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5 Top-Performing S&P 500 Stocks of Q1

The S&P 500, which had more than tripled on Mar 9 after a grueling spell following the Great Recession, is now on the second-longest and second-highest bull market run in history. The bull run through the 1990s has been the longest. Stocks scaled new highs on Republican tax cuts and robust economic growth at home and abroad.

But, recent trade war tensions, uproar in the White House, higher interest rates and half a trillion dollars of loss for tech stocks in just over a two-week span have pushed the index back to critical support at its 200-day moving average. The S&P, in fact, fell into correction territory, while volatility has more than doubled so far this year.

Not all S&P stocks are, however, facing a tumultuous Q1. Some of them have been able to dish out impressive year-to-date gains and have remained unperturbed by the higher bouts of gyrations.

What Backed the S&P Rally?

The S&P started Q1 on a positive note. Trump’s polices, including tax cuts, repealing regulations and increased infrastructure outlays restored expectations of a pro-growth agenda that helped the S&P move north.

The latest tax laws gave companies massive tax relief as they will now be paying between 8% and 15.5% instead of the earlier 35% for bringing back money held overseas. This means around $1.2 trillion in foreign profits that the S&P 500 companies are hoarding be brought back. This in turn can be used to create jobs and reward shareholders — something the Trump administration has been aiming for since the campaigns days.

Trump’s economy is also in good shape, with the jobless rate near a 17-year low. Initial jobless claims remained near the lowest level since 1970 and the number of people collecting unemployment benefits tanked to a fresh 45-year low.

But, there is another major factor behind the strong American growth. It’s the global economic growth, with every major country from China to Europe and Latin America to Japan expanding at a healthy pace. According to the International Monetary Fund, the global economy expanded at rate of 3.7% last year, the fastest since 2010.

S&P Ends Q1 on a Sour Note

Selling in stocks intensified after the Trump administration announced that it will levy tariffs on tens of billions of dollars of Chinese imports on top of imposing duties on foreign steel and aluminum. In response to Trump’s tariffs, Beijing said that it will target 128 U.S. products with an import value of $3 billion. Investors panicked as a full-blown trade war might deal a heavy blow to economies, resulting in widespread unemployment.

A number of high-profile departures from the Trump administration, in the meantime, pushed political-risk to the highest level since the 2003 invasion of Iraq. Such events threatened to upset the Trump administration’s business-friendly policies.

Amid all these, the Fedhas tightened its monetary policy. At the conclusion of the FOMC meeting on Mar 21, Jerome Powell-led Federal Reserve hiked interest rates by a quarter-percentage point and projected a steeper path of rate hikes in 2019 and 2020. This hasn’t gone down well with investors as we all know that they had piled up on U.S. stocks with the notion that quantitative easing will help the domestic economy grow at a better rate than emerging economies like China.

Adding to the downbeat tone is also a sharp selloff in the technology sector. Investors remained concerned about tighter regulations for large tech companies. The sector took a beating following the backlash over Facebook, Inc’s FB handling of user data. Everyone raised questions as to how Cambridge Analytica, which worked on Trump’s election campaign, had gained access to personal data on roughly 50 million Facebook users without their knowledge.

The S&P tech sector, which was the most crowded trade of the year, peaked on Mar 12 to 1,233.93, putting its market cap at about $6 trillion. However, the market cap is currently down to nearly $5.5 trillion, a decline of 8.8%, per WSJ Market Data Group.

5 Best S&P 500 Stocks of Q1

The S&P, now, has fallen more than 10% from its peak in January. The average number of stocks on the index is almost 15% below the 52-week high, while the average stock in some of the sectors are already in bear-market territory, defined as a decline of 20%, as per Bespoke Investment Group.

Despite the brutal selloff of the past few weeks, some stocks have managed to give encouraging returns, thanks to a great story or maybe a little luck. Here is the rundown of the best stocks from the S&P 500 in Q1. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Seagate Technology plc STX provides data storage technology and solutions the United States and internationally. Even though the company is part of the larger tech sector, traders have been ploughing back into STX stock. The stock has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings rose 12.5% in the last 60 days. The company is expected to give a solid return of 18.2% this year. Seagate Technology has outperformed the broader industry in the year-to-date period (+36% vs +17.4%).

Considering Seagate Technology has done so well in Q1, it comes as no surprise that close-cousin Micron Technology, Inc.’s MU performance has been pretty encouraging. The provider of semiconductor systems has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings rose 11.8% in the last 60 days. Micron Technology is expected to give a staggering return of 121.6% this year, while the stock has already given a steady return of 25.2% in the year-to-date period.

IDEXX Laboratories, Inc. IDXX develops, manufactures, and distributes products and services primarily for the companion animal veterinary, livestock and poultry, dairy, and water testing markets. The stock has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings rose 9.6% in the last 60 days. The company is expected to give a promising return of 25.3% this year. IDEXX Laboratories has outperformed the broader industry in the year-to-date period (+20.7% vs +6.8%). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kohl’s Corporation KSS operates department stores in the United States. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings climbed 16.2% in the last 60 days. The stock is expected to give a solid return of 25.1% this year. Kohl’s has outperformed the broader industry in the year-to-date period (+19.1% vs +13.4%).

Motorola Solutions, Inc. MSI provides mission-critical communication infrastructure, devices, accessories, software, and services. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings rose 13.1% in the last 60 days. The stock is expected to give an encouraging return of 20.3% this year. Motorola Solutions has outperformed the broader industry in the year-to-date period (+15.1% vs -2.9%).

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Seagate Technology PLC (STX): Free Stock Analysis Report
 
Facebook, Inc. (FB): Free Stock Analysis Report
 
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IDEXX Laboratories, Inc. (IDXX): Free Stock Analysis Report
 
Kohl's Corporation (KSS): Free Stock Analysis Report
 
Micron Technology, Inc. (MU): Free Stock Analysis Report
 
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