Growth stocks’ dizzying rally amid the COVID-19 pandemic drove many names to overvaluation. A rotation away from pricey growth stocks in the technology space is now causing their prices to retreat. However, growth stocks typically perform well during economic recoveries and the projected economic recovery bodes well for growth stocks from the non-tech space. The IMF projects the U.S. will grow 5.1% this year after an estimated 3.4% contraction last year.
A $1.9 trillion COVID-19 relief package, robust vaccine distribution, and a low interest-rate environment are key factors that will drive the prospective recovery. While some debate has been sparked regarding a potential rise in interest rates, the Fed has stated its intention to hold the rates at their current level until at least 2022.
With a robust supply chain and assorted product portfolios, many growth companies are preparing to capitalize on the economic recovery. Align Technology, Inc. (ALGN), Horizon Therapeutics Public Limited Company (HZNP), and Insperity, Inc. (NSP) are three such stocks. They boast solid growth attributes, and we think are well-positioned to hit new highs.
Align Technology, Inc. (ALGN)
ALGN designs, manufactures, and markets Invisalign clear aligners and iTero intraoral scanners. It serves primarily orthodontists and restorative and aesthetic dentistry through its Clear Aligner Scanner, and Services segments.
Last month, ALGN made available its proprietary Invisalign G8 with SmartForce Aligner Activation features, the company’s latest biomechanics innovations. This latest evolution in SmartForce innovation improves treatment predictability for frequently treated case types. And yesterday, ALGN announced the favorable outcome of a binding arbitration relating to the valuation of its membership interest in SDC Financial, LLC. The arbitrator directed SDC to pay $45.5 million and interest of $3,000 per day until payment is made in full. This payment will boost ALGN’s financials nicely.
ALGN’s revenues have increased at a CAGR of 18.8% over the past three years, while its EPS rose at a CAGR of 99.3% over the same period. The company’s impressive track record positions it well to emerge as a leading player in the medical equipment industry.
ALGN’s revenue has increased 28.4% year-over-year to $834.52 million in the fourth quarter ended December 31, 2020. Its non-GAAP operating margin increased 250 basis points from the year-ago value to 28.9%, while its non-GAAP EPS rose 48.3% from the same period last year to $2.61.
Analysts expect ALGN’s revenues to grow 46.7% year-over-year to $808.11 million in the current quarter (ending March 31, 2021). A consensus EPS estimate of $1.99 in the first quarter represents a 172.6% improvement from its year-ago value. The stock has gained 185.3% over the past year.
ALGN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
ALGN has a B grade for Quality and Sentiment. Within the Medical - Devices & Equipment industry, it is ranked #58 of 182 stocks.
In total, we rate ALGN on eight different levels. Beyond what we’ve stated above, we have also given ALGN grades for Momentum, Stability, Value and Growth. Get all ALGN’s ratings here.
Horizon Therapeutics Public Limited Company (HZNP)
Based in Ireland, HZNP is focused on researching, developing and commercializing medicines that address critical needs for people impacted by rare and rheumatic diseases. The company operates in two segments: Orphan and Inflammation. Its marketed medicines include ACTIMMUNE, BUPHENYL, DUEXIS, KRYSTEXXA, PENNSAID, PROCYSBI, QUINSAIR, RAVICTI, RAYOS and VIMOVO.
Yesterday, HZNP completed the acquisition of Viela Bio, Inc. (VIE) at a price of $53.00 per share of Viela common stock. The acquisition is a strong, complementary fit, representing a significant step forward in advancing the HZNP’s ’s strategy to expand its pipeline to accelerate long-term sustainable growth.
Last November, HZNP entered a global collaboration and license agreement with Halozyme Therapeutics to develop a TEPEZZA Subcutaneous (SC) formulation. HZNP intends to potentially shorten drug administration time, reducing healthcare practitioner time, thereby offering additional flexibility and convenience for patients.
HZNP’s revenues have increased at a CAGR of 27.7% over the past three years, while its total assets have grown at a CAGR of 13.1% over the same period.
HZNP’s net sales have increased 105% year-over-year to $745.31 million in the fourth quarter ended December 31, 2020. Its adjusted EBITDA has risen 165.2% from the year-ago value to $370.98 million, while its non-GAAP EPS has improved 128.6% to $1.28 over the same period.
A consensus revenue estimate of $2.79 billion for its fiscal 2021 (ending December 31) represents a 26.7% improvement year-over-year. Analysts expect HZNP’s EPS to grow 28.4% over the next five years. The company has an impressive earnings surprise history; it beat consensus Street estimates in each of the trailing four quarters. The stock has gained 218.5% over the past year.
HZNP’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which translates to Buy in our rating system. HZNP has a B grade for both Value and Growth. It is currently ranked #26 of 239 stocks in the Medical - Pharmaceuticals industry.
Click here to see the additional POWR Ratings for HZNP (Momentum, Quality, Stability and Sentiment).
Insperity, Inc. (NSP)
NSP provides an array of human resources and business solutions designed to help improve business performance. The company offers a comprehensive suite of products and services that are available in the marketplace through its premier Workforce Optimization and Workforce Synchronization solutions.
Last month, NSP partnered with Salesforce, the global leader in CRM, to digitally transform its business. The strategic collaboration is expected to enhance NSP’s productivity, optimize its customer acquisition and retention, and maximize its marketing campaigns.
NSP has gained 251.7% over the past five years owing to its impressive revenue and earnings growth. Its revenues have increased at a CAGR of 9.1% over the past three years, while its EBITDA has grown at a CAGR of 14.2% over the same period.
NSP’s 2020 results reflect a strong company response to pandemic-related challenges to its growth along with some unexpected benefits in its direct cost programs. Its average number WSEEs paid per month have increased 3% sequentially to 239,232 in the fourth quarter, ended December 31, 2020. Its gross profit has increased 3.5% year-over-year to $167.55 million over the same period.
A consensus revenue estimate of $4.50 billion in the fiscal 2021 (ending December 31) represents a 5% improvement year-over-year. Analysts expect NSP‘s EPS to grow 15% over the next five years. The company has an impressive earnings surprise history; it beat consensus Street estimates in each of the trailing four quarters. The stock has gained 75.6% over the past year.
It is no surprise that NSP has an overall B rating, which translates to a Buy in our POWR Ratings system. NSP has a B grade of B for Sentiment and Value. It is ranked #19 of 51 stocks in the B-rated Outsourcing - Business Services industry.
Click here to see the additional POWR Ratings for NSP (Stability, Momentum, Growth and Quality).
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
Want More Great Investing Ideas?
9 “MUST OWN” Growth Stocks for 2021
How to Ride the 2021 Stock Market Bubble
5 WINNING Stocks Chart Patterns
ALGN shares were trading at $543.21 per share on Tuesday afternoon, down $15.64 (-2.80%). Year-to-date, ALGN has gained 1.65%, versus a 6.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands.
The post 3 Growth Stocks You’ll Want to Own in 2021 appeared first on StockNews.com