week on Friday. The S&P 500 closed at a fresh all-time record high of 2,175.03, gaining 9.86 points or 0.5%. The Dow Jones Industrial Average edged higher toward record highs touched earlier last week. The blue-chip index ended at 18,570.85, advancing 53.62 points or 0.3%. The Nasdaq didn’t lag behind either, closing at its highest level for this year. The tech-laden index went up 26.26 points or 0.5% to finish at 5,100.16.

The Russell 2000 Index, which largely represents small-cap stocks, also rallied a little over 10% from its late-June lows. During that phase, stocks suffered a bloodbath due to the Brexit stunner. Market pundits had cautioned that U.K.’s decision to leave the Eurozone will lead to volatility across the financial markets. So, why did the stocks go higher over the last four weeks?

Quarterly Earnings Creditable

Earnings drove trading all of the last week. The second-quarter earnings picture showed reasonable improvement compared to discouraging results in the last couple of quarters. This suggested better-than-expected earnings improvement over the rest of the year. As of July 22, the companies that have reported so far showed a 70.6% EPS estimate beat, with 55.6% coming in ahead of top-line expectations (read: Decisive Week for the Q2 Earnings Season).

We have received a solid batch of earnings reports from tech behemoths to financial giants this season. QUALCOMM Incorporated’s (NASDAQ:QCOM) fiscal third-quarter net income of $1.03 per share came in ahead of the Zacks Consensus Estimate of 83 cents. Microsoft Corporation’s (NASDAQ:MSFT) fiscal fourth-quarter 2016 earnings per share of 69 cents beat the Zacks Consensus Estimate of 58 cents. Promising earnings results showed that the company is efficiently managing its on-demand computer services.

Quarterly earnings per share of the big banks, Morgan Stanley (NYSE:MS) , Goldman Sachs Group Inc (NYSE:GS) and JPMorgan Chase & Co (NYSE:JPM) , of 75 cents, $3.72 and $1.55, respectively, also outpaced the Zacks Consensus Estimate of 60 cents, $3.01 and $1.43, respectively. Among other major companies, Johnson & Johnson (NYSE:JNJ) and Alcoa Inc (NYSE:AA) also came up with upbeat earnings.

Encouraging Economic Data

Markets have been bolstered by a string of promising economic data. Buoyed by affordable home financing and a stable jobs market, sales of previously owned homes touched a record high in nearly a decade in June. Supply constraints have also subsided, thanks to solid housing starts and permit numbers (read: 4 Stocks to Ride 9-Year High U.S. Home Resales).

U.S. retail sales recorded a healthy gain in June as buyers loosened their purse strings, a telltale sign of sturdy consumer spending. But it was June’s robust jobs data that was primarily responsible for pushing stocks higher. Moreover, producer price index increased last month indicating a healthier level of inflation and growth.

Stimulus Measures in the Wind

Hopes that central banks around the world would introduce stimulus measures to reinvigorate their economies also helped boost the stock market. The Bank of England said that most of its members are expecting a loosening of policy in August. This reassured investors who were expecting further stimulus measures to stem the rot of an already reeling economy.

Equities also climbed as speculation grew that Japan’s Prime Minister Shinzo Abe is contemplating to initiate “helicopter money” in order to stimulate economic growth. This works as a tool to overcome deflation. (Read: What is Helicopter Money?)

5 Best Growth Stocks for Your Portfolio

It seems that the U.S. economy has weathered the Brexit storm, banking on corporate earnings that have largely exceeded expectations and a flurry of positive economic reports led by strong jobs data. Hopes of loosened monetary policies around the globe also propelled stocks higher.

In this bullish scenario, it will be prudent to invest in stocks with solid growth potential. Our selection is also backed by a good Zacks Growth Score and Zacks Rank. We narrowed down our choices with the help of our new style score system.

Our research shows that stocks with a Growth Style Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) offer the best investment opportunities in the growth investing space.

Dollar General Corp. (NYSE:DG) is a discount retailer that provides various merchandise products in the U.S. DG holds a Zacks Rank #2 (Buy) and has a Growth Style Score of ‘A’. The company has expected earnings growth of 17% for the current year. The earnings estimate for the current year has increased by 1.53% over the last 60 days.

Intel Corporation (NASDAQ:INTC) designs, manufactures and sells integrated digital technology platforms worldwide including the U.S. INTC holds a Zacks Rank #2 (Buy) and has a Growth Style Score of ‘A’. The company has expected earnings growth of 7.4% for the current year. The earnings estimate for the current year has increased by 3.3% over the last 60 days.

Blue Buffalo Pet Products Inc (NASDAQ:BUFF) operates as a pet food company in the United States, Canada, Japan, and Mexico. BUFF holds a Zacks Rank #1 (Strong Buy) and has a Growth Style Score of ‘A’. The company has expected earnings growth of 20.3% for the current year. The earnings estimate for the current year has increased by 1.35% over the last 60 days.

Waters Corporation (NYSE:WAT) operates as an analytical instrument manufacturer in the U.S. and internationally. WAT holds a Zacks Rank #2 (Buy) and has a Growth Style Score of ‘B’. The company has expected earnings growth of 8.2% for the current year. The earnings estimate for the current year has increased by 0.47% over the last 60 days.

Equity Lifestyle Properties, Inc. (NYSE:ELS) is a publicly owned real estate investment trust (REIT). ELS holds a Zacks Rank #2 (Buy) and has a Growth Style Score of ‘B’. The company has expected earnings growth of 8.2% for the current year. The earnings estimate for the current year has increased by 1.23% over the last 60 days.