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Wall Street has been able to sustain its bull run in 2020 after a fabulous 2019 despite the coronavirus outbreak. All three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are in positive territory.
Although these three indexes posted single-digit gains so far this year, several Nasdaq Composite stocks have surged more than 30%. Some of these stocks carry a favorable Zacks Rank and have more upside left.
Nasdaq Composite’s Dream Run Continues
The Nasdaq Composite commenced 2020 right from where it left off last year. Notably, the tech-laden index rallied an impressive 35.2% in 2019 — marking its best yearly performance in six years. The index followed it up with a 2% gain in January and is up 8.2% year to date.
On Feb 12, the Nasdaq Composite closed at 9,725.96, recording a fresh all-time high. On Dec 27, 2019, the tech-heavy index touched the major psychological barrier of 9,000. This means the index has rallied more than 700 points in just one and half months.
Primary Catalysts of Nasdaq Composite
As the Nasdaq Composite is a tech-heavy index, its performance is directly proportional to that of the technology sector. The world is witnessing rapid technological improvements owing to unprecedented growth in high-speed mobile Internet traffic, particularly with respect to wireless data and video. These developments have transformed this industry into an ever evolving, inventive and keenly contested space.
The last few years witnessed a series of breakthroughs in cloud computing, predictive analysis, AI, self-driving vehicles, digital personal assistants and IoT, which have set the stage for robust growth.
In this regard, large-scale commercial deployment of 5G wireless networks will boost the overall technology sector. Moreover, large tech companies are rapidly shifting to digital media platform offering online TV streaming services, resulting in innovative product differentiation.
Additionally, the technology sector is expected to benefit most from the interim trade deal between the United States and China. An end to the U.S.-China trade spat is likely to restore Chinese and global economic growth, which in turn will create demand for high-tech U.S. products and is likely to revive global economy.
Likewise, the repeal of tariffs on Chinese intermediary goods should raise the profit margin of U.S. tech giants. Moreover, clinching a lasting agreement with China, which will stringently protect U.S. intellectual properties, will be immensely beneficial to the home-grown tech behemoths.
Our Top Picks
Consequently, it will be prudent to invest in Nasdaq Composite stocks with a favorable Zacks Rank. We have narrowed down our search to five such stocks that have appreciated in 2020 and have strong growth potential. Each of our picks carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.