Since the beginning of the year, the benchmark indexes have witnessed wild price swings. The severe volatility has been driven by the rise in the consumer price index, Russia’s invasion of Ukraine, and the Fed’s planned multiple interest rate hikes this year. Last week, the Fed approved its first interest rate hike in more than three years and planned to increase several more times this year. However, after correcting from their highs, the major indexes have recorded their best week since November 2020, driven mainly by growth stocks. Last week, the S&P 500 jumped 6.1%, while the Dow Jones Industrial Average and the tech-heavy Nasdaq Composite surged 5.5% and 8.1%, respectively.
Experts believe that the economy will continue witnessing a steady recovery this year driven by improved corporate earnings. This should bode well for growth stocks. Evercore ISI’s head of equities, derivatives and quantitative strategy, Julian Emanuel, said “I think the Fed has set the stage for investors to focus on earnings again. Bottom-line earnings estimates since the beginning of the year have risen.” Also, investors' interest in growth stocks is evident from the SPDR Portfolio S&P 500 Growth ETF's (SPYG) 17.9% returns over the past year.
That’s why today we're highlighting 4 exciting stocks from our Top 10 Growth screen, which is just 1 of the 10 screens in our POWR Screens 10 service (more on that below). Qualcomm (QCOM), STMicroelectronics N.V. (STM), Hackett Group (HCKT), and Rimini Street (RMNI) could be good additions to your portfolio right now.
Qualcomm Inc. (QCOM)
Wireless technology company QCOM provides technologies and products for mobiles, wireless devices, automotive, computing, Internet of Things (IoT), and networking. It is also currently engaged in developing, launching, and expanding 5G technology.
On February 9, 2022, QCOM announced the opening of Extended Reality Labs in Europe. QCOM’s VP and GM of XR, Hugo Swart, said, “These labs will be the key to building out our XR portfolio, which encompasses best-in-class platforms, software, and innovative technology features and to make it available to all developers helping to build out the metaverse through Snapdragon Spaces.”
For the fiscal first quarter ended December 26, 2021, QCOM’s non-GAAP revenues increased 30% year-over-year to $10.69 billion. The company’s non-GAAP net income increased 47% year-over-year to $3.68 billion. Also, its non-GAAP EPS came in at $3.23, representing an increase of 49% year-over-year.
QCOM’s revenue has grown at a CAGR of 18.9% over the past three years. The company’s EBITDA grew at a CAGR of 31.8% over the past three years.
Analysts expect QCOM’s EPS for the quarter ending March 31, 2022, to increase 53.2% year-over-year to $2.91. Its revenue for fiscal 2022 is expected to increase 26.5% year-over-year to $42.33 billion. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 18.6% to close the last trading session at $153.99.
QCOM’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #4 out of 97 stocks in the B-rated Semiconductor & Wireless Chip industry. Click here to see the other ratings of QCOM for Momentum and Stability.
STMicroelectronics N.V. (STM)
Headquartered in Geneva, Switzerland, STM designs, develops, manufactures, and markets products, including discrete and standard commodity components and application-specific integrated circuits for analog, digital and mixed-signal applications. The company’s segments include Automotive and Discrete Group, Analog, MEMS and Sensors Group, and Microcontrollers and Digital ICs Group.
On December 9, 2021, STM announced the introduction of the third generation STPOWER silicon-carbide MOSFETs, advancing the state-of-the-art power devices for electric vehicle powertrains and other power density and energy efficiency reliability is essential to target criteria. Power Transistor Macro-Division GM and Group VP of STM and Discrete Group, Edoardo Merli, said, “We are investing relentlessly to support our automotive and industrial programs expected to generate $1 billion in SiC revenue in 2024.”
For the fiscal fourth quarter ended December 31, 2021, STM’s net revenues increased 9.9% year-over-year to $3.55 billion. The company’s net income increased 28.9% year-over-year to $750 million. Also, its EPS came in at $0.82, representing an increase of 30.2% year-over-year.
STM’s revenue has grown at a CAGR of 9.7% over the past three years. The company’s EBITDA grew at a CAGR of 16% over the past three years.
For the quarter ending March 31, 2022, STM’s EPS and revenue are expected to increase 82.1% and 19.6% year-over-year to $0.71 and $3.49 billion, respectively. It surpassed consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 20.7% to close the last trading session at $42.96.
STM’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
It has a B grade for Value, Sentiment, and Quality. It is ranked #2 in the Semiconductor & Wireless Chip industry. To see the additional ratings of STM for Growth, Momentum, and Stability, click here.
Hackett Group Inc. (HCKT)
HCKT is an intellectual property-based strategic consultancy company. The company's services include benchmarking, executive advisory, business transformation, and cloud enterprise application implementation. It also provides dedicated business strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology, including Oracle and SAP practices.
On December 14, 2021, HCKT announced its strategic alliance with Anaplan, Inc. (PLAN) that will allow HCKT to deliver finance and supply chain solutions that empower organizations to deliver real-time intelligence to executives, add strategic value to the enterprise, and accelerate best practices implementation utilizing PLAN's leading business performance orchestration platform.
HCKT’s total revenue from continuing operations increased 18.4% year-over-year to $70.23 million for the fourth quarter ended December 31, 2021. The company’s net income increased 1,750% year-over-year to $16.52 million. Also, its EPS came in at $0.50, representing an increase of 1,566.6% year-over-year.
HCKT’s EBITDA growth was 107.3% year-over-year. Its levered free cash flow has grown at a CAGR of 20.1% over the past three years. Also, its EBITDA has grown at a CAGR of 7% over the past three years.
Analysts expect HCKT’s EPS for the quarter ending March 31, 2022, to increase 18.5% year-over-year to $0.32. Its revenue for the quarter ending June 30, 2022, is expected to increase 15.7% year-over-year to $75.50 million. It surpassed Street EPS expectations in each of the trailing four quarters. Over the past nine months, the stock has gained 23.7% to close the last trading session at $21.25.
It's no surprise that HCKT has an overall A rating, which equates to a Strong Buy in our proprietary POWR Rating system.
It has an A grade for Sentiment and Quality and a B grade for Growth and Stability. It is ranked first in the A-rated Outsourcing – Tech Services industry. Click here to see the other ratings of HCKT for Value and Momentum.
Rimini Street Inc. (RMNI)
RMNI is a global provider of enterprise software products and services. The company’s software support includes application management services, database management services, security solutions, integration and interoperability, license, monitoring and health check, global tax, legal and regulatory, cloud advisory, and professional services. It offers Oracle E-Business Suite, JD Edwards, PeopleSoft, and Oracle Retail services.
On March 2, 2022, RMNI announced that its Board of Directors had authorized the repurchase of up to $15 million of common stock over the next two years through open market purchases, including through Rule 10b5-1 trading plans or privately negotiated transactions. RMNI’s CFO, Michael L. Perica, said, “With a strong cash position and consistent operating cash flow generation model, we believe the company can both continue funding growth while implementing this capital return plan for our shareholders.”
For the fiscal fourth quarter ended December 31, 2021, RMNI’s revenue increased 13% year-over-year to $99.30 million. The company’s non-GAAP net income increased 600.6% year-over-year to $77.82 million. Also, its adjusted EBITDA increased 49.6% year-over-year to $19.26 million.
Over the past three years, RMNI’s revenue and EBIT have grown at a CAGR of 13.9% and 13.7%, respectively. Also, its EBITDA has grown at a CAGR of 13.5% over the past three years.
For the quarter ending June 30, 2022, RMNI’s EPS is expected to increase 200% year-over-year to $0.06. Its revenue for fiscal 2023 is expected to increase 11.9% year-over-year to $455.66 million. Over the past month, the stock has gained 26.6% to close the last trading session at $5.89.
RMNI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Growth and Value. Within the Software – Application industry, it is ranked #2 out of 163 stocks. To see the other ratings of RMNI for Momentum, Stability, and Sentiment, click here.
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QCOM shares were trading at $156.33 per share on Monday morning, up $2.34 (+1.52%). Year-to-date, QCOM has declined -14.12%, versus a -6.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
4 High-Quality Growth Stocks to Buy in March StockNews.com
