The market continues to grow at an amazing pace, so it only makes sense to take a look at growth stocks in this environment. But how do you find them? More importantly, how do you find ones that should continue to grow in the future?
We have a screen that will help you with that and its aptly titled Zacks #1 Rank Growth Stocks. Not only is it looking for strong buys, but it also wants stocks that have at least a 20% historical growth rate and a 20% or more projected growth rate. In other words, we want to see growth yesterday, today and tomorrow.
Below are three names that recently passed the test. But this screen is changing daily, so click here for the full list of names and make sure to come back regularly to take full advantage of this market.
Texas Instruments (TXN)
If you’re going to put “Texas” right there in the name of your company, then it better have results as BIG as the state. Fortunately, Texas Instruments (TXN) passed that test with its second-quarter report last month.
The company is an original equipment manufacturer of analog, mixed signal and digital signal processing integrated circuits. In other words, it’s a semiconductor name, which puts it in the Top 21% of the Zacks Industry Rank. Furthermore, shares have surged approximately 41.7% since the coronavirus low on March 23.
So how big was that quarterly report? Earnings per share of $1.48 beat the Zacks Consensus Estimate by approximately 68.2%. It marked the eighth straight quarter with a positive surprise and an average beat of more than 26% over the past four.
Revenue of $3.24 billion also topped our expectations by 9.3%. However, TXN was not spared a coronavirus impact. The top line did drop 12% from the previous year due mainly to weakness in the automotive market and its analog and embedded processing segments.
However, the company serves diverse end markets, so it can weather setbacks better than most. For example, its personal electronics and industrial markets performed well.
TXN forecasted third-quarter revenue of $3.26 billion to $3.54 billion and EPS between $1.14 and $1.34. Both of those ranges were above Zacks Consensus Estimates, which led to analysts boosting expectations.
However, you don’t become a Zacks Rank #1 (Strong Buy) like TXN with quarterly revisions. You need the annual estimates to go up too. That’s not a problem.
Earnings estimates for this year have climbed 26.6% in the past 30 days to $5.05, which is another example of Texas-sized improvement. Expectations for next year are more Illinois-sized, having gained 11% in that time to $5.33.
That leaves year-over-year growth at 5.5%, but there’s plenty of time for that to improve as we move forward.
If we’re required to wear facemasks to leave our homes, then we might as well wear something with a little panache. Maybe something with a floral pattern or tie-died. Or perhaps a mask with a comic book character or the cast of the Golden Girls.
Whatever you choose, Etsy (ETSY) has got you covered. The company actually called facemasks an “emerging category” and named it one of the “tailwinds” for its strong second-quarter report from earlier this month.
However, facemasks are just one small part of what Etsy is all about. But it goes to show how felicitous this company is for the current time. It’s an e-commerce company that buys and sells all kinds of goods, including art, home products, mobile accessories, jewelry, wedding products and countless others. It has a more crafty offering than the big guys in this field.
So how fitted to the times is ETSY? Shares are up nearly 300% since the coronavirus low on March 23!
For its second quarter, earnings per share of 75 cents demolished the Zacks Consensus Estimate by more than 78%, while revenue surged nearly 137% year over year to $428.74 million.
The company saw 18.7 million new buyers and reactivated buyers in the quarter. (Reactivated buyers are those who haven’t purchased in over a year.) It is also reinvesting in itself to better capitalize on this weird time in our history and the future.
Analysts are on board! Earnings estimates have soared in the short amount of time since the report. ETSY is now expected to report $2.05 for this year, which marks an advance of 80% in just the past week.
Next year’s upward revisions have been a little tamer, but are still up over 26% in that time to $2.09. So for the moment, analysts aren’t expecting much of a year-over-year improvement, when this pandemic will hopefully be a thing of the past.
But does anybody think that people are going to suddenly stop online purchases when we get back to some kind of normal?
Take a look at that chart below. That’s right… Teradyne (TER) has been beating the Zacks Consensus Estimate for several years now, which continued last month with its second quarter report.
TER is a leading provider of automated test equipment, which means it’s part of a space in the top 49% of the Zacks Industry Rank. However, since it generates the bulk of its revenue from the semiconductor test market, it’s also worth noting that the semiconductor – general industry is in the top 21%.
The company reported earnings per share of $1.33 last time, which was more than 101% better than the previous year and ahead of our expectations by nearly 28%. In addition to the long string of positive surprises, it has an average beat of approximately 16.4% over the past four quarters.
Revenue jumped 49% from last year to just under $839 million, which also topped our expectations. Approximately 79% of that came from semiconductor test platforms.
TER attributed the quarter’s success to stronger-than-expected system-on-a-chip (SOC) test shipments, along with successful navigation of supply constraints. The Industrial Automation part of its business was most impacted by the economic shutdown and declined from the previous year, though activity improved monthly through the quarter.
Perhaps the best part of the report, though, was its outlook for the third quarter. TER expects revenue between $745 million and $805 million, with earnings at $1.01 to $1.17. Those forecasts were well above expectations at the time, which led to higher revisions from analysts.
Over the past 30 days, earnings estimates for this year have jumped 25.6% to $3.87, while next year has advanced 15.3% to $4.08. This suggest year-over-year improvement of about 5.4%.
Looking forward, a growing memory market exposure, the robust test demand and its strong product lineup should keep this company producing high marks.
Shares of TER are up 95.3% since the coronavirus low on March 23.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now >>