Forget about Meme stocks: buy those high growth stocks with a big rise
AShares of MC Entertainment AMC climbed nearly 100% on Wednesday, while other so-called Bed Bath & Beyond BBBY and GameStop GME shares jumped 60% and 13% respectively. Despite these huge gains, the market as a whole was much calmer, with all three major US indices edging up on that day.
The big memes moves happened on another low volume day after the long Memorial Day weekend. Trade volume is likely to remain well below average as the summer begins and the holidays resume. More cities in the United States are starting to reopen almost completely amid the successful coronavirus vaccination campaign.
The economic boom, coupled with the Fed’s easy monetary policies, supply chain setbacks, government checks and other factors all contributed to the price hike that raised fears of inflation after the release. April CPI figure of 4.2%. Clearly, the rise in prices needs to be watched and Wall Street will be watching the Fed closely.
But the central bank has remained firm that inflation will be “transient”. Investors should also be aware that even if the Fed is forced to raise rates, yields are likely to remain historically low, prolonging there is no alternative invest. For example, the 10-year U.S. Treasury yield has only slightly exceeded 3% a few times over the past decade, after remaining well above the threshold globally before the financial crisis – it has hovered around 1.6% for much of the past. three months.
The current backdrop and steadily improving earnings make it clear why the bulls have pushed the S&P 500 near its all-time highs and have the tech-rich Nasdaq above its 50-day morning average. And the benchmark is up about 25% from its pre-pandemic levels last February, which paints a much less overheated picture than its more than 80% from March lows.
With that in mind, investors might consider adding growth-oriented stocks to their portfolios that are still trading below their highs, even if memes stocks are skyrocketing again …
Image source: Zacks Investment Research
GrowGeneration Corp. GRWG
GrowGeneration is one of the largest suppliers of hydroponics products in the United States, with more than 50 retail and distribution centers. The company sells everything from organic nutrients and state-of-the-art lighting technology to “state-of-the-art hydroponic equipment used by commercial and domestic growers.” The hydroponics space is set to benefit from the larger legal marijuana boom in the United States, no matter which real growers like Tilray TLRY or Canopy Growth CGC take more market share down the road.
The strength of the hydroponic space which also supports indoor agriculture / gardening more broadly is one of the main reasons the actions of Scotts MiracleGro SMG have been so important. GRWG exceeded our first quarter estimate in early May and raised its outlook for fiscal 21. GrowGeneration sales climbed 173%, with membership up 51%.
Looking ahead, Zacks estimates that GRWG’s revenue for FY21 will grow another 139% to $ 462 million, which would add to the 143% expansion in FY20 revenue. Meanwhile, its adjusted annual earnings are expected to rise 364%, from $ 0.11 to $ 0.51 per share.
GRWG’s consensus earnings estimates have risen since reporting to help them land a Zacks Rank # 2 (Buy) right now, as well as an “A” rating for growth in our style scoring system. Additionally, the six brokerage recommendations that Zacks has for the stock are “strong buys” and this is part of a space that sits in the top 8% of our 250+ industries.
Image source: Zacks Investment Research
GrowGeneration’s stock has climbed 540% in the past year. But the stock cooled significantly in 2021, up 7% behind the S&P 500 and its industry. GrowGeneration shares jumped 1.5% on Wednesday, in a recent run. But at $ 43 a share, it’s still trading around 30% below its February highs and it’s currently sitting near neutral RSI levels, which could give it a clue.
Wednesday’s pop was part of a wider industry rise after Amazon AMZN said on Tuesday it would no longer screen potential employees for marijuana for positions not regulated by the Department of Transportation. The e-commerce giant also wrote in a blog post that it “actively supports the Marijuana Opportunities Reinvestment and Erasure Act of 2021 (MORE Act), federal legislation that would legalize marijuana at the federal level.” .
Even if the specific bill does not pass, some type of full US federal legalization of adult marijuana seems like a pretty solid bet given that one month in April Pew Research Poll showed that 91% of American adults “say marijuana should be legal for medical and recreational purposes (60%) or that it should be legal for medical purposes only (31%). When federal legalization takes place, the floodgates for the marijuana industry will likely open and GrowGeneration seems worth considering.
Micron Technology, Inc. MU
Micron is one of the world’s largest manufacturers of DRAM and NAND memory chips. As a quick introduction, DRAM chips are found in PCs and data centers, while NAND, or flash memory, is designed to store data and can be found in mobile phones and other devices. Unfortunately, Micron faces supply chain issues that impact its entire industry.
The global chip shortage worries some on Wall Street and MU is down 12% since it hit record highs on April 12 – closing regular trading on Wednesday at $ 84.32 per share. Fortunately, Micron has jumped around 10% since May 12 to push it just above neutral RSI levels. And MU has jumped 72% in the past year after starting to emerge from its cyclical crisis in August.
Overall, 14 of the 21 brokerage recommendations Zacks has for Micron are “strong buy”, with three more “buy” and none below a “hold”. MU receives an “A” rating for momentum, as well as “B” ratings for growth and value.
Micron has traded steadily at a steep discount to the semiconductor industry over the past five years despite gaining 550% from 275%. Micron is currently trading at a 60% discount to the industry at 8.7 times 12-month forward earnings. This is also a 40% discount from its own annual median.
Image source: Zacks Investment Research
Micron beat our estimate for the second quarter of FY21 at the end of March, with sales up 30% to extend its streak of double-digit revenue growth to four consecutive quarters, as it rebounds after a slowdown. The company’s adjusted earnings also skyrocketed and provided strong indications, which should benefit key growth areas within technology such as 5G, AI and data centers. CEO Sanjay Mehrotra also addressed the global chip shortage and his capital spending plans.
Zacks estimates that MU’s Fiscal 2021 revenue is expected to jump 26% to $ 27 billion, with FY 22 expected to grow by more than 32%. These estimates would mark a strong return to growth after two years of decline and see FY22 easily surpass FY18 total sales ($ 30.4 billion) to $ 35.3 billion. And MU’s adjusted earnings are expected to grow 96% this year and an additional 103% in fiscal 2022.
The strong EPS revisions activity after Micron’s release is helping it capture a Zacks Rank # 2 (Buy) right now. And ultimately, investors with a longer-term buy-and-hold mentality might want to consider the memory chip to stand out.
Zacks names “best single choice to overtake”
Among thousands of stocks, 5 Zacks experts each chose their favorite to soar + 100% or more in the coming months. Of these 5, research director Sheraz Mian chooses one to have the most explosive advantage of all.
You’ve known this company from its past glory days, but few would expect it to be ready for a monster turnaround. Fresh out of a successful repositioning and flush with A-List celebrity mentions, it could rival or overtake other recent Zacks stocks which are expected to double as Boston Beer Company which climbed + 143.0% in just a bit. more than 9 months and Nvidia which climbed + 175.9% in a year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.