Five Growth Stocks With Strong Balance Sheets

The latest data points to the fact that the U.S. economy is rapidly getting back on track.

The latest ISM data shows July PMI at 54.2, the highest level in the past year, with greatest strength in the food, beverage and tobacco sector, followed by chemical products, computer & electronic products and then petroleum and coal. This represents encouraging expansion in manufacturing.

The latest data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD) shows an 18.8% (+/- 1.1%) increase in July building permits over June and a 9.4% (+/- 1.5%) increase over July 2019. Housing starts jumped 22.6% (+/-14.7%) from June and 23.4% (+/-12.4%) from last year. This represents strength in housing.

The unemployment rate remains high with roughly a fifth of the population still without jobs or without adequate hours of work. However, according to the Bureau of Labor Statistics, the July national unemployment rate was 0.9 percentage point lower than June, although of course it was still significantly higher (by 6.5 points) than last year. This indicates that the employment situation is also limping back.  

And this is despite the fact that there was a second surge in infections with some states partially locking down, as necessary.

So it isn’t surprising that stock prices are going through the roof, sending markets soaring and the Nasdaq to new all-time highs. And if history is anything to go by, this bull market should have legs.

There’s one reason for caution however. At least some of the good news is attributable to the government stimulus. So if that isn’t continued, we don’t really know how this will end.   

So on the one hand, there is reason to believe that this market will continue on its way up while on the other, there’s the concern that more free money isn’t coming. To make the most of the situation, I’ve picked some growth stocks that are trading somewhat lower than their 52-week highs that however have strong balance sheets and the flexibility to wiggle out of a difficult situation, if it arises.

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Disclosure: 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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