5 Stocks To Buy On Surprising Rise In January Factory Orders

Three Major Drivers of Business Spending

First, on Jan 30, Fed chair Jerome Powell said that the central bank will maintain its dovish monetary stance at least for the time being. Better-than-expected inflation data (both consumer price index and producer price index) also strengthened investors’ confidence that the central bank will not take an aggressive stance in 2019.

Second, the 11-month long trade dispute between the United States and China is heading toward a likely resolution. If the two countries can reach an amicable solution, a major concern for global economic slowdown will be eliminated. The International Monetary Fund has identified ongoing tariff-related hassle between the United States and China as the primary factor for a perceived global economic slowdown in 2018.

Third, in order to streamline their own economies, both China and the 19-member European Union have decided to inject economic stimulus with an immediate effect. Notably, China and Eurozone economies are the two largest trading partners of the United States. Consolidation of Chinese and Eurozone economies will enable the United States to export more especially when the U.S. dollar price index is gradually diminishing.

Our Top Picks

Rising Durable Goods Orders are normally associated with stronger economic activity. At present, the U.S. economy is firmly placed on a growth trajectory albite at a slow pace. We narrowed down our search to five stocks with Zacks Rank #2 (Buy) and strong growth potential.

The chart below shows price performance of our five picks year to date.

(Click on image to enlarge)

Cisco Systems Inc. (CSCO - Free Report) designs, manufactures and sells Internet Protocol-based networking and other products related to the communications and information technology industry worldwide. The company has an expected earnings growth rate of 17.7% for the current year. The Zacks Consensus Estimate for the current year has improved 1.3% over the last 60 days.

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