Thanks to the COVID-19 pandemic, 2020 was a great year for growth stocks, particularly from the technology space. While the overvaluation of technology growth stocks led to a sell-off earlier this year given the emergence of opportunities to capitalize on the economic recovery, growth investing is by no means unattractive now.
Together with continued progress on the coronavirus vaccination front, President Joe Biden’s $1.9 trillion American Recovery Package and accommodative central bank monetary policy are priming the pump for a fast-paced economic recovery. This is is positioning many non-tech companies to grow significantly in the coming quarters. These stocks are the potential post-pandemic winners.
A renewed interest in growth stocks in the wake of the sell-off is evident in the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 8.2% gains over the past month versus the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 0.9% returns. We think this trend makes a favorable investment case for Corning Incorporated (GLW), Weyerhaeuser Company (WY), Tempur Sealy International, Inc. (TPX), and Louisiana–Pacific Corporation (LPX) that possess solid growth attributes.
Click here to check out our Industrial Sector Report for 2021
Corning Incorporated (GLW)
Founded in 1851, GLW manufactures a wide range of glass and ceramic products for the optical communications, display technology, automotive, and life sciences markets, among others. It operates through four segments: Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials, and Life Sciences. The company is known for its sustained investment in RD&E, a unique combination of material and process innovation, and deep, trust-based relationships with its customers.
GLW’s net sales of $3.35 billion for the fiscal fourth quarter ended December 31, 2020 represents an 18.9% year-over-year rise. Its gross profit has increased 42% year-over-year to $1.21 billion. The company’s net income has increased 687.5% from the prior-year quarter to $252 million. Also, its EPS increased 2700% year-over-year to $0.28.
For the quarter ending June 30, 2021, analysts expect GLW’s EPS to increase 92% year-over-year. Its revenue is estimated to increase 45.3% for 2021. Furthermore, it surpassed consensus EPS estimates in each of the trailing four quarters.
GLW’s revenue has grown at a CAGR of 3.8% over the past three years. Its EBITDA has increased at the rate of 1.3% over the same period. This reflects the company’s steady growth over the past few years.
Last week, GLW announced the next phase in its long-term relationship with Samsung Electronics Co Ltd subsidiary Samsung Display Co., Ltd., which is a leading display technologies innovator. This strategic relationship should benefit GLW’s shareholders and strengthen its platform.
And last month, the company announced that it will receive $57 million in additional funding from the Biomedical Advanced Research and Development Authority (BARDA) through its partnership with the Department of Defense’s (DoD) Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense and Army Contracting Command. The stock has gained 120.4% over the past year to close yesterday’s trading session at $44.99.
It’s no surprise that GLW has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The POWR Ratings also evaluate stocks by various components, such as Value, Momentum, and Quality. GLW has an A grade for Growth and Momentum, and a B grade for Quality. Click here to see GLW’s rating for Value, Sentiment, and Stability.
GLW is ranked #16 of 45 stocks in the A-rated Industrial-Manufacturing industry.
Weyerhaeuser Company (WY)
Forest products company Weyerhaeuser produces a variety of softwood lumber and other building materials in North America. It began operations in 1900. Weyerhaeuser also produces fine paper, containerboard, bleached paperboard, and a variety of wood products. The company is also involved in real estate development and construction.
WY’s net sales of $2.1 billion for the fiscal 2020 fourth quarter, ended December 31, 2021, represents a 33.3% year-over-year rise. Its gross profit has increased 171.7% year-over-year to $671 million. The company’s net income has increased by 2185.7% year-over-year to $292 million. Also, its adjusted EPS increased by 2050% year-over-year to $0.39.
For the quarter ended June 30, 2021, analysts expect WY’s EPS and revenue to increase 518.2% year-over-year and 40.8% year-over-year, respectively. Also, it surpassed consensus EPS estimates in each of the trailing four quarters.
WY’s revenue has grown at a CAGR of 1.5% over the past three years. The company’s EBITDA has grown at an annualized rate of 1.9% over the same period. This reflects the company’s consistent growth over the past few years.
In February, WY announced an agreement to purchase 69,200 acres of high-quality Alabama timberlands from Soterra, a subsidiary of Greif, Inc., for approximately $149 million. The acquisition comprises highly productive timberlands situated in southwest Alabama, approximately 100 miles north of Mobile.
Also in February, the company announced the appointment of Nancy S. Loewe as senior vice president and chief financial officer. Loewe joins Weyerhaeuser from Visa, where she served as senior vice president of finance. She brings more than 20 years of financial and operating experience across multiple industries. The stock has gained 86.2% over the past year to close yesterday’s trading session at $37.42.
WY’s POWR Ratings reflects this promising outlook. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. It has a B grade for Growth and sentiment. One can see WY’s ratings for Stability, Quality, Momentum, and Value here.
WY is ranked #4 of 53 stocks in the REITs-Diversified industry.
Tempur Sealy International, Inc. (TPX)
TPX is a bedding manufacturer that offers premium, pressure-relieving, temperature-sensitive mattresses, pillows, and other sleep products made from viscoelastic foam technology developed by NASA during the 1970s to help cushion astronauts during lift-off.
For the fourth quarter, ended December 31, 2020, TPX’s net sales of $1.1 billion represent a 21.3% year-over year rise. Its gross profit has increased 25.6% year-over-year to $485.2 million. The company’s net income for the quarter came in at $144.70 million, representing a 213.2% increase year-over-year. Its EPS came in at $0.70,an increase of 218.2% year-over-year.
The consensus EPS estimate of $0.51 for the quarter ended March 31, 2021 represents an increase of 54.6% year-over-year. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The company’s revenue is expected to increase 45.5% for the next quarter.
The CAGR of TPX’s revenue has been 10.8% over the past three years. Its EBITDA has grown at a CAGR of 18.1% over the same period. This reflects the company’s steady growth over the past few years.
In February, TPX launched a product lineup that includes an all-new, expanded mattress portfolio. In March, the TPX priced an $800 million senior notes offering. TPX has gained 242.3% over the past year and closed yesterday’s trading session at $38.83.
TPX’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has a B grade for Growth, Momentum, and Quality. Click here to see its POWR Ratings for Stability, Sentiment, and Value.
TPX is ranked #22 of 64 stocks in the A-rated Home Improvement and Goods industry.
Louisiana–Pacific Corporation (LPX)
LPX specializes in floors, walls, and roofs. The company's products are used in home construction, repair and remodeling, and outdoor structures. It operates in four segments, which include North America Oriented Strand Board (OSB), Siding, Engineered Wood Products (EWP), and South America. It sells its products primarily to retailers, wholesalers, and homebuilding and industrial businesses in North and South America, as well as in Asia, Australia, and Europe.
LPX’s net sales of $860 million for the fiscal 2020 fourth quarter ended December 31, 2021 represents a 60.1% year-over-year rise. Its gross profit has increased 401.4% year-over-year to $351 million. The company’s net income has increased by 390.4% year-over-year to $255 million.
LPX’s EPS is expected to increase 685.3% year-over-year to $2.67 for the quarter that ended March 30, 2021. Also, LPX surpassed consensus EPS estimates in all the trailing four quarters. Its revenue is expected to come in at $3.23 billion in its fiscal year 2021, which represents a 15.8% year-over-year rise.
LPX’s revenue has grown at a CAGR of 0.7% over the past three years. Its EBITDA has increased at a CAGR of 6% over the same period. This demonstrates the company’s robust growth over the past few years.
In February, LPX priced a $350 million senior notes offering. The company also announced quarterly dividends. In addition, LPX announced phased siding capacity expansion plans that include the exploration of strategic alternatives for its EWP segment. The stock has rallied 261.4% over the past year and closed yesterday’s trading session at $63.39.
LPX has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Growth and Quality. Click here to see the additional POWR Ratings for LPX (Momentum, Sentiment, Value, and Stability).
LPX is ranked #9 of 54 stocks in the A-rated Industrials-Building Materials industry.
Click here to check out our Industrial Sector Report for 2021
Want More Great Investing Ideas?
How to Ride the NEW Stock Bubble?
GLW shares were trading at $45.22 per share on Wednesday morning, up $0.23 (+0.51%). Year-to-date, GLW has gained 26.40%, versus a 10.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand.
The post 4 Buy-Rated Growth Stocks to Grab in April appeared first on StockNews.com