Why the Best GDP Growth in 40 Years Could Drive These 5 Stocks Much Higher

Though it may be a somewhat temporary phenomenon, one of Wall Street’s top chief economists, Aneta Markowska of Jefferies, sees the potential for the United States economy to experience the best growth in 40 years. She cites the combination of the coming pandemic stimulus, the reopening of the economy and a massive step-up in consumption.

Markowska sees a stunning 6.4% gross domestic product growth for 2021 and a follow-through in 2022 of 4.7%. All this of course as the government continues to pile on massive amounts of debt with a $1.9 trillion COVID-19 related stimulus and the potential for a huge $2 trillion national infrastructure rebuild in the near future.

These estimates are extremely bullish, and Jefferies addressed the bold call by saying this in a recent research report:

In conjunction with additional fiscal stimulus, which is becoming increasingly a near term event, she believes this will create solid growth momentum at the start of the second quarter. Within her assumptions, Aneta forecasts the COVID vaccine to be widely available and administered to roughly half of the US population by the end of 2Q. This will set the stage for the second leg of reopening, this time driven by a return of high-contact activity. Given consumption remains well below pre-COVID levels for now, this is where she sees the strongest growth potential.

With the Jefferies macro team bullish on cyclical stocks going forward, they are out with 34 companies they feel will benefit the most from the seismic economic growth. We focus on five that offer solid value and big upside potential. It’s important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Analog Devices

This stock could very well continue to benefit from the increase in information technology and 5G spending. Analog Devices Inc. (NASDAQ: ADI) is a leader in the design, manufacture and marketing of analog, mixed-signal and digital signal-processing integrated circuits for use in industrial, automotive, consumer and communication markets worldwide.

The company offers signal-processing products that convert, condition and process real-world phenomena, such as temperature, pressure, sound, light, speed and motion, into electrical signals.

Analog Devices has among the best end-market exposure, with high communications and aerospace/defense market exposure, in addition to offering investors a powerful 5G content growth story. Plus, acquisitions over the past few years like Linear Technology and Hittite Microwave should provide revenue and additional cost synergies that are still coming.

Investors receive a 1.55% dividend. The Jefferies price target for the shares is $186. The Wall Street consensus target is just $164.02. Analog Devices stock closed Tuesday at $160.49 a share.

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