The S&P 500 index and Nasdaq composite are trading near their all-time highs. Better-than-expected U.S. retail sales data boosted the benchmarks, and the U.S. dollar reached a four-and-a-half-year high against the yen today. Furthermore, a decline in weekly jobless claims for six consecutive weeks, an increase in discretionary spending, and President Biden’s commitment to monitor inflation should drive the stock market higher. And according to a FactSet report issued on November 5, 2021, analysts project corporate earnings growth of more than 20% for Q4 2021. Therefore, we think it could be wise to bet on fundamentally sound growth stocks now.
Investors’ interest in growth stocks is evident in the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 71.2% gains over the past year.
Under-the-radar stocks Atkore Inc. (ATKR), Methanex Corporation (MEOH), and Conn’s, Inc. (CONN), which possess solid growth attributes, could be ideal bets now. Analysts expect their earnings to increase in the current quarter and over the next few years. Also, these stocks are rated ‘Strong Buy’ in our proprietary rating system.
Atkore Inc. (ATKR)
ATKR is a manufacturer and distributor of raceway and mechanical products and solutions (MP&S) that is headquartered in Harvey, Ill. The company offers electrical and mechanical products, including Cable Tray Systems, Conduit, Fittings, Mechanical Tubes, Traffic products, and other construction services. ATKR also provides energy, healthcare, data center, and prefabrication solutions.
ATKR’s net sales increased 121.8% year-over-year to $853.66 million for its fiscal third quarter, ended June 25, 2021. The company’s gross profit grew 254.1% from its year-ago value to $339.27 million. Its operating income rose 497.5% from the prior-year quarter to $248.73 million, and the company’s net income increased 628% year-over-year to $175.3 million.
ATKR’s revenue is expected to increase 60.7% year-over-year to $2.84 billion in its fiscal year 2021. The company has an impressive earnings surprise history; it beat the consensus EPS in each of the trailing four quarters. Also, its EPS is expected to grow 225.4% in the current quarter. ATKR’s EPS is expected to grow at 25.9% per annum over the next five years. Furthermore, its revenue has increased at a 12.3% CAGR and its total assets have increased at a 15.2% CAGR over the past three years. The stock has gained 263.1% in price over the past year.
ATKR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong 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 Growth and Quality. We have also graded ATKR for Stability, Sentiment, Momentum, and Value. Click here to access all ATKR’s ratings. ATKR is ranked #2 of 35 stocks in the Industrial – Metals industry.
Note that ATKR is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Methanex Corporation (MEOH)
Headquartered in Vancouver, Canada, MEOH is a global producer and supplier of methanol to international markets, including North America, Asia Pacific, Europe, and South America. The company’s global operations are supported by a global supply chain of terminals, storage facilities, and a dedicated fleet of methanol ocean tankers. MEOH also owns and manages a fleet of approximately 30 ocean-going vessels.
Last month, MEOH and Mitsui O.S.K. Lines, Ltd. (MOL) finalized a strategic shipping partnership involving Methanex’s Waterfront Shipping (WFS) subsidiary. With this agreement , MEOH, WFS, and MOL should strengthen their relationship and advance the commercialization of methanol, including renewable methanol, as a viable marine fuel.
MEOH’s revenue increased 85.5% year-over-year to $1.08 billion for its third quarter, ended September 30, 2021. The company’s adjusted net income came in at $99 million, compared to a $79 million adjusted net loss in the prior-year quarter. Its adjusted EBITDA grew 560% from its year-ago value to $264 million. Also, the company’s EPS amounted to $0.93, compared to a $1.15 loss per share in the third quarter of 2020.
Analysts expect MEOH’s revenue to increase 54.2% year-over-year to $4.09 billion in its fiscal 2021. Its EPS is expected to increase 219.4% in the current quarter. Also, MEOH’s EPS is expected to grow at 28.7% per annum over the next five years. MEOH’s revenue has increased at a 15.9% CAGR over the past five years. Also, its total assets have grown at an 8.4% CAGR over the past three years. The stock has surged 42.2% in price over the past three months and 29.2% over the past year.
It is no surprise that MEOH has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has a B grade for Growth and Quality.
Conn’s, Inc. (CONN)
CONN is a specialty retailer that offers a selection of durable consumer goods and related services. The Woodlands, Tex.-based company’s segments include Retail and Credit. It offers furniture and related accessories, home appliances, consumer electronic gadgets including LED, gaming products, and home office products. In addition, CONN also provides credit solutions for its core credit-constrained consumers.
For the fiscal second quarter, ended July 31, 2021, CONN’s total revenues increased 14% year-over-year to $418.38 million. The company’s operating income grew 30.8% from the year-ago value to $54.21 million. Its net income rose 80.3% from the prior-year quarter to $37 million, and its EPS increased 74.3% year-over-year to $1.22.
CONN’s revenue is expected to increase 14.2% year-over-year to $1.58 billion in its fiscal year 2022. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. The company’s EPS is expected to increase 136% in the current quarter. Also, CONN’s EPS is expected to grow at 23% per annum over the next five years. In addition, its EBITDA and net income have increased at CAGRs of 19.7% and 49.3%, respectively, over the past three years. The stock has gained 57% in price over the past nine months and 130.5% over the past year.
CONN’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. Also, the stock has an A grade for Quality, Momentum, and Value, and a B grade for Growth.
In addition to the POWR Rating grades I have just highlighted, one can see CONN’s ratings for Sentiment and Stability here. The stock is ranked #3 of 43 stocks in the B-rated Specialty Retailers industry.
Note that CONN is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.
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ATKR shares were trading at $104.87 per share on Wednesday morning, down $1.07 (-1.01%). Year-to-date, ATKR has gained 155.10%, versus a 26.45% 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. More...
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