Many investors jumped out of expensive growth stocks and into quality cyclical stocks earlier this year to capitalize on the economic recovery. But investors’ interest in growth stocks has been returning lately. This is evidenced by the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 5.4% returns over the past month versus  the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 1.7% loss and the SPDR S&P 500 Trust ETF’s (SPY) 1.9% gains over the same period. People’s gradual return to “analog” lifestyles as COVID-19 restrictions are removed, along with continued fiscal and monetary policy support for economies, should help many stocks generate solid growth in the coming quarters.

The Fed has said that it expects to make at least two interest rate hikes in late 2023 but has left interest rates unchanged for now. Furthermore, the Conference Board expects U.S. real GDP growth to be 6.6% in 2021. These factors should bode well for growth-focused stocks.

So, we think it could be wise to bet now on PetroChina Company Limited (PTR), Starbucks Corporation (SBUX), and Vale S.A. (VALE). Each has solid growth prospects.

PetroChina Company Limited (PTR)

Headquartered in Beijing, China, PTR does business in a range of petroleum-related products, services, and activities internationally. The company has a total of 31,151 km of pipelines that includes 22,555 km of natural gas pipelines, 7,190 km of crude oil pipelines, and 1,406 km of refined product pipelines. It is a subsidiary of China National Petroleum Corporation.

The company’s operating income increased 16.3% year-over-year to ¥551.92 billion ($85.43 billion) for its  fiscal first quarter, ended March 31, 2021. Its operating income was ¥44.15 billion ($6.83 billion) compared to a ¥9.25 billion ($1.43 billion) operating loss in the prior-year period. Its net income came in at ¥31.64 billion ($4.90 billion) versus a ¥13.35 billion ($2.07 billion) net loss in the year-ago period. Its EPS was ¥0.15 ($0.02) compared to a loss per share of ¥0.09 ($0.01) in the prior-year period. Its EPS and net income have increased at CAGRs of 32.7% and 32.2%, respectively, over the past three years.

Analysts expect PTR’s EPS and revenue to increase 245.5% and 34.7%, respectively, year-over-year to $5.01 and $377.55 billion in its fiscal year 2021. The stock has gained 61.7% over the past nine months to close yesterday’s trading session at $49.03.

PTR’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. It has an A grade for Growth, and a B grade for Value, Stability, and Sentiment.

Click here to see the additional POWR Ratings for PTR (Momentum and Quality). PTR is ranked #1 of 50 stocks in the B-rated Foreign Oil & Gas industry.

Starbucks Corporation (SBUX)

World renowned SBUX operates as a roaster, marketer, and retailer of specialty coffee. The Seattle, Wash., company operates through three segments: Americas; International; and Channel Development. It operates roughly 32,000 stores and offers its products under the Starbucks, Teavana, Seattle’s Best Coffee and Evolution Fresh brand names.

Last month, SBUX announced  in partnership with Caribbean Coffee Traders Limited, it will open its first location in Barbados this year, bringing its unique Starbucks Experience to local customers for the first time.

The company’s revenue surged 11.2% year-over-year to $6.67 billion for its fiscal second quarter, ended March 28, 2021. Its non-GAAP operating income grew 94.1% year-over-year to $1.07 billion. Its net earnings came in at $659.40 million, which represents a 100.8% year-over-year increase. SBUX’s non-GAAP EPS was  $0.62, up 93.8% year-over-year. Its total assets have increased at a 17.4% CAGR over the past three years. Also, its revenue has increased at a 3.4% CAGR  over the past five years.

For the quarter ended June 30, 2021, analysts expect SBUX’s EPS to be  $0.77, representing a 267.4% year-over-year increase. It has surpassed  consensus EPS estimates in each of the trailing four quarters. Its revenue is expected to increase 31.4% year-over-year to $8.15 billion for the quarter ending September 30, 2021. The stock has rallied 52.8% over the past year to close yesterday’s trading session at $111.81.

It’s no surprise that SBUX has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock has a B grade for Growth, Momentum, Sentiment, and Quality.

Click here to see SBUX’s ratings for Value and Stability as well. SBUX is ranked #6 of 45 stocks in the A-rated Restaurants industry.

Vale S.A. (VALE)

Based in Rio de Janeiro, Brazil, VALE produces and sells iron ore and iron ore pellets for use as raw materials in steelmaking. The company’s segments include ferrous minerals, base metals, and coal. It also offers platinum group metals.

VALE announced a CAD$150 million ($121.1 million) investment to extend its  mining activities in Thompson, Manitoba by 10 years. The company’s North Atlantic Base Metals operations’ COO, Dino Otranto said, “This $150M investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations.”

VALE’s net operating revenue increased 81.4% year-over-year to $12.64 billion for the first quarter, ended March 31, 2021. Its adjusted EBITDA grew 189.7% year-over-year to $8.35 billion. Its net income increased 3,301.9% year-over-year to $5.48 billion. The company’s EPS was $1.09, up 2,080% year-over-year. Its EPS and revenue have increased at CAGRs of 48.4% and 31%, respectively, over the past three years.

The company’s EPS and revenue are expected to increase 508.7% and 115.5%, respectively, year-over-year to $1.40 and $16.2 billion for the quarter ended June 30, 2021.The stock has gained 123.3% over the past year to close yesterday’s trading session at $22.81.

VALE’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary ratings system. The stock has an A grade for Growth and Quality, and a B grade for Value, Momentum, and Sentiment.

Within the Industrial – Metals industry, VALE is ranked #2 of 42 stocks. To see more of VALE’s component grades, click here.

Note that VALE is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.

Click here to check out our Industrial Sector Report for 2021

PTR shares were trading at $50.80 per share on Thursday morning, up $1.77 (+3.61%). Year-to-date, PTR has gained 69.65%, versus a 15.59% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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