4 Growth Stocks to Buy on Dips This Month

NASDAQ: MSFT | Microsoft Corp. News, Ratings, and Charts

MSFT – Growth stocks are experiencing a correction after a blistering rally over the past year. This is in-part because some investors are now rotating away from overvalued growth stocks and into value stocks with the expectation of an economic recovery. However, because pandemic-driven trends are expected to continue for the foreseeable future, there is little reason to believe that growth stocks will underperform in the future. So, this may be a good time to bet on fundamentally sound growth stocks at a discount. Microsoft Corporation (MSFT), Amazon.com, Inc. (AMZN), Facebook, Inc. (FB), and Broadcom, Inc. (AVGO) are companies that look highly promising thanks to their growth metrics and innovative product portfolios.

Growth stocks have delivered high returns over the past year as evidenced by the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 35.6% gains over this period. But the ETF has lost 5.8% over the past month versus the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 4.3% gain. This indicates that some investors are rotating away from expensive growth stocks and into solid bargains with the expectation that an impending economic recovery will help these stocks their fair values quickly.

A broader market correction is long overdue given the solid price run up since the mid-March 2020 market correction. However, strong fundamentals and high earnings indicate that investors should buy the dip. Several blue-chip growth companies have by now reported earnings for the December quarter, and most of them have either met or beaten expectations.

Microsoft Corporation (MSFT), Amazon.com, Inc. (AMZN), Facebook, Inc. (FB), and Broadcom, Inc. (AVGO) are four companies that are experiencing  price dips lately. But looking at their strong past performance and strong business models, we think investors should take advantage of the lower prices of their stocks.

Microsoft Corporation (MSFT)

MSFT needs no introduction. In addition to the Windows operating system and Office suite of products, the company also provides cloud computing services through Microsoft Azure. MSFT has gained 43.3% over the past year to close Friday’s trading session at $231.60. However, the stock is down 4.4% over the past month.

MSFT recently released its Group Transcribe app, which delivers real-time translation and transcription for in-person meetings. MSFT has also released a slew of new updates to its Azure IaaS service, including easier acquisition of computing capacity, greater options to increase edge and hybrid deployments, and new features for Linux environments.

MSFT’s trailing-twelve-month revenue has grown at  a CAGR of 11.7% over the past five years. The company’s trailing-twelve-month EBITDA grew at a CAGR of 19.3% over the past three years.

MSFT is expected to see a revenue growth of 17.2% for the quarter ended March 31, 2021 and 14.8% in 2021. The company’s EPS is estimated to grow 28.5% in 2021 and at a rate of 16.7% per annum over the next five years.

MSFT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

It has an A  grade  for Sentiment and B for Quality, Stability, and Momentum. In the Software – Application industry, it is ranked #11 of 112 stocks.

In total, we rate MSFT on eight different levels. Beyond what we stated above we have also  given MSFT grades for Value and Growth. Get all the MSFT ratings here.

Amazon.com, Inc. (AMZN)

In addition to running the world’s largest e-commerce marketplace, AMZN also develops and sells Kindle readers, Fire tablets, Fire phones, and more. The company also provides cloud computing services through Amazon Web Services (AWS). AMZN has returned 57.8% over the past year, but it declined 10.5% over the past month to close Friday’s trading session at $3000.46.

AMZN  recently acquired 11 aircraft to expand its transportation fleet. The company now has a mixture of owned and leased aircraft to power its r delivery services. And it has announced that it  will be opening two new fulfillment centers and one new delivery station in San Antonio, Texas.

The company’s trailing-twelve-month revenue grew at a CAGR of 29.3% over the past five years. AMZN’s trailing-twelve-month EBITDA grew at a CAGR of 45.7% over the past three years.

AMZN is expected to see  revenue growth of 38.4% for the quarter ended March 31, 2021 and 22.8% in 2021. Its  EPS is estimated to grow 14% in 2021 and 38.4% per annum over the next five years.

It’s no surprise that AMZN has an overall rating of B, which equates to Buy in our POWR Ratings system. AMZN has a B grade  for Growth, Quality, and Sentiment. In the 68-stock Internet industry, it is ranked #8.

Click here to see the additional POWR Ratings for AMZN (Value, Stability, and Momentum).

Facebook, Inc. (FB)

FB is one of the world’s largest social media companies. The company owns, runs, and operates Facebook, Instagram, and WhatsApp. It is also involved in virtual reality through its Oculus VR headset. FB’s stock has returned 45.9% over the past year and its last closing price was $264.28. The stock has lost 7.5% over the past three months.

FB  recently launched video- and voice-calling features on its WhatsApp desktop app. The company has also released Live Rooms on Instagram, which allows up to three people to go live on Instagram.

The company’s trailing-twelve-month revenue has grown  at a CAGR of 36.8% over the past five years. Its  trailing-twelve-month EBITDA grew at a CAGR of 19.4% over the past three years.

FB is expected to see a revenue growth of 1.7% for the quarter ended March 31, 2021 and 10.1% in 2021. The company’s EPS is estimated to grow 12.2% in 2021 and 21.5% per annum over the next five years.

FB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary ratings system. FB has an A  grade  for Quality and B for both Momentum and Sentiment. In the 68-stock Internet industry, it is ranked #3.

Beyond what we’ve stated above we have also given FB grades for Stability, Growth, and Value. Get all the FB ratings here.

Broadcom, Inc. (AVGO)

AVGO develops and markets a wide range of solutions for semiconductor connectivity. The company’s products find application in the home connectivity, data center, and smartphone industries. AVGO’s stock has gained 67.1.1% over the past year but lost 3.4% over the past month to close the last trading session at $450.14.

AVGO’s BCM4389 chip is used to power the world’s first Wi-Fi 6E phone—the Samsung Galaxy S21 Ultra. This new chip enables wi-fi speeds of more than 2 GBPS. The company is also working on expanding the reach of its global cyber security aggregator program (CSAP).

AVGO’s  trailing-twelve-month revenue grew at a CAGR of 28.8% over the past five years. Its  trailing-twelve-month EBITDA grew at a CAGR of 13.5% over the past three years.

AVGO is expected to see  revenue growth of 13.9% for the quarter ended April 30, 2021 and 12.1% in 2021. The company’s EPS is estimated to grow 20.1% in 2021 and 8.6% per annum over the next five years.

It’s no surprise that AVGO has an overall rating of B, which equates to Buy in our POWR Ratings system. AVGO has a B grade for Growth, Momentum, Stability, and Sentiment. In the B-rated Semiconductor & Wireless Chip industry, it is ranked #8 of 99 stocks.

Click here to see the additional POWR Ratings for AVGO.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

 

Note that AVGO is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.

Want More Great Investing Ideas?

“MUST OWN” Growth Stocks for 2021

How to Ride the 2021 Stock Market Bubble

5 WINNING Stocks Chart Patterns

K.I.S.S. for the March Stock Market

 


MSFT shares were trading at $231.10 per share on Monday morning, down $0.50 (-0.22%). Year-to-date, MSFT has gained 4.14%, versus a 3.30% rise in the benchmark S&P 500 index during the same period.


About the Author: Aaryaman Aashind


Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...


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