Investors look to adopt an investment strategy to garner above-market returns. However, if the company grows at the market's projected growth rate, the stock’s performance will be in line with market returns.

Thus, for better gains compared to the market, investors need to focus on stocks that have the potential to record strong earnings growth going forward.

Over the last month, both the S&P 500 and the Nasdaq Composite Index have gained over 5% each, buoyed by the following underlying factors.

Rebound in Oil Prices

Crude oil, which forms a major indicator of global economic growth, faced a major setback when the commodity touched a 13-year low of $27 a barrel in Feb 2016. However, remarks by major oil producers hinting at an impending cut on crude production, triggered significant recovery. Over the last one month, WTI crude rallied to $38.46 a barrel, marking a gain of nearly 42%.

Moreover, the EIA projected a decline in oil production across the seven major shale-drilling regions in the U.S. for the sixth straight month in April. Also, the EIA believes that the production will drop by 106,000 bpd to 4.87 million bpd in April from March. In addition, the Organization of Petroleum Exporting Countries or OPEC reportedly decreased output by 79,000 barrels to 33.06 million bpd in Feb 2016.

Upbeat Domestic Numbers

Upward revision in the U.S. GDP growth estimate by 1% coupled with 242,000 job additions in Feb 2016, handily outpacing the consensus estimate of 194,000, as per the Bureau of Labor Statistics (BLS) strongly support the bullish sentiment of investors. Moreover, the unemployment rate in the month of February remained unchanged at 4.9%.

Also, the ISM Manufacturing Index increased to 49.5% in February from 48.2% in January, higher than the consensus estimate of 48.6 despite reflecting a contraction in manufacturing activity and 1.6% increase in factory orders.

Meanwhile, Core Personal consumption expenditures (PCE) grew 0.3% while personal income and spending inched up 0.5%. Hence, we believe that such strong domestic economic data will continue to act as strong catalysts for the U.S. stock market.

Recent Fed Policy

Federal Open Market Committee (FOMC) has decided to keep interest rates flat at 0.25% to 0.50% and plans to double the rate in 2016 against its previous forecast of four rate increase. However, FOMC believes that economic activity has been growing at a moderate pace despite lackluster global growth and other headwinds. As a result, the stock market remains the safest bet for investors.
 
5 Growth Stocks to Pick

Thus, to outpace market returns as well as to take advantage from the above-mentioned factors, we have used the Zacks Stock Screener to narrow down on stocks with solid prospects, sporting a Zacks Rank #1 (Strong Buy) along with Growth Style Score and VGM score of ‘A.’
 
Our first pick is American Eagle Outfitters, Inc. (AEO - Analyst Report) – a company engaged in the designing and marketing of casual clothing. American Eagle Outfitters provided a favorable guidance for the first quarter of fiscal 2016. Meanwhile, the company plans to drive omni-channel growth and enhance global traction are likely to augment its business prospects worldwide.

Analysts have become increasingly bullish on the company over the past month, leading to a spike of 7% and 7.2% in the Zacks Consensus Estimate for 2016 and 2017 earnings, respectively. Additionally, for 2016, EPS is likely to improve 12.7%, further underlining the stock’s potential.   

Next, Gibraltar Industries, Inc. (ROCK - Analyst Report) is a compelling stock in focus. The company manufactures and distributes products to the industrial and buildings market and continues to gain significantly from its value-creating growth strategies. Tthe acquisition of the RBI business has unlocked considerable synergies. Meanwhile, increasing demand for solar racking products have been boosting the company’s top as well as bottom-line results.

Over the past 30 days, the Zacks Consensus Estimate has increased by 11.8% and 18.6%, respectively in 2016 and 2017. Meanwhile, for full-year 2016, the EPS is likely to grow by 21.7%.

Tyson Foods, Inc. (TSN - Analyst Report) – a producer distributer and marketer of non-vegetarian prepared foods and allied products – is another attractive bet. Overall, the company’s continuous innovation and dominance over the chicken segment is commendable. The Hillshire Brands acquisition has also boosted sales of prepared foods for the company.

The Zacks Consensus Estimate for 2016 earnings has scaled nearly 0.25% over the last 30 days. Moreover, full-year 2016 EPS growth projection is pegged at 25.3%, painting a rosy picture.

Another safe pick at the moment would be Carmike Cinemas Inc. (CKEC - Snapshot Report) – one of the largest motion picture exhibitors in the U.S. Continuous hit movie releases coupled with a strong movie line-up for 2017 will certainly propel growth for the company.

Moreover, the company has been witnessing an upward trend in earnings estimate revision. Notably, over the past 30 days, the Zacks Consensus Estimate for 2016 and 2017 earnings have increased 67.4% and 24%, respectively. Further, for full-year 2016, earnings are likely to improve at a rate of 43.3%.

Last but not least, Universal Forest Products Inc. (UFPI - Analyst Report), which engineers, manufactures, treats, distributes and installs lumber, composite wood, plastic and other building products, flaunts an earnings growth projection of 14% for the current year.

Moreover, analysts are quite bullish on the stock, leading to a 4.6% and 9.3% increase in the Zacks Consensus Estimate for 2016 and 2017 earnings, over the past 30 days.