5 Top-Ranked Growth Stocks To Tap Market Rally In February

Wall Street has resumed its northbound journey after last week's disappointing performance that was incidentally the worst since October 2020. The primary reason for last week's extreme volatility — a typical trading practice in which a few key heavily shorted stocks by hedge fund giants were favored by a group of individual investors organized via Reddit’s wallstreetbets forum — has evaporated. Moreover, a series of good economic data and news boosted investors' confidence.

At this stage, it will be prudent to invest in growth stocks with a favorable Zacks Rank. Notably, growth investors are primarily focused on stocks with aggressive earnings or revenue growth, which should propel their stock price higher in the future. Higher fiscal stimulus and vaccination process are likely to drive the overall growth of the economy.

Wall Street Resumes Northbound Journey

All the three major stock indexes — the Dow, the S&P 500, and the Nasdaq Composite — gained in each of the first four trading days of this week barring a marginal loss of Nasdaq on Feb 3. On Feb 4, the S&P 500 and the Nasdaq Composite recorded their all-time highs at 3,872.42 and 13,778.42, respectively. The Dow is just 0.7% away from its all-time high of 31,272.22 recorded on Jan 21.

Positive Economic Data and News

First, on Feb 1, the Congressional Budget Office projected that the U.S. economy will expand 4.6% in 2021 after contracting 3.5% last year. The economy is expected to reach the pre-pandemic level of February 2020 by mid-2021, much earlier than what was projected in July. In its latest projection, the Atlanta Fed estimated that the U.S. GDP will grow 6% in the first-quarter of 2021.

Second,  we are in the middle of the fourth-quarter 2020 earnings season, which has so far delivered better-than-expected results. As of Feb 3, the total earnings of 223 S&P 500 companies were up 2.5% from the same period last year on 1.5% higher revenues.

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