5 S&P 500 Stocks That Helped the Index Score Big in 2021

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The S&P 500 has made a remarkable turnaround from the pandemic-led record lows in 2020, with the index recording an increase of 28.4% year to date. The uptick in the market has largely been driven by impressive growth in business activities, healthy customer spending and improvement in trade activities, supported by the government’s stimulus package and COVID-19 vaccination programs.

The U.S. GDP continued its positive trajectory in the third quarter of 2021 with growth of 2.3% at an annual rate, following 6.7% and 6.4% increases in the second and first quarters, respectively. The deceleration was partly attributable to conscious customer spending and fresh restrictions imposed in some parts of the country on the outbreak of new variants of COVID-19. The market participants have also been subject to headwinds like supply chain constraints, high raw material, logistics and freight costs as well as labor issues, particularly in the second half of the year. However, several countermeasures, including supply chain management, price hikes and focus on cost-management, proved to be some relief.

Job additions in several sectors like manufacturing, warehousing, transportation, construction, and professional & business services reflect strong economic fundamentals. In November 2021, the U.S. unemployment rate moved down to 4.2% from 4.6% in the previous month.

Healthy domestic and international orders for products, the infrastructure development bill and the thriving e-commerce business are expected to act as tailwinds, going forward. Technology companies are expected to continue their momentum, benefiting from the continued solid demand for IT services and cloud computing. Shortages of chips and the proposed CHIPS Act has also opened up opportunities for semiconductor companies.

Top Picks

We have zeroed in on five S&P 500 stocks that have soared more than 30% on a year-to-date basis. These stocks, carrying either a Zacks Rank #1 (Strong Buy) or 2 (Buy), possess solid growth opportunities. Earnings estimates for the stocks have been raised in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corporation NVDA: Headquartered in Santa Clara, CA, the company is the global leader in visual computing technologies and the inventor of the graphic processing unit. The Zacks Rank #2 stock has skyrocketed 129.8% year to date compared with 66.9% growth of the Zacks Semiconductor – General industry. In the past 60 days, the Zacks Consensus Estimate for earnings has improved 4.6% for fiscal 2022 (ending January 2022) and 9.9% for fiscal 2023 (ending January 2023).

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NVIDIA is well-poised to benefit from strong demand for notebook and desktop gaming graphic processing units and ramp-up of its Ampere architecture products into the vertical industries and hyperscale customers. Expansion of NVIDIA GeForce NOW is expected to drive user base. Also, solid uptake of artificial intelligence-based smart cockpit infotainment solutions is likely to drive its performance in the quarters ahead.

For the fourth quarter of fiscal 2022, NVIDIA anticipates generating revenues of $7.4 billion (+/-2%).

Danaher Corporation DHR: Based in Washington, DC, it is a leading provider of diverse lines of professional, industrial, commercial and consumer products. Year to date, shares of the Zacks Rank #2 company have surged 47% compared with the Zacks Diversified Operations industry’s increase of 9.5%. The Zacks Consensus Estimate for both 2021 and 2022 earnings has been revised 0.5% upward over the past 60 days.

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Danaher stands to gain from strong demand for its products, product innovation investments, acquired assets, shareholder-friendly policies in the quarters ahead. Also, the Danaher Business system initiatives are likely to prove beneficial.

DHR anticipates its core revenue to grow in the low to mid-teens for fourth-quarter 2021 and more than 20% for 2021 on a year-over-year basis.

Rockwell Automation, Inc. ROK: The Milwaukee, WI based company provides industrial automation and information solutions across more than 100 countries. The Zacks Rank #2 stock has rallied 39.2% year to date, higher than 34.4% growth of the Zacks Industrial Automation and Robotics industry. In the past 60 days, the Zacks Consensus Estimate for earnings has improved 5.2% for fiscal 2022 (ending September 2022) and 6.5% for fiscal 2023 (ending September 2023).

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Rockwell is likely to benefit from its strong demand for core automation platforms, digital transformation solutions and software & cyber security services. Also, solid backlog, acquired assets and its effort to drive process improvement, functional streamlining, material cost savings and manufacturing productivity are likely to act as tailwinds.

For fiscal 2022, ROK expects sales growth of 16-19% on a year-over-year basis.

Gartner, Inc. IT: Based in Stamford, CT, Gartner is a leading information technology research and advisory firm. It offers rich domain expertise and technology-related insight necessary for an informed decision-making process. Year to date, shares of the Zacks Rank #1 company have surged 109.9% compared with the Zacks Consulting Services industry’s increase of 59.1%. In the past 60 days, the Zacks Consensus Estimate for 2021 earnings has improved 11.4% and increased 7.6% for 2022.

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Gartner is well-positioned to benefit from large and diverse addressable market, strong integrated research and consulting team, healthy liquidity position and shareholder-friendly policies.

For 2021, it expects to generate total revenues of $4.66 billion on a year-over-year basis.

Ingersoll Rand Inc. IR: Based in Davidson, NC, the company is a global industrial company with expertise in industrial and mission-critical flow creation technologies. The Zacks Rank #2 stock has surged 34.8% on a year-to-date basis compared with 9.5% growth recorded by the Zacks Manufacturing – General Industrial industry. In the past 60 days, the Zacks Consensus Estimate for earnings has improved 11.7% for 2021 and 7.9% for 2022.

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Ingersoll Rand is poised to benefit from its solid product portfolio, innovation capabilities and healthy liquidity position. Also, its exposure in various end markets, pricing actions and gains from accelerated synergy actions are likely to be beneficial.

For 2021, the company expects total revenue growth of high-teens on a year-over-year basis.

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