Benchmark indexes soared on Jun 5, after the Labor Department reported a surprising surge in U.S. jobs in May. This boosted investor sentiments as the report indicates economic recovery from the coronavirus pandemic.
The U.S. Bureau of Labor Statistics reported that total nonfarm payroll employment rose by 2.5 million in May and the unemployment rate declined to 13.3%. On Jun 5, the Dow, the S&P 500 and the Nasdaq closed 3.1%, 2.6% and 2% higher, respectively.
Economy Reopening Boosts Job Growth
Lifting of the lockdowns implemented to curb the spread of COVID-19 has helped boost the U.S. job market. The economy added total 2.5 million jobs against the decline of 2.6 million in April.
In May, unemployment rate not only declined 1.4% from the month before but is also lower than the consensus estimate of 19.5%. The hospitality, construction, education and health services, and retail trade sectors witnessed substantial job addition.
Per the report, job additions in the leisure and hospitality sector increased by 1.2 million against 7.5 million and 743,000 job losses in April and March, respectively. In fact, employment in food services and drinking space rose by 1.4 million, accounting for nearly half of the total nonfarm employment.
Employment in the construction sector rose 464,000 in May, while education and health services added 424,000 jobs. Additionally, employment in retail trade rose by 368,000. The economy has shown signs of rebound on ebbing coronavirus fears and return of businesses to normal functioning.
With the stay-at-home restrictions easing, more people will get employed in the next few months. In fact, a trend could be seen in the last month’s job report. Nearly all 50 states had begun some partial re-opening by May 19, allowing businesses to reopen. Dentists and doctors of other specializations were able to see patients again which helped the sector witness growth in employment.
As jobs stay intact or employment rise, consumers’ spending capacity and demand will also remain intact.Hence, jobs addition will drive economic growth.
5 Stocks to Buy Now
Investing in growth stocks seems prudent as these are poised to grow at a faster pace than the broader market in the current scenario. Hence, we have shortlisted five stocks that flaunt a Zacks Rank #1 (Strong Buy) and possess a Growth Score of A.You can see the complete list of today’s Zacks #1 Rank stocks here.
Energy Focus, Inc. EFOI designs, develops, manufactures, markets, and sells energy-efficient lighting systems. The company has an expected earnings growth rate of 66.7% for the current quarter against the Zacks Building Products - Lighting industry’s projected decline of 44.1%. The Zacks Consensus Estimate for its current-year earnings has climbed 40% over the past 60 days.
Boxlight Corporation BOXL develops, sells, and services interactive classroom solutions for the education market. The company has an expected earnings growth rate of 54.6% for the current quarter against the Zacks Technology Services industry’s estimated decline of more than 100%. The Zacks Consensus Estimate for its current-year earnings has moved 33.3% up over the past 60 days.
SunOpta Inc. STKL manufactures and sells plant-based and fruit-based food and beverage products. The company has an expected earnings growth rate of 50% for the current quarter against the Zacks Food - Miscellaneous industry’s projected decline of 1.9%. The Zacks Consensus Estimate for its current-year earnings has moved up 11.8% over the past 60 days.
NeoPhotonics Corporation NPTN develops, manufactures, and sells optoelectronic products that transmit, receive, and switch high speed digital optical signals for communications networks. The company has an expected earnings growth rate of more than 100% for the current year against the Zacks Semiconductor - Communications industry’s expected decline of 36%. The Zacks Consensus Estimate for its current-year earnings has moved up 61.8% over the past 60 days.
FARO Technologies, Inc. FARO designs, develops, manufactures, markets, and supports software driven three-dimensional measurement and imaging solutions. The company has an expected earnings growth rate of more than 100% for the next quarter compared with the Zacks Computer - Integrated Systems industry’s projected growth of 33.9%. The Zacks Consensus Estimate for its current-year earnings has climbed more than 100% over the past 60 days.
5 Stocks Set to Double Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.