Over the past month, the stock market has witnessed a massive sell-off on concerns over the potential aggressive monetary policy tightening to bring down the multi-decade high inflation. Minutes from the Federal Reserve’s May meeting reveal that the officials discussed the odds of raising interest rates, which could slow the economic growth.
According to Goldman strategist Vickie Chang, the stock market sell-off may not reach the bottom until the Federal Reserve indicates the end of interest rate hikes. Despite the risk-off environment, some growth companies should perform well. And the recent market meltdown provides an attractive opportunity to bet on their stocks at attractive prices.
Taro Pharmaceutical Industries Ltd. (TARO), Superior Industries International, Inc. (SUP), Viavi Solutions Inc. (VIAV), CEVA, Inc. (CEVA), and SMART Global Holdings, Inc. (SGH) possess solid growth attributes and hold the potential to rebound meaningfully. So, these growth stocks could be great additions to one's portfolio.
Taro Pharmaceutical Industries Ltd. (TARO)
Headquartered in Haifa, Israel, TARO is a science-based pharmaceutical company that develops, manufactures, and markets prescription and over-the-counter pharmaceutical products internationally. The company also creates and manufactures active pharmaceutical ingredients majorly for use in its finished dosage form products.
For the third quarter ending December 31, 2021, TARO's net sales amounted to $140.15 million. Its operating income came in at $36.31 million, while its net income grew 25.1% year-over-year to $32.92 million. The company's EPS increased 22.9% from its year-ago value to $0.86.
Analysts expect TARO's revenue to increase 3.6% year-over-year to $152.40 million for the first quarter ending June 2022. The consensus EPS estimate of $1.05 represents a 69.4% improvement year-over-year for the second quarter ending September 2022.
The stock has declined 26.9% year-to-date. TARO's total assets have grown at a CAGR of 0.9% over the past three years.
TARO's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has a B grade for Growth, Sentiment, and Stability. Within the Medical - Pharmaceuticals industry, it is ranked #4 of 165 stocks.
To see additional POWR Ratings for Value, Quality, and Momentum for TARO, click here.
Superior Industries International, Inc. (SUP)
Headquartered in Southfield, Michigan, SUP designs, manufactures, and sells aluminum wheels to the original equipment manufacturers and aftermarket distributors in North America and Europe. The company supplies aluminum wheels to automobile and light truck manufacturers.
During the first quarter ending March 31, 2022, SUP's net sales increased 11.8% year-over-year to $400.50 billion. Its income from operations amounted to $23.60 million, while its net income came in at $10.10 million. The company's EPS stood at $0.04. In addition, SUP's revenue has grown at a CAGR of 14.6% over the past five years
The consensus EPS estimate of $1.60 for fiscal 2023 represents an 88.2% year-over-year growth. Analysts expect revenue to increase 15.4% year-over-year to $401.10 million for the second quarter ending June 2022.
The stock has plunged 10.7% year-to-date. However, the stock has gained 20.1% over the past month.
SUP's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Sentiment and a B for Value. Within the Auto Parts industry, it is ranked #16 of 69 stocks.
In total, we rate SUP on eight different levels. Beyond what we've stated above, we have also given SUP grades for Stability, Growth, Quality, and Momentum. Get all SUP ratings here.
Viavi Solutions Inc. (VIAV)
Headquartered in Scottsdale, Arizona, VIAV offers network test, monitoring, and assurance solutions to communications service providers, enterprises, network equipment manufacturers, government, and avionics customers worldwide. The company has three operational segments: Network Enablement (NE), Service Enablement (SE), and Optical Security and Performance Products (OSP) segments.
VIAV's net revenue increased marginally year-over-year to $315.50 million for the third quarter ended April 2, 2022. The income from operations grew 13.6% from its year-ago value to $40.80 million, while its net income amounted to $19.20 million, up 11.6% from its prior-year quarter. The company's EPS improved 14.3% year-over-year to $0.08.
VIAV's revenue has grown at a CAGR of 4.8% over the past three years. Furthermore, the company's EBITDA has grown at a CAGR of 13.8% over the past three years.
Analysts expect VIAV's revenue to increase 3.9% year-over-year to $322.95 million for the fourth quarter ending June 2022. The company's EPS is expected to grow 4% year-over-year to $0.23 in the fourth quarter ending June 2022. Moreover, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters. The company's shares have declined 20% year-to-date.
It is no surprise that VIAV has an overall B rating, equating to Buy in our POWR Ratings system. VIAV has a B grade for Growth and Quality. In the Technology - Communication/Networking industry, it is ranked #5 of 54 stocks
Click here to see the additional POWR Ratings for VIAV (Value, Stability, Momentum, and Sentiment).
CEVA, Inc. (CEVA)
CEVA functions as a licensor of wireless connectivity and smart sensing technologies to semiconductor and original equipment manufacturer (OEM) companies worldwide. It develops and licenses various digital signal processors, AI processors, wireless platforms, and complementary software.
In February, CEVA announced PentaG2, its second-generation 5G platform architecture, focused on increasing the proliferation of new usage models for mobile broadband and IoT and diminishing the entry barriers for handset OEMs seeking to internalize 5G modem design. PentaG2 is a comprehensive hardware/software IP platform that combines advanced DSPs with special-purpose accelerators for optimal signal chain processing to deliver a 4X improvement in power efficiency versus its predecessor.
In the first quarter ending March 31, 2022, CEVA's total revenues increased 35.4% year-over-year to $34.39 million. Its non-GAAP operating income grew 109.5% from its year-ago value to $5.51 million, while its non-GAAP net income amounted to $4.21 million, up 1559.1% from its year-ago value. The company's non-GAAP EPS improved 1700% year-over-year to $0.18.
CEVA's revenue has grown at a CAGR of 19.5% over the past three years. Furthermore, the company's levered fund cash flow has grown at a CAGR of 49.3% over the past three years.
The $0.21 consensus EPS estimate represents a 4.2% improvement year-over-year for the third quarter ending September 2022. Analysts expect CEVA's revenue to increase 13.2% year-over-year to $34.46 million for the second quarter ending June 2022. Moreover, the company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters.
The stock has declined 22.5% year-to-date.
CEVA's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Growth and a B grade for Quality. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #15 of 95 stocks.
In total, we rate CEVA on eight different levels. Beyond what we've stated above, we have also given CEVA grades for Value, Sentiment, Momentum, and Stability. Get all the CEVA ratings here.
SMART Global Holdings, Inc. (SGH)
Headquartered in Newark, California, SGH designs and manufactures specialty solutions for the computing, memory, and LED markets internationally. The operational segments of the company are Memory Solutions, Intelligent Platforms Solutions, and LED Solutions segments.
In March, SGH announced the next generation of its DuraFlash ME2 family of SATA SSD products, consisting of industry-standard M.2 2242, M.2 2280, mSATA, Slim SATA, and 2.5" form factors. These SSDs are available in industrial and commercial temperature grades and have versions that execute SMART's SafeDATA power-loss, data-protection technology for carefully handling power fluctuations and sudden power loss events.
SGH's net sales increased 47.7% year-over-year to $449.17 million for the second quarter ending February 25, 2022. The non-GAAP operating income grew 111.5% from its year-ago value to $57.44 million, while its non-GAAP net income improved 116.9% from its prior-year quarter to $47.57 million. Its non-GAAP EPS amounted to $0.87, up 97.7% from its year-ago value.
SGH's revenue has grown at a CAGR of 9% over the past three years. Furthermore, the company's levered fund cash flow has grown at a CAGR of 41.7% over the past three years.
The consensus EPS estimate of $0.75 during the third quarter ending May 2022 represents an 8.5% improvement year-over-year. Analysts expect SGH's revenue to increase 4% year-over-year to $455.02 million for the third quarter ending May 2022. In addition, the company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters.
The company's shares have plunged 34.6% year-to-date. The stock has gained 2.8% over the past year.
It is no surprise that SGH has an overall B rating, equating to Buy in our POWR Ratings system. VIAV has an A grade for Growth and a B for Value and Sentiment. In the Semiconductor & Wireless Chip industry, it is ranked #37.
Click here to see the additional POWR Ratings for SGH (Stability, Momentum, and Quality).
TARO shares were trading at $33.70 per share on Thursday afternoon, down $2.94 (-8.02%). Year-to-date, TARO has declined -32.75%, versus a -14.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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