U.S. household net worth hits record high in second quarter: 5 picks – September 24, 2021

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U.S. household net worth hit a new all-time high in the second quarter of 2021, supported by a faster than expected recovery in the U.S. economy from the devastation caused by the pandemic. On September 23, the Fed announced that household net worth jumped $ 5.85 trillion or 4.3% in the second quarter of 2021 from the first quarter to reach $ 141.7 trillion.

Year over year, Americans’ net worth jumped 19.6% as the second quarter of 2020 was fully affected by the global outbreak of the deadly coronavirus. The value of stocks increased by nearly $ 3.5 trillion while the value of real estate held by households increased by about $ 1.2 trillion.

The US economy grew 6.5% in the second quarter on the back of a strong economic recovery. In absolute terms, U.S. GDP in the second quarter of 2021 stood at $ 19.4 trillion, surpassing the $ 19.2 trillion recorded in the fourth quarter of 2019, the last quarter before the global coronavirus outbreak.

Reasons for the surge in household net worth

A sharp reduction in new coronavirus cases, the nationwide vaccination against COVID-19, and the phasing out of economic and other daily restrictions have resulted in a faster-than-expected reopening of the US economy.

Additionally, a massive $ 1.9 trillion fiscal stimulus injected by the Biden administration in March and the Fed’s continued accommodative monetary policies, keeping the benchmark lending rate close to zero and buying bonds. $ 120 billion per month helped the recovery of the US economy and improved household equity.

The US stock market ended the second quarter of 2021 on a positive note. The three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – rose 4.6%, 8.2% and 9.5% respectively. In addition, the Russell 2000 specific to small caps gained 4.1% and the S&P 400 focused on mid caps gained 3.3%. All of this reflects a widespread rally in the second quarter of 2021.

On the other hand, the housing market has remained robust, mainly due to record mortgage rates. The Fed adopted an ultra-dovish monetary stance and cut the benchmark interest rate to 0-0.25% in March 2020. The low market interest rate drastically reduced mortgage rates, allowing consumers to ‘buy houses. Strong demand has strengthened the real estate sector.

Momentum is likely to continue

The Wall Street rally continued through the first two months of the third quarter of 2021 before taking a heavy blow in September. However, the US stock markets have rebounded impressively over the past two trading sessions and have recouped much of the loss suffered in September. The Dow Jones and S&P 500 recorded their best two-day consecutive rally since July and the Nasdaq Composite recorded the best two-day consecutive rally since August.

In his statement following the two-day FOMC meeting on September 22, Fed Chairman Jerome Powell said: “While overall progress continues as planned, the Committee considers that a moderation of the pace asset purchases may soon be justified “. However, the impact of tapering seems to be already taken into account in stock market valuations.

Finally, on August 24, the House of Representatives put forward a bipartisan infrastructure bill worth $ 1,000 billion. On August 10, the US Senate passed a bipartisan infrastructure bill worth $ 550 billion in addition to previously approved funds of $ 450 billion for five years.

Total spending can reach $ 1.2 trillion if the plan is extended to eight years. Infrastructure projects such as roads, bridges, passenger railways, airports, drinking water and wastewater systems, high-speed internet and climate-related infrastructure are expected to benefit.

Our top picks

We narrowed down our search to five large-cap stocks (market capital> $ 10 billion) that delivered double-digit returns in the past three months with higher upside potential for the remainder of 2021. These stocks have underwent strong revisions to earnings estimates in the past 30 days. Finally, each of our picks carries a Zacks Rank # 1 (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.

The chart below shows the price performance of our five picks over the past three months.

Image source: Zacks Investment Research

Regeneron Pharmaceutical Inc. (REGN Free Report) enjoys strong demand for Eylea and Dupixent. The continued growth of Eylea and Dupixent through increased penetration in existing indications and a promising late-stage pipeline strengthen its prospects. Libtayo’s approval in the lucrative NSCLC and BCC indication is also expected to boost sales.

This Zacks Rank # 1 company has an expected earnings growth rate of 90% for the current year. Zacks’ consensus estimate for current year earnings has improved 1.5% in the past 7 days. The share price has jumped 17.5% in the past three months.

Continental Resources Inc. (CLR Free Report) explores, develops and produces crude oil and natural gas primarily in the northern, southern, and eastern regions of the United States. It sells crude oil and natural gas to energy marketing companies, crude oil refining companies, and natural gas gathering and processing companies. Continental Resources occupies a leading position in the Bakken region.

The company has an expected profit growth rate of over 100% for the current year. Zacks’ consensus estimate for current year earnings has improved 5.3% in the past 30 days. The share price has climbed 12.5% ​​in the past three months.

O’Reilly Automobile Inc. (ORLY Free Report) operates as a retailer of automotive parts, tools, supplies, equipment and accessories in the United States. The specialty auto parts retailer is poised to take advantage of store and distribution center openings in profitable regions.

The company has a competitive advantage through a dual market strategy by serving Do-it-Yourself and Do-it-for-Me customers. A customer-centric business model and growing demand for high-quality auto parts are expected to boost O’Reilly’s prospects.

The company has an expected profit growth rate of 17.5% for the current year. Zacks’ consensus estimate for current year earnings has improved 0.1% over the past 30 days. The share price has appreciated 12.4% over the past three months.

Darling Ingredients Inc. (DAR Free Report) develops, produces and sells natural ingredients from edible and inedible bionutrients. It operates through three segments: Food Ingredients, Food Ingredients and Fuel Ingredients.

The company has an expected earnings growth rate of 90.3% for the current year. Zacks’ consensus estimate for the current year has improved 3% over the past 30 days. The share price has jumped 12.3% in the past three months.

The Mosaic Company. (MOS Free Report) produces and markets nutrient concentrates for phosphate and potash crops in North America and internationally. It operates through three segments: phosphates, potash and mosaic fertilizers.

Demand for phosphate and potash in North America remains strong in 2021. Producer economic strength and agricultural commodity prices are driving demand for fertilizer globally. The company should also benefit from the price increase. The acquisition of Vale Fertilizantes should also generate significant synergies. Mosaic should also benefit from its cost reduction initiatives.

The company has an expected profit growth rate of over 100% for the current year. Zacks’ consensus estimate for current year earnings has improved 3.8% in the past 30 days. The share price has risen 12.1% in the past three months.

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