Wall Street's popular adages are not matching this year. April is historically known for being favorable to investors. But this year, April ended on a disappointing note. For May, the popular adage is "Sell and Go Away." However, last month turned out highly successful for U.S. stock markets.
The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — were up 2.3%, 4.8% and 6.9%, respectively. The tech-heavy Nasdaq Composite recorded its best month since November 2023. On May 31, the blue-chip Dow soared 1.5% or 574.84 points, marking its best daily performance in 2024.
Market participants remain confident of U.S. equities despite a sticky inflation rate, a resilient labor market and a significant decline in thFe U.S. GDP growth rate. Wall Street is continuing its northbound journey in June too.
Positive Factors
The U.S. economy is cooling. The Department of Commerce revised the U.S. GDP growth rate downward for first-quarter 2024 to 1.3% from 1.6% reported earlier. The data is notably slower compared with the 3.4% GDP growth rate in fourth-quarter 2023. This marked the lowest quarterly GDP growth rate since second-quarter 2022.
The labor market remains resilient. The U.S. economy added 272,000 jobs in May, surpassing the consensus estimate of 190,000 and April's data of 165,000. However, the unemployment rate edged up to 4%, for the first time since January 2022, and from 3.9% in the previous month. Labor market data eliminates the fear of a near-term recession.
Corporate earnings for the first quarter of 2024 continued to be solid. Total earnings of the S&P 500 companies were up 6.8% year over year on 4.3% higher revenues. Notably, in fourth-quarter 2023, total earnings of the S&P 500 companies were up 6.9% year over year on 3.9% higher revenues.
Our Top Picks
We have narrowed our search to five growth stocks that have solid upside left for 2024. These stocks have witnessed positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Growth Score A.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
AppLovin Corp. APP is engaged in building a software-based platform for mobile app developers to enhance the marketing and monetization of their apps in the United States and internationally. APP provides a technology platform that enables developers to market, monetize, analyze and publish their apps.
AppLovin has an expected revenue and earnings growth rate of 31.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.4% over the last 30 days.
Datadog Inc. DDOG has been benefiting from strength in customer demand for offerings in modern observability, cloud security, software delivery and cloud service management. DDOG had 3,340 customers with an annual run rate of $100K or more at the end of the last reported quarter.
DDOG's dollar-based retention rate was in the mid-110s in the first quarter as customers increased their usage and adopted more products. Besides an expanding portfolio, contributions from a solid cloud partner base, including Google Cloud, Microsoft Azure and Amazon Web Services, remain the key growth drivers of DDOG.
Datadog has an expected revenue and earnings growth rate of 22.1% and 16.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the last 60 days.
monday.com Ltd. MNDY develops software applications in the United States, Europe, the Middle East, Africa, and internationally. MNDY provides Work OS, a cloud-based visual work operating system that consists of modular building blocks used and assembled to create software applications and work management tools.
MNDY also offers product solutions for work management, sales CRM, software development verticals, business development, presale, and customer success services. MNDY serves organizations, educational or government institutions, and distinct business units of an organization.
monday.com has an expected revenue and earnings growth rate of 29.5% and 23.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 19.3% over the last 30 days.
Medpace Holdings Inc. MEDP provides clinical research-based drug and medical device development services in North America, Europe, and Asia. MEDP offers a suite of services supporting the clinical development process from Phase I to IV in various therapeutic areas. Medpace Holdings also provides clinical development services to the pharmaceutical, biotechnology, and medical device industries.
Medpace Holdings has an expected revenue and earnings growth rate of 14.8% and 27.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 30 days.
Wingstop Inc. WING franchises and operates restaurants. WING's operating segment consists of the Franchise and Company segments. WING offers classic wings, boneless wings, and tenders that are cooked to order and hand sauced and tossed in various flavors.
Wingstop has an expected revenue and earnings growth rate of 27.5% and 36.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 13.8% over the last 60 days.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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