2021 has begun with much optimism around the potential for COVID-19 vaccines to help vanquish the pandemic. As a result, the stock markets witnessed broad gains on the first trading day of the year. While the stock markets grew over the past year with ease, underlying volatility has been a cause for concern among many investors.

With  coronavirus vaccines proving to be effective against new strains of the virus and the  incoming Biden administration rekindling hopes for additional fiscal stimulus, the U.S. economy is looking at a V-shaped recovery this year. In fact, Biden has already announced his plans regarding a $1.9 trillion fiscal stimulus package, a large portion of which  of which is expected to be relief checks to individuals and extended unemployment benefits. An expected increase in per-capita spending should also drive the markets higher this year.

This should further buoy budding companies such as Hologic, Inc. (HOLX), PTC Inc. (PTC) and PAR Technology Corporation (PAR) that possess  enviable growth potential.

We think these stocks are the ideal alternatives to the most popular companies that are currently trading at sky-high valuations and have little room for growth. These lesser-known stocks have demonstrated resilience during the pandemic, delivering impressive financials. As the market soars in the upcoming months, these stocks have plenty of room to grow.

Hologic, Inc. (HOLX)

HOLX manufactures diagnostic equipment with a focus on women’s health products. Its diverse equipment portfolio can be used for multiple purposes, ranging from diagnosis to treatment. The company operates through four segments – Diagnostics, Breast Health, GYN Surgical and Skeletal Health. HOLX has an international supply chain facilitated through direct sales, service forces and independent distributors.

HOLX acquired two companies – Biotheranostics and SOMATEX — in the first week of January, for a combined  $294 million. While Biotheranostics is a leading company in the field of molecular tests and breast cancer detection, SOMATEX specializes in Biopsy site markers and localization technology. These acquisitions should allow HOLX to expand its range of specialty treatments, which will attract higher volumes of customers.

On December 1, the company received FDA approval for its proprietary Genius AI technology for cancer detection. This allows HOLX to market its breakthrough product across the United States and thereby enhance its revenues.

HOLX has gained 74.1% over the past three years owing to its impressive revenue and earnings growth. Its revenues have increased at a CAGR of 7.3% over the past three years, while its EPS has grown at 16.8% over the same period. The company’s net income has increased at a CAGR of 13.9% over the past three years.

HOLX’s revenue has increased 55.6% year-over-year to $1.35 billion in the fiscal fourth quarter ended September 26, 2020. This can be attributed to a 72.5% increase in organic revenues. Its gross margin has improved 4040 basis points from the prior-year quarter to 69.2%, while its non-GAAP EPS has risen 218.5% from the year-ago value to $2.07.

The consensus revenue estimate of $2.17 for the fiscal first quarter ended December 31, 2020 indicates a 255.7% improvement year-over-year. Analysts expect HOLX’s revenue to rise 37% in 2021.

HOLX has gained more than 185% since hitting its 52-week low of $26.49 in March. The stock hit its 52-week high of $81.80 on January 8.

How does HOLX stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

B for Peer Grade

B for Industry Rank

A for Overall POWR Rating.

The stock is also ranked #14 of 185 stocks in the Medical – Devices & Equipment industry.

PTC Inc. (PTC)

PTC is a global software and services company operating through two segments – Software Products and Professional Services. The company specializes in a suite of Internet of Things (IoT) services, comprising computer-aided design modelling and product and service lifecycle management solutions. PTC was named a leader in the Industrial IoT platforms category by Gartner Magic Quadrant in November last year,

On December 14, PTC acquired Software-as-a-Service platform Arena Solutions Inc. for $175 million. This acquisition should allow the company to gain further exposure to the SaaS market, aligning with its long-term objective of emerging as an industry leader.

In October last year, the company cemented its strategic alliance with Rockwell Automation. With the companies having similar digital transformation goals, this collaboration should streamline their operations, allowing them to grow substantially over a short period.

PTC has gained 88.3% over the past three years. This can be attributed to its surging revenues, which increased at a CAGR of 7.8% over the same period. The company’s EPS and net income has increased at CAGRs of 181.9% and 175.7%, respectively, over the past three years.

PTC’s annual recurring revenues have increased 14% year-over-year to $1.27 billion for the year ended September 30, 2020. Its revenues have increased 17% year-over-year to $391 million in the fiscal fourth quarter ended September 30, 2020. Net income has grown 443.5% from the prior-year quarter to $53.41 million, while its EPS has improved 411.1% from the same period last year to $0.46 over the three-month period.

The consensus EPS estimate of $0.65 for the fourth quarter ended December 31, 2020 indicates a 14% rise year-over-year. Moreover, PTC beat the Street’s EPS estimates in each of the trailing four quarters, which is impressive. The consensus revenue estimate of $382.33 million for the about to be reported quarter indicates an 11.7% improvement from the same period last year.

PTC has gained more than 180% since hitting its 52-week low of $43.90 in March. The stock hit its 52-week high of $130.95 on January 12.

It is no surprise that PTC is rated “Strong Buy” in our POWR Ratings system, with an “A” for Trade Grade, Buy & Hold Grade and Peer Grade, and a “B” for Industry Rank. In the 115-stock Software – Application industry, PTC is currently ranked #6.

PAR Technology Corporation (PAR)

PAR is a systems and services provider for the hospitality industry, operating in two segments – Hospitality and Government. It offers point-of-sale (POS) services, enterprise software applications and business intelligence services as well as associated hardware for the hospitality industry. Moreover, the company provides a wide range of technical services for the Department of Defense and other federal agencies through its ‘Government’ segment.

On January 12, ParTech, Inc., a wholly owned subsidiary of PAR, was recognized as a leading provider of POS software and integrated technology solutions in the restaurant industry. This recognition was provided by IDC MarketScape: Worldwide Point-of-Sale Application of Quick-Service/ Fast Casual Restaurants 2020-21.

Moreover, PAR was selected as the main service provider for CKE Restaurants and the Boston market. This reflects the company’s popularity in the hospitality restaurant sector, as well as giving substance to  its earnings and revenue growth potential.

PAR’s revenues have increased 20.7% year-over-year to $54.80 million in the third quarter ended September 30, 2020. Gross margin has improved 29.7% from the same period last year to $11.67 million. The company’s total assets have risen at a CAGR of 24.6% over the past three years.

Analysts expect PAR’s EPS to rise 37.1% in the fourth quarter (ended December 31, 2020) and 61.6% in fiscal 2021. The consensus revenue estimate of $57.57 million for the about-to-be reported quarter indicates an 8.8% rise from the same period last year.

PAR has gained more than 610% since hitting its 52-week low of $9.64 in March. The stock hit its 52-week high of $70.18 on January 14.

PAR’s POWR Ratings reflect this promising outlook. It has a “Strong Buy” rating with an “A” for Trade Grade and Buy & Hold Grade. It is currently ranked #14 of 81 stocks in the Technology – Services industry.

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HOLX shares were trading at $75.99 per share on Tuesday afternoon, down $0.11 (-0.14%). Year-to-date, HOLX has gained 4.34%, versus a 1.28% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

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