It’s a great time to be a stock market investor right now. At the moment, nearly all areas of the market are rising. Big Tech’s rising, small-caps are rising… even FTSE 100 value stocks – which have underperformed for an eternity – are rising!
Encouragingly, some experts believe these conditions could last for a while. Wharton professor Jeremy Siegel, for example, expects stocks to keep rallying at least through this year. Although not everyone is this bullish, of course.
Here, I’m going to highlight two stocks that I believe can move higher in this bull market. I’d be happy to buy both for my own portfolio today.
Consumers are cashed up
One growth stock I believe has the potential to do well in this bull market is JD Sports Fashion (LSE: JD). It’s a retailer that specialises in athletic footwear and athleisure wear. It currently trades on a forward-looking price-to-earnings (P/E) ratio of 24, which I see as an undemanding valuation.
One reason I’m bullish on JD is that the company now generates around 35% of its sales from the US. With many US consumers now cashed up after receiving their stimulus cheques, I can see JD benefitting as the US reopens and people rush out to buy new footwear.
It’s worth noting that JD Sports is investment bank Berenberg’s ‘top pick’ in the consumer discretionary sector. It believes the company is well-positioned for a strong and fast recovery given its regional mix and the growing evidence of accelerating consumer demand for trainers.
“JD looks cheap, in our view, for its quality and growth, offering a faster-growing and more diversified alternative to owning the sports brands, at a 40% discount,” its analysts wrote last week.
This stock can be volatile at times. So, it isn’t likely to be suitable for all investors. The company also faces plenty of competition from rivals, which adds risk to the investment case. However, I’m comfortable with these risks. I’d buy the stock today.
This stock should benefit from a stronger UK economy
In the small-cap space, one stock I believe could do well in this bull market is Keystone Law (LSE: KEYS). It’s an innovative ‘platform-based’ law firm that’s disrupting the legal industry. I listed this stock as one of my best ‘buy’ ideas for 2021 and, so far, it’s done pretty well, rising from 500p to 625p – a gain of 25% (versus 4% for the FTSE All-Share). However, in the years ahead I think this stock can climb much higher.
The reason I’m bullish here is that I expect demand for legal services in the UK to pick up dramatically this year as the economy rebounds. This should benefit Keystone. We haven’t had a trading update from the company for a while now. However, in its last update in January, the company said trading during December and January has been “exceptionally strong.” This is encouraging.
Given its small market capitalisation (£200m), this stock could be volatile. This adds risk to the investment case. The stock’s valuation (forward-looking P/E ratio of just under 40) also adds risk. If the company’s full-year results on 29 April are disappointing, the stock will most likely fall.
But think the long-term growth story here is very attractive. I’d buy this growth stock today for the current bull market and hold it for the long term.
Edward Sheldon owns shares in JD Sports Fashion and Keystone Law. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.