Amid skyrocketing inflation rates, the Federal Reserve is expected to be tough on with interest rate increases to bring price pressures down. The Bureau of Labor Statistics recently reported that the consumer price index increased 8.3% in April, exceeding the 8.1% estimate. Coupled with a negative U.S. GDP rate in the first quarter, these factors add to recession risks. Due to these macroeconomic concerns, investors are liquidating their growth stock holdings. Over the past month, the S&P 500 Index has slumped 12%, and the NASDAQ Composite Index has declined 15.1%.
Because the stock market has been experiencing relentless selling pressure recently, numerous buy-the-dip opportunities have been created for long-term investors. Due to the broad sell-off, fundamentally sound growth stocks are now trading at attractive valuations. Furthermore, these stocks are well-positioned to rebound in the long run, ensuring solid returns to the investors.
Against the backdrop, we think it could be wise to invest in quality growth stocks Exelixis, Inc. (EXEL) and Cheniere Energy, Inc. (LNG), which are currently trading at discounts to their peers.
Exelixis, Inc. (EXEL)
EXEL in San Francisco is an oncology-focused biotechnology company that focuses on discovering, developing, and commercializing new medicine to treat cancers in the United States. The company’s products include CABOMETYX tablets to treat advanced renal cell carcinoma, COMTRIQ capsules to treat metastatic medullary thyroid cancer, COTELLIC to treat advanced melanoma, and MINNEBRO for the treatment of hypertension in Japan.
On May 3, EXEL’s partner Ipsen received approval from the European Commission (EC) for CABOMETYX® (cabozantinib) as a monotherapy for the treatment of patients with locally advanced or metastatic differentiated thyroid carcinoma (DTC). The EC approval will allow the marketing of CABOMETYX in all the 27 member states of the European Union, Norway, Liechtenstein, and Iceland. This might extend the company’s global market reach and boost revenues.
In April, EXEL initiated the dose-escalation stage of the first-in-human phase 1 trial of XL1114. It is a novel anti-cancer compound that inhibits the CARD11-BCL10-MALT1 complex and is a monotherapy for patients with non-Hodgkin’s lymphoma (NHL). This dose-escalation stage will determine the recommended dose and evaluate the safety and efficacy of XL114 in patients with NHL.
EXEL's total revenues increased 31.7% year-over-year to $355.98 million in its fiscal 2022 first quarter, ended March 31, 2022. Its income from operations rose 1,906.9% year-over-year to $83.24 million. Its income before income taxes improved 4,329.7% year-over-year to $85.23 million. In addition, the company’s non-GAAP net income and non-GAAP net income per share came in at $83.89 million and $0.26, respectively, registering an increase of 194.7% and 188.9% year-over-year.
The company has an impressive growth history; its revenue has improved at a 21.1% CAGR over the past three years. Over the past three years, its total assets and levered free cash flow increased at CAGRs of 19.1% and 19.1%, respectively.
Analysts expect EXEL’s revenue for its fiscal year 2022 third-quarter, ending Sept. 30, 2022, to come in at $409.59 million, indicating a 24.7% increase year-over-year. Also, the $0.23 consensus EPS estimate for the same quarter represents an 88.9% rise from the same period last year. EXEL has topped the consensus EPS estimates in three of the trailing four quarters.
Shares of EXEL have declined 15.1% over the past month and 19.9% over the past year and closed yesterday’s trading session at $19.49.
EXEL's POWR Ratings reflect this promising outlook. It has an overall grade of B, equating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
EXEL has a grade of A for Value, Quality, and Sentiment. Within the Biotech industry, it is ranked #8 of 392 stocks. To see additional POWR Ratings (Growth, Stability, and Momentum) for EXEL, click here.
Click here to checkout our Healthcare Sector Report for 2022
Cheniere Energy, Inc. (LNG)
LNG in Houston, Tex., is an energy infrastructure company that is in liquefied natural gas (LNG) related businesses in the United States. In addition, it participates in the LNG and natural gas marketing business. The company owns and operates the Sabine Pass LNG terminal in Cameron Parish, Louisiana, and the Corpus Christi LNG terminal near Corpus Christi, Tex. It also owns the Creole Trail pipeline and operates the Corpus Christi pipeline.
Earlier this month, LNG’s subsidiary, Corpus Christi Liquefaction Stage III, LLC, entered a long-term Integrated Production Marketing (IPM) gas supply agreement with ARC Resources U.S. Corp, a subsidiary of ARC Resources, Ltd., to sell 140,000 MMBtu per day of natural gas to Corpus Christi Stage III for 15 years. This agreement is expected to support the Corpus Christi Stage III Project, which is being developed to include seven midscale liquefaction trains with a total expected production capacity of 10 mtpa.
In its fiscal 2022 first quarter, ended March 31, 2022, LNG's total revenues increased 142.2% year-over-year to $7.48 billion, and its LNG revenues grew 144.7% year-over-year to $7.34 billion. Its consolidated adjusted EBITDA rose 117.1% from its year-ago value to $3.15 billion. In addition, the company’s cash and cash equivalents and total current assets amounted to $2.49 billion and $5.71 billion, respectively, as of March 31, 2022.
The company’s financials have grown substantially over the past three years. LNG’s revenue has risen at a 40.2% CAGR over the past three years.
The $5.78 billion consensus revenue estimate for its fiscal year 2022 second quarter, ending June 30, 2022, represents a 91.5% growth from the prior-year period. The consensus EPS estimate of $3.19 for the current quarter indicates a 4,265.3% year-over-year rise.
The stock has plunged 4% in price over the past month and closed yesterday's trading session at $132.97.
LNG’s POWR Ratings reflect a strong outlook. The stock has an overall B rating, which translates to Buy in our POWR Ratings system.
LNG has an A grade for Momentum and a B for Growth. It is ranked #31 of 99 stocks in the B-rated Energy - Oil & Gas industry. Click here to see LNG’s POWR Ratings for Value, Stability, Sentiment, and Quality.
What To Do Next?
If you would like to see more top growth stocks, then you should check out our free special report:
What makes them "MUST OWN"?
All 9 picks have strong fundamentals and are experiencing tremendous momentum. They also contain a winning blend of growth and value attributes that generates a catalyst for serious outperformance.
Even more important, each recently earned a Buy rating from our coveted POWR Ratings system where the A rated stocks have gained +48.22% a year.
Click below now to see these top performing stocks with exciting growth prospects:
EXEL shares were trading at $17.80 per share on Thursday afternoon, down $1.69 (-8.67%). Year-to-date, EXEL has declined -2.63%, versus a -17.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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