The market has had a tough start to the year, with January underperforming the long-term median and average. The market sell-off has been driven mostly by growing inflationary pressures, the Fed's decision to raise interest rates, and weaker-than-expected labor market data.
However, we believe beaten-down growth stocks are ideal bets now for investors looking to maximize their returns over the long run. Investors' interest in growth stocks is evident in the SPDR Portfolio S&P 500 Growth ETF's (SPYG) 11.9% gains over the past year.
Intel Corporation (INTC), Intuit Inc. (INTU), and NetEase, Inc. (NTES) are companies whose stocks have suffered significant price declines over the past few months. However, based on their solid fundamentals and impressive growth attributes, we think they could gain considerably in the long run.
Intel Corporation (INTC)
INTC in Santa Clara, Calif., is a global manufacturer and designer of technologies for the cloud, smart, and connected devices for retail, industrial, and consumer uses. The company operates through DCG; IOTG; Mobileye; NSG; PSG; CCG, and All Other segments. Accelerators, Connectivity, Memory and Storage, Platform products, and Boards and Systems are INTC's products.
This month, INTC announced its plan for an initial investment of more than $20 billion to construct two new leading-edge chip factories in Ohio. The company believes that this investment should boost production to meet the increasing demand for semiconductors and to power a new generation of innovative products.
During the fourth quarter, ended Dec. 25, 2021, INTC's net revenue increased 2.8% year-over-year to $20.53 billion. The company's gross margin came in at $11.01 billion. And its operating income amounted to $4.99 billion. Also, the company's net income came in at $4.62 billion during the period.
Analysts expect INTC's revenue to increase 4.6% year-over-year to $76.7 billion for its fiscal 2023. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Also, its EPS is expected to increase at a 3.2% rate per annum over the next five years. INTC's Revenue and EBITDA have increased at CAGRs of 4.3% and 3.5%, respectively, over the past three years. The stock has declined 7.5% in price over the past month but has gained marginally over the past three months.
INTC's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Value and a B grade for Quality. We have also graded INTC for Stability, Sentiment, Momentum, and Growth. Click here to access all INTC's ratings. INTC is ranked #22 of 100 stocks in the A-rated Semiconductor & Wireless Chip industry.
Click here to checkout our Semiconductor Industry Report for 2022
Intuit Inc. (INTU)
INTU is a global technology platform that provides financial management and compliance products and services in the United States, Canada, and internationally. The Mountain View, Calif.-based company operates in Small Business and Self-Employed; Consumer; Credit Karma; and ProConnect segments. Its professional tax offerings include Lacerte, ProSeries, ProFile, and ProConnect Tax Online.
This month, INTU's QuickBooks campaign launched two new products to provide small businesses and their employees with faster access to their money to give them greater cash flow flexibility so they can succeed and prosper.
During its fiscal first quarter, ended Oct. 31, 2021, its total net revenue increased 51.7% year-over-year to $2.01 billion. The company's operating income came in at $195 million. Its net income grew 15.2% from its year-ago value to $228 million. Also, the company's EPS rose 9.3% from the prior-year quarter to $0.82.
INTU's revenue is expected to increase 27.4% year-over-year to $12.27 billion in its fiscal year 2022. Also, its EPS is expected to increase 20.1% in fiscal 2021 and 16.8% in fiscal 2022. INTU's EPS and net income have increased at CAGRs of 13.5% and 15.3%, respectively, over the past three years. INTU stock has lost 20.8% in price over the past month. However, the stock has surged 24.3% over the past nine months.
It is no surprise that INTU has an overall B rating, which equates to a Buy in our POWR Ratings system. Also, the stock has an A grade for Quality and Sentiment.
Click here to see the additional POWR Ratings for INTU (Growth, Value, Stability, and Momentum). INTU is ranked #19 of 165 stocks in the Software – Application group.
Click here to check out our Software Industry Report for 2022
NetEase, Inc. (NTES)
Headquartered in Hangzhou, China, NTES is a technology company that offers online gaming, communication, intelligent learning, commerce, Netease mail, news, and other products services. The company operates in three segments: Online Games Services; Youdao; Innovative Businesses, and Others. It caters to both domestic and international markets, including Japan, the United States, Europe, and Southeast Asia.
NTES' net revenues for the third quarter, ended Sept. 30, 2021, increased 18.9% year-over-year to RMB22.19 billion ($3.49 billion). The company's gross profit grew 19.5% from its year-ago value to RMB11.81 billion ($1.86 billion). Its operating profit rose 31.5% from the prior-year quarter to RMB3.78 billion ($593.48 million).
NTES' $3.76 billion consensus revenue estimate for its fiscal period ending March 2022 represents an increase of 17.6% year-over-year. The company's EPS is expected to increase 6.5% in fiscal 2022. In addition, its revenue and total assets have grown at CAGRs of 12.5% and 22.7%, respectively, over the past three years. NTES stock has declined 7.1% in price year-to-date but has gained 7% over the past six months.
NTES' POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has a B grade for Growth and Value.
In addition to the POWR Rating grades I have just highlighted, one can see NTES' ratings for Sentiment, Quality, Stability, and Momentum here. The stock is ranked #1 of 47 stocks in the China group.
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 +31.10% a year.
Click below now to see these top performing stocks with exciting growth prospects:
INTC shares were trading at $46.78 per share on Friday afternoon, down $1.27 (-2.64%). Year-to-date, INTC has declined -9.17%, versus a -8.43% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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