7 growth stocks to buy after 20% correction
Growth stocks typically generate above-average returns relative to the stock market and its peers. We often find growth stocks in an innovative sector or in a new market that grow faster than conventional industries. Over the past decade, software, semiconductors, financial technology (fintech), online shopping, biotechnology and clean energy have, at least sometimes, been seen by investors as good spaces to invest in. Looking for good growth stocks to buy.
Unlike value stocks, growth stocks trade at relatively high valuations. Picking a growth stock that can unleash its true potential can be difficult, especially as a bear market has affected investor sentiment.
This drop, while not a cause for concern in the short term, has also provided an opportunity to invest in some of the best growth stocks to buy on Wall Street at very attractive prices. Here are seven names that fall into that category.
Advanced Microphone Device
Recently research suggests that the global software as a service (SaaS) market could reach “$720.44 billion by 2028 at a compound annual growth rate (CAGR) of 25.89% over the forecast period. 2022 – 2028.” Given the space’s strong outlook, Wall Street is eyeing software businesses that could benefit from the sector’s growth.
Therefore, today’s first growth stock is Adobe (NASDAQ:ADBE), a leading global software company. The company provides digital products and services used by individuals and businesses to create and curate content.
By Adobe second quarter The financial results, released on June 16, showed record revenue of $4.39 billion, up 14% year-over-year. Adobe’s net income, excluding certain items, was $1.59 billion, or $3.35 per diluted share, compared with $3.03 for the year-ago period.
At the end of Q2, Adobe cash and equivalents were down $479 million from December 3 to $3.4 billion. Meanwhile, the company bought back about 1.9 million shares of ADBE in Q2.
So far, shares of ADBE are down about 21%. The stock is changing hands at 28 times analysts’ median forward earnings estimates and 12.7 times its sales in the 12 months ending December. Analysts’ 12-month average for Adobe is $450.
Advanced Microphone Device (AMD)
Advanced Microphone Device (NASDAQ:AMD) in the semiconductor sector. McKinseya well-known consulting firm, guess that the semiconductor market will grow at an average annual rate of 6% to 8% per year and reach an annual value of $1 trillion by 2030.
Released by AMD Q2 results on Aug. 2. Its revenue jumped 70% year-over-year to a record $6.6 billion. Its net income, excluding some items, was $1.7 billion, compared with $778 million in the same period a year earlier. Its earnings per share rose 67% year-on-year to $1.05. AMD generated free cash flow of $906 million, compared with $888 million in Q2 2021.
Management expects 2022 revenue to grow about 60% to $26.3 billion. Meanwhile, Advanced Micro Devices recently closed its acquisitions Xilinx and Pensando system., enhances the product delivery process and allows the company to tap into many non-cyclical growth trends.
AMD stock has fallen nearly 29% since January. Its forward price earnings The price (P/E) and price-to-sales (P/S) ratios are 23x and 6.3x, respectively. Analysts’ average 12-month price forecast is $120.
Gilead Science (GILD)
Biopharma Company Gilead Science (NASDAQ:GILD) develops and markets therapies used to treat life-threatening infectious diseases. Most of its revenue is generated from HIV and hepatitis virus drugs.
In Q2, Its revenue grew just 1% year-on-year to $6.3 billion. And its EPS, excluding some items, fell 13% year-on-year to $1.58.
However, due to strong demand for its HIV portfolio and all-time high cancer revenue, Gilead increased its full-year sales 3% to 24.5 billion – 25.0 billion. USD. In addition, Gilead . Science announced that it will acquire the UK-based biotech company. MiroBio for about $405 million in cash.
GILD stock is down more than 13% since the start of the year. But it currently has a dividend yield of 4.64%, while its stock has a forward P/E ratio of just . 9.4 and it is trading for three times the sales then. Analysts’ average 12-month price forecast is $69.
Lowe’s Companies (LOW)
Lowe’s companies (NYSE:SHORT) is one of the world’s largest home improvement retailers, operating approximately 2,000 stores in the US and Canada. The company is also the King of Dividends with payouts increasing for nearly 60 consecutive years.
On May 18, LOW reported Q1 result. Its total revenue fell 4% year-on-year to $23.7 billion, while EPS increased 9% year-on-year to $3.51. It ended the quarter with cash and cash equivalents of $3.4 billion, down from $6.7 billion in the same period a year earlier.
Despite the challenging macro environment, the company remains confident in the outlook for the home improvement market, prompting the company to reaffirm its full-year direction.
However, LOW stock is down nearly 23% this year and has a dividend yield of 2%. Forward P/E and P/S ratios are at 15x and 1.3x, respectively. Analysts’ average 12-month price forecast for the stock is $236.00.
Based in Uruguay, Mercadolibre (NASDAQ:MELI) operates the largest payment and e-commerce ecosystem in Latin America. The latter region has a population of more than 650 million and is one of the fastest growing regions in the world in terms of Internet usage. Mercadolibre’s network includes 137 million active users in 18 countries.
E-commerce company released Q2 earnings 3. Last quarter, the company’s net revenue grew 56.5% year-on-year, excluding foreign currency fluctuations, to $2.6 billion, while its EPS was $2.43, compared with $1.37 in the same period a year earlier. MercadoLibre ended the second quarter with nearly $3 billion in cash and short-term investments.
Many investors consider Mercadolibre as Amazon (NASDAQ:AMZN) of Latin America. The company operates four different businesses, including a marketplace, Mercado Libre, a logistics unit (Mercado Envios), a fintech services unit (Mercado Pago) and a credit business (Mercado Credito). With such a wide reach, the company has a competitive advantage over its peers. For example, more than 95% of the items sold by the company are shipped using the company’s logistics network. Meanwhile, Mercadolibre’s fintech revenue grew 113% year-on-year in Q2.
MELI stock is down 20% this year. The stock has a forward P/E ratio of 111 times and the ratio of selling prices over the last 12 months of the year is 5.9. Finally, the 12-month average analyst price forecast for Mercadolibre is $1240.
Material MP (MP)
Rare earth elements are important inputs to advanced technologies. For example, rare earth magnets enable the movement of electric vehicles (EVs), drones, defense systems, wind turbines and robots.
Material MP (NYSE:MP) is the largest producer of rare earth materials in the Western Hemisphere. It mines nearly 15% of the rare earth content consumed in the global market by 2021.
On August 4, MP Document is posted Q2 financial results. Driven by increased demand and prices for rare earth materials, the company’s revenue grew 96% year-on-year to $143.6 million. MP’s net income, excluding certain amounts, was $81.9 million, or 43 cents per share, compared with 18 cents in the same quarter a year earlier. Miners free cash flow increased by $3.3 million year-on-year to $102.4 million,.
Current MP Material delivery over 90% its rare earth products to China for processing. However, the company is upgrading and strengthening two of its processing facilities. As a result, it will be able to sell separated rare-earth oxides directly to end-users and turn certain rare-earth elements into alloy shards and magnets.
So far, in 2022, MP stock is down about 16%. The company’s forward P/E and P/S ratios are 22.5 times and 15 times, respectively. Analysts’ 12-month average price target for MP stock is $48.50.
Technology platform PayPal (NASDAQ:PYPL) provides digital payment services to both merchants and consumers. It has 429 million active users in over 200 markets globally.
PYPL released Q2 figures as of Aug. 2. The company’s net sales increased 10% year-over-year, excluding foreign currency fluctuations, to $6.8 billion.
But its EPS, which excludes some items, fell to 93 cents from $1.15 in the same quarter a year earlier. The company ended the second quarter with $15.6 billion in cash and investments, while $10.6 billion in debt and it generated free cash flow of $1.3 billion.
Management raised the company’s full-year 2022 EPS adjusted guidance to $3.87 – $3.97. In addition, the company plans to reduce operating costs and reinvest some of the total savings in high-trust growth opportunities. As a result, the company expects its operating margin to increase in fiscal year 23.
Shares of PayPal have fallen nearly 50% since January. Stocks are trading at 25.5 forward earnings of the company and 4.5 times the forward revenue. Wall Street’s 12-month average price target for PayPal is $120.00.
Originally published on InvestorPlace. Read Here.
Featured image credit: Photo by Anna Nekrashevich; Bark; Thank you!