The major stock market indexes ended in the green last week despite COVID-19 omicron-related fears and high inflation concerns. According to the Bureau of Labor Statistics data, consumer price inflation rose by 6.8% in November 2021. Investors also expect a sooner than expected interest rate rise by the Fed in the near term. However, U.S. jobless claims recently declined to a 52-year low.
JPMorgan Chase & Co. (JPM) provided a positive outlook for 2022. JPM Global Research Leader Marko Kolanovic said, “Our view is that 2022 will be the year of a full global recovery, an end of the pandemic, and a return to normal economic and market conditions we had prior to the COVID-19 outbreak.” And according to a Factset report, a record-high net profit margin is expected in 2022. Amid this backdrop, investors’ interest in the growth stocks has been growing, as is evident in the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 3.2% returns over the past month compared to the SPDR S&P 500 Trust ETF’s (SPY) 1.5% gains over the same period.
So, we think it could be wise to bet on fundamentally sound large-cap stocks Intuit Inc. (INTU), Starbucks Corporation (SBUX), The TJX Companies, Inc. (TJX), and Align Technology, Inc. (ALGN), given their solid growth attributes.
Intuit Inc. (INTU)
INTU in Mountain View, Calif., provides financial management and compliance products and services. The company operates through three segments: small business & self-employed; consumer; and strategic partner. In addition, it provides TurboTax, QuickBooks, Mint, Credit Karma, and Mailchimp. It has a $191.97 billion market capitalization. On November 1, 2021, INTU announced the acquisition of Mailchimp, which provides a customer engagement and marketing platform for growing small- and mid-market businesses. INTU and Mailchimp are expected to work together to deliver innovation and help tackle challenges small- and mid-market companies face.
INTU’s non-GAAP revenue for its fiscal first quarter, ended October 31, 2021, increased 51.7% year-over-year to $2 billion. The company’s non-GAAP operating income increased 66% year-over-year to $555 million, while its non-GAAP EPS came in at $1.53, up 63% year-over-year. Its revenue and EPS have increased at CAGRs of 18.9% and 13.5%, respectively, over the past three years.
Analysts expect INTU’s EPS for the quarter ending January 31, 2022, to increase 177.9% year-over-year to $1.89. Its revenue for its fiscal year 2022 is expected to increase 27.4% year-over-year to $12.27 billion. Over the past year, the stock has gained 87% to close Friday’s trading session at $677.95.
INTU’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Sentiment and Quality and a B grade for Growth. It is ranked #19 out of the 168 stocks in the Software – Application industry. Click here to check the other ratings of INTU for Value, Momentum, and Stability.
Starbucks Corporation (SBUX)
With a market capitalization of $136.94 billion, Seattle, Wash.-based SBUX operates 33,000 stores as a premier roaster, marketer, and retailer of specialty coffee worldwide. The company operates in three segments: Americas; International; and Channel Development. In addition, it offers coffee and tea beverages, roasted whole bean and ground coffees, single-serve and ready-to-drink drinks, iced tea, and various food products.
On November 18, 2021, SBUX announced the opening of its new store in collaboration with Amazon Go in New York. The new store has integrated the digital and physical retail experience for its customers by bringing together the comfort of an SBUX café and the convenience of Amazon Go’s ‘Just Walk Out’ shopping experience. With more store openings planned in 2022, this is expected to help expand the company’s reach.
For the fiscal fourth quarter, ended October 3, 2021, SBUX’s revenues increased 31.3% year-over-year to $8.14 billion. Its non-GAAP operating income increased 95.3% year-over-year to $1.59 billion, while its non-GAAP EPS came in at $1, up 96.1% year-over-year. Its revenue and EPS have increased at CAGRs of 5.5% and 3%, respectively, over the past three years.
For the quarter ending December 31, 2021, SBUX’s EPS and revenue are expected to increase 29.5% and 15.2%, respectively, year-over-year to $0.79 and $7.98 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 10.7% in price over the past year to close Friday’s trading session at $116.73.
It is no surprise that SBUX has an overall B rating, which equates to a Buy in our proprietary rating system. The stock has an A grade for Quality and a B grade for Sentiment. It is ranked #9 out of 45 stocks in the B-rated Restaurants industry. Click here to see the additional POWR ratings for SBUX (Value and Stability).
The TJX Companies, Inc. (TJX)
Framingham, Mass.-based TJX is an off-price and home fashions retailer. The company operates in Marmaxx; HomeGoods; TJX Canada; and TJX International segments. It sells family apparel, fine jewelry, accessories, home fashions like home basics, furniture, rugs, lighting products, and tabletop. It has a market capitalization of $89.14 billion.
On November 17, 2021, TJX announced that it was well-positioned to capitalize on the holiday season’s demand as the supply of products remained steady with gradual supply debottlenecking. Its CEO, Ernie Herrman, said, “We are in an excellent inventory position, with most of the product needed for the holiday season either on hand or scheduled to arrive at our stores and online in time for the holidays.”
TJX’s net sales for its fiscal third quarter, ended October 30, 2021, increased 20% year-over-year to $12.50 billion. The company’s net income increased 18% year-over-year to $1.02 billion. Also, its EPS increased 18.3% year-over-year to $0.84. Its revenue and total assets have increased at CAGRs of 5.5% and 26%, respectively, over the past three years.
TJX’s EPS and revenue for its fiscal 2022 is expected to increase 858.1% and 52%, respectively, year-over-year to $2.97 and $48.84. It has surpassed consensus EPS estimates in three of the trailing four quarters. Over the past six months, the stock has gained 15.3% in price to close Friday’s trading session at $74.73.
TJX’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to a Buy in our proprietary rating system. It has an A grade for Sentiment and a B grade for Growth and Quality.
Align Technology, Inc. (ALGN)
ALGN is a medical device company with a market capitalization of $52.68 billion. The San Jose, Calif.-based company designs, manufactures, and markets Invisalign clear aligners and iTero intraoral scanners and services for orthodontists, general practitioner dentists, and restorative and aesthetic dentistry. It operates in the Clear Aligner and Scanners and Services segments.
On October 28, 2021, ALGN announced the findings of a multi-center clinical study. Yuvaf Shaked, senior VP and MD of iTero scanner and services business, ALGN, said, “When combined with the ease of use and comfortable experience for a broad population of patients, the iTero 5D imaging system with NIRI technology is an essential tool for any doctor’s office.”
For its fiscal third quarter, ended September 30, 2021, ALGN’s revenues increased 38.4% year-over-year to $1.01 billion. The company’s non-GAAP net income came in at $228.57 million, up 28.5% year-over-year. Its non-GAAP EPS increased 27.5% year-over-year to $2.87. And its revenue and EPS have increased at CAGRs of 26.5% and 34.3%, respectively, over the past three years.
Analysts expect ALGN’s EPS and revenue for its fiscal 2021 to increase 111.6% and 59.6%, respectively, year-over-year to $11.11 and $3.95 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 31.4% in price over the past year to close Friday’s trading session at $668.12.
ALGN’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. It has a B grade for Sentiment and Quality. Within the Medical – Devices & Equipment industry, it is ranked #41 out of 170 stocks. Click here to see the other ratings of ALGN for Growth, Value, Momentum, and Stability.
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INTU shares were trading at $680.87 per share on Monday morning, up $2.92 (+0.43%). Year-to-date, INTU has gained 80.46%, versus a 26.60% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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