While last year was dominated by high-growth tech stocks, the economic recovery this year has motivated investors to take profits in those stocks and rotate to much cheaper cyclical stocks to capitalize on the economic recovery. However, with accelerating economic recovery, a new set of growth stocks–including some of the pandemic winners–are now grabbing investors’ attention. The renewed investor interest in growth stocks is evidenced by the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 5% gains over the past month versus the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 3.8% returns.
Not all stocks that advanced over the past several months are well positioned to continue growing with the economic recovery. So, it’s wise to take a close look at companies’ business models to ensure that there are sufficient opportunities for them to grow even absent pandemic tailwinds.
We think Goldman Sachs Group Inc. (GS), Intuitive Surgical, Inc. (ISRG), Cognex Corporation (CGNX), and Manpower Group, Inc. (MAN) possess solid growth attributes and could deliver solid returns in the upcoming months.
The Goldman Sachs Group Inc. (GS)
One of the top players in the investment banking and management space, GS operates through four segments: Investment Banking, Global Markets, Asset Management, and Consumer & Wealth Management. The company provides a range of financial services to corporations, financial institutions, governments, and individuals worldwide.
GS’ $17.70 billion in net revenues for its fiscal year 2021 first quarter, ended March 31, 2021, represents an 102.5% year-over-year rise. Its gross profit has increased 42% year-over-year to $1.21 billion. The company’s net income has increased 463.5% from the prior-year quarter to $6.83 billion. Also, its EPS increased 502.5% year-over-year to $18.80.
The company’s revenue has grown at a 14.7% CAGR over the past three years, while its EPS has grown at a 56.1% CAGR over the period. This reflects GS’ steady growth over the past few years.
For the current quarter, ending June 30, 2021, analysts expect GS’ EPS and revenue to increase 1,679.2% and 22.9%, respectively, year-over-year to $9.43 and $11.98 billion. Also, it surpassed the consensus EPS estimates in three of the trailing four quarters.
Hazeltree and GS’ Transaction Banking (TxB) announced a joint solution on March 2to streamline treasury management with integrated global payments and FX capabilities. The solution is expected to simplify operations and reduce cost for treasurers managing cash and foreign exchange transactions. The demand for this solution is expected to increase in the coming months. The stock has gained 97.7% over the past year to close yesterday’s trading session at $350.16.
It’s no surprise that GS has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Growth, Value, and Sentiment. Click here to see GS’ ratings for Momentum, Stability, and Quality as well.
GS is ranked #9 of 24 stocks in the A-rated Investment Brokerage industry.
Intuitive Surgical, Inc. (ISRG)
ISRG develops, manufactures and markets the da Vinci surgical system and Ion endoluminal system. Its da Vinci surgical system includes surgeon’s consoles, patient-side carts, 3-D HD vision systems, skills simulators, and da Vinci Xi integrated table motions. The company also provides a comprehensive suite of services, training, and education programs.
The company’s $1.30 billion in net sales for its fiscal year 2021 first quarter, ended March 31, represents a 17.5% year-over-year rise. Its gross profit has increased 22.3% year-over-year to $902.60 million. The company’s net income has increased by 37.6% year-over-year to $435.2 million. Also, its adjusted EPS has increased by 34.2% year-over-year to $3.61.
ISRG’s revenue has grown at a 11.2% CAGR over the past three years. Its EBITDA and EPS have increased at CAGRs of 5.2% and 13.5%, respectively, over the same period. This reflects the company’s consistent growth over the past few years.
For the quarter ended June 30, 2021, analysts expect ISRG’s EPS and revenue to increase 174.7% and 47.8%, respectively, year-over-year to $3.05 and $1.26 billion. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 73.9% over the past year to close yesterday’s trading session at $867.55.
ISRG’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. It has an A grade for Sentiment, and a B grade for Growth and Quality. Click here to see ISRG’s ratings for Value, Momentum, and Stability as well.
ISRG is ranked #52 of 181 stocks in the Medical- devices & Equipment industry.
Cognex Corporation (CGNX)
CGNX is a provider of machine vision products that capture and analyze visual information to automate tasks, primarily in manufacturing processes, where vision is required. The company’s products range from vision sensors that are integrated, to personal computer (PC)-based systems for users. It sells its products to consumer electronics, automotive, consumer products, food and beverage, pharmaceuticals, and medical devices industries. It also sells through a network of distributors and integrators.
For the fourth quarter ended December 31, 2020, CGNX’s net sales were $223.61 million, which represents a 31.7% year-over year increase. Its gross profit has increased 34.9% year-over-year to $168.45 million. The company’s operating income for the quarter came in at $59.08 million, up 235.5% year-over-year. CGNX’s revenue increased at a 12.5% CAGR over the past five years. This reflects the company’s steady growth over the past few years.
Analysts expect CGNX’s EPS to be $0.35 for the quarter ended March 31, which represents an 191.7% year-over-year increase. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The company’s revenue is expected to increase 35% year-over-year to $228.27 million for the quarter ending June 30, 2021.
In March, CGNX announced the launch of its Data Man 8700 Series of handheld barcode readers. It is built on a redesigned platform and can be used without having any tuning or operator training. This should help the company increase its consumer base. The stock has gained 58.2% over the past year and closed yesterday’s trading session at $82.93.
CGNX’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Quality, and a B grade for Growth and Sentiment. Click here to see the additional POWR Ratings for CGNX (Stability, Momentum, and Value).
CGNX is ranked #53 of 86 stocks in the A-rated Industrial- Machinery industry.
Manpower Group, Inc. (MAN)
MAN is a provider of workforce solutions and services. Its segments include America, Southern Europe, Northern Europe, Asia Pacific Middle East (APME), Right Management and Corporate. The company offers recruitment services, including permanent, temporary, and contract recruitment of professionals, as well as administrative and industrial positions under the Manpower and Experis brands.
Its $4.9 billion in net sales for its fiscal year 2021 first quarter, ended March 31, represents a 6.6% year-over-year rise. Its gross profit has increased 6.9% year-over-year to $768.10 million. The company’s net income has increased by 3,547% year-over-year to $62 million. Its EPS stood at $1.12, which represents a 3,633.3% year-over-year increase. MAN’s levered free cash flow margin has increased at a 262.5% CAGR over the past three years.
The company’s EPS and revenue are expected to increase 683.3% and 37.5%, respectively, year-over-year to $1.41 and $5.15 billion, for the quarter ending June 30, 2021. Also, MAN surpassed consensus EPS estimates in each of the trailing four quarters. The stock has rallied more than 75% over the past year and closed yesterday’s trading session at $123.23.
MAN has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an B grade for Growth, Value, and Sentiment. Click here to see the additional POWR Ratings for MAN (Momentum, Stability, and Quality).
MAN is ranked #4 of 19 stocks in the A-rated Outsourcing-Staffing services industry.
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GS shares were trading at $347.74 per share on Tuesday afternoon, down $2.42 (-0.69%). Year-to-date, GS has gained 32.38%, versus a 10.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
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