Investing in growth stocks now can be beneficial because these companies are expected to grow their revenues faster than average, often reinvesting profits for future expansion. Therefore, it could be wise for investors seeking affordable growth stocks to consider Viavi Solutions Inc. (VIAV), Coursera, Inc. (COUR), and MiMedx Group, Inc. (MDXG), all priced under $10.
The World Bank expects global economic growth to stabilize around 2.6% through 2024, slightly up from previous forecasts, driven mainly by strong U.S. demand. U.S. inflation is easing, supported by higher interest rates, which could stabilize the economy without significant disruptions, potentially favorable for investing in growth stocks depending on market conditions and sectors benefiting from this stability.
In addition, inflation eased slightly in May, with consumer prices rising 3.3% over the past year, just above the Federal Reserve's target. Despite steady interest rates and robust economic indicators like strong job growth and rising wages, the Fed remains cautious about lowering rates further to avoid reigniting inflation, which could impact growth stocks positively in the current economic climate.
Considering these conducive trends, let’s analyze the fundamentals of the three growth picks mentioned above.
Viavi Solutions Inc. (VIAV)
VIAV provides network test, monitoring, and assurance solutions for communications service providers, hyperscalers, network equipment manufacturers, original equipment manufacturers, and government and avionics customers in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa.
In terms of the trailing-12-month gross profit margin, VIAV’s 58.59% is 19.3% higher than the 49.11% industry average. Likewise, its 9.89% trailing-12-month levered FCF margin is 1% higher than the 9.79% industry average.
During the third quarter that ended March 30, 2024, VIAV reported net revenue of $246 million. Its non-GAAP net income and non-GAAP EPS came in at $13.20 million and $0.06 for the quarter, respectively. In addition, the company’s total liabilities and stockholders' equity amounted to $1.74 billion, compared to $1.85 billion as of March 30, 2024.
Street expects VIAV’s EPS and revenue for the quarter ending September 30, 2024, to increase 1.6% and 1.9% year-over-year to $0.09 and $252.70 million, respectively. Over the past month, the stock has declined 7.1% to close the last trading session at $7.07.
VIAV’s POWR Ratings reflect strong prospects. It has an overall rating of B, translating to a Buy in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #9 out of 42 stocks in the Technology - Communication/Networking industry. It has a B grade for Growth, Value, and Quality. Click here to see VIAV’s ratings for Momentum, Stability, and Sentiment.
Coursera, Inc. (COUR)
COUR operates an online educational content platform internationally. It operates in three segments: Consumer, Enterprise, and Degrees. The company offers guided projects, courses, and specializations, as well as online degrees and certificates for entry-level professionals, non-entry-level professionals, universities, and MasterTrack.
COUR’s revenue grew at a CAGR of 26.1% over the past three years. Moreover, its Total Assets grew at a CAGR of 30.2% over the past three years.
In terms of the trailing-12-month levered FCF margin, COUR’s 9.80% is 76.3% higher than the 5.56% industry average. Moreover, its 52.03% trailing-12-month gross profit margin is 41.38% higher than the 36.80% industry average.
COUR’s revenues for the first quarter that ended March 31, 2024, increased 14.5% year-over-year to $169.07 million. Its non-GAAP gross profit came in at $91.68 million, up 15.2% year-over-year. Also, the company’s non-GAAP net income stood at $11.92 million and $0.07 per share, compared to a non-GAAP net loss of $5.16 million and $0.03 per share, respectively.
For the quarter ended June 30, 2024, COUR’s revenue is expected to increase 7% year-over-year to $164.50 million. Its EPS for the quarter ending December 31, 2024, is expected to rise 14.9% year-over-year to $0.07. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past month, COUR’s stock has declined 4.7% to close the last trading session at $7.05.
COUR’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
It has a B grade for Growth and Value. It is ranked #8 out of 19 stocks in the A-rated Outsourcing - Education Services industry. Click here to see COUR’s Momentum, Stability, Sentiment, and Quality ratings.
MiMedx Group, Inc. (MDXG)
MDXG develops and distributes placental tissue allografts for various sectors of healthcare. It processes the human placental tissues utilizing its patented and proprietary PURION process to produce allografts that retain the tissue's inherent biological properties and regulatory proteins.
MDXG’s Total Assets grew at a CAGR of 43.8% over the past three years. Similarly, its revenue grew at a CAGR of 8% during the same period.
In terms of the trailing-12-month EBIT margin, MDXG’s 15.16% is 607.2% higher than the 2.14% industry average. Likewise, its 83.50% trailing-12-month gross profit margin is 45.3% higher than the 57.48% industry average. Moreover, its 16.14% trailing-12-month EBITDA margin is 177.6% higher than the 5.81% industry average.
MDGX’s net sales for the first quarter that ended March 31, 2024, increased 18.2% year-over-year to $84.71 million. Its gross profit rose 21% over the prior-year quarter to $71.72 million. Likewise, its adjusted EBITDA came in at $18.67 million, up 236.7% year-over-year.
The company’s adjusted net income was $9.97 million, compared to an adjusted net loss of $944 thousand in the year-ago quarter. In addition, its adjusted earnings per share came in at $0.07, compared to an adjusted loss per share of $0.03 in the year-ago quarter.
Analysts expect MDXG’s revenue for the quarter ended June 30, 2024, to increase 9.6% year-over-year to $89.06 million. Likewise, its EPS for the quarter ending September 30, 2024, is expected to increase 35.7% year-over-year to $0.08. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 3.3% to close the last trading session at $6.82.
MDXG’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Growth, Value, and Quality. Within the Medical - Devices & Equipment industry, it is ranked #6 out of 132 stocks. To see MDXG’s Momentum, Stability, and Sentiment rating, click here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
VIAV shares were trading at $7.02 per share on Friday afternoon, down $0.05 (-0.71%). Year-to-date, VIAV has declined -30.29%, versus a 17.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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