5 Growth ETFs & Stocks To Ride The Market Rally

The stock market has been on a tear though concerns over resurging coronavirus and U.S. China tensions have kept returns on check. Though the rally has been broad-based, the tech-heavy Nasdaq Composite Index is firing all cylinders, hitting new all-time highs.

Growth investing has taken the lead over value and is likely to stay this way given a slew of reasons. A superb rally in the mega-cap tech stocks, trillions of dollars in monetary and fiscal stimulus, and the positive developments in potential coronavirus vaccines were the biggest catalysts. Notably, biotech and pharma firms like Moderna (MRNA - Free Report), Pfizer (PFE - Free Report), Inovio Pharmaceuticals, Johnson & Johnson (JNJ - Free Report), Merck (MRK - Free Report) and Eli Lilly (LLY - Free Report) have been leading in the vaccine race.

A latest industry gauge indicates that U.S. manufacturing activity expanded in July at the fastest pace in more than a year. This coupled with a raft of stronger-than-expected manufacturing purchasing managers indexes in Europe and in China, which signals a steady global economy, also lifted investors’ sentiment. Apart from these, the rise in mergers and acquisitions also led to a spike in the stock market.

Why Growth?

Growth stocks refer to high-quality stocks that are likely to witness revenues and earnings increasing at a faster rate than the industry average. These stocks harness their momentum in earnings to create a positive bias in the market, resulting in rocketing share prices. Growth stocks tend to outperform during an uptrend.

However, it is worth noting that these funds offer exposure to stocks with growth characteristics that have comparatively higher P/B, P/S and P/E ratios and exhibit a higher degree of volatility when compared to value stocks.

That said, we have highlighted the five best ETFs & stocks from this corner of the market that have outperformed so far this year. These funds have a solid Zacks ETF Rank #1 (Strong Buy), or 2 (Buy), indicating their outperformance in the coming months if the same trend prevails.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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