TER: 3 Growth Stocks with Considerable Upside Potential

This year has been stellar for growth stocks which have outperformed the rest of the market. The SPDR Portfolio S&P 500 Growth ETF (SPYG), which represents the performance of US stocks exhibiting “growth” characteristics, has gained 27.2% year-to-date versus the SPDR S&P 500’s (SPY) 12.5% return.

This trend is likely to continue into 2021 as a coronavirus vaccine should hit the market by the middle of next year, which could lead to a rebound in demand for many industries.

High-growth companies like Teradyne, Inc. (TER - Get Rating), Ollie’s Bargain Outlet Holdings, Inc. (OLLI - Get Rating), and Sleep Number Corporation (SNBR - Get Rating) have been on a bullish trend so far this year based on their strong fundamentals. The stocks of these companies are expected to see further gains going into 2021.

Teradyne, Inc. (TER - Get Rating)

TER supplies automation solutions for conducting tests for industrial applications. The company’s automation solutions cover wireless products, semiconductors, data storage, and complex electronic instruments. TER’s stock has gained 61.8% so far this year.

TER’s subsidiary, Energid Technologies, has been selected by Schilling Robotics to help with the development of its new GEMINI ROV system. This move cements TER’s position as a leader in robotics testing and development solutions providers.

TER’s revenue grew at a CAGR of 12.9% over the last five years. The company’s EBITDA grew at a CAGR of 17.6% over the last three years. The company’s revenue growth for the quarter that ended December 2020 is expected to be 9.1%, and 5.2% for 2021. TER’s EPS growth is estimated to be 7.6% in 2021 and 23.5% per annum over the next five years.

How does TER stack up for the POWR Ratings?

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A for Trade Grade

A for Buy & Hold Grade

A for Peer Grade

A for Industry Rank

A for Overall POWR Rating

The stock is also ranked #18 out of 86 stocks in the Semiconductor & Wireless Chip industry.

Ollie’s Bargain Outlet Holdings, Inc. (OLLI - Get Rating)

OLLI is a specialty retailer that offers excess inventory in various categories. The company’s offerings include food, books, houseware, hardware, toys, and more. OLLI’s stock has gained 34.8% so far this year.

OLLI recently announced a national partnership with Toys for Tots to serve as the official drop-off location where people can donate cash or toys in the run-up to Christmas. OLLI also announced a national partnership with Miracle Network Hospitals. Funds raised by OLLI will go to benefit 78 local CMN hospitals. These moves will help OLLI build goodwill in the community, along with creating brand awareness.

OLLI’s revenue grew at a CAGR of 18.6% over the last five years. The company’s EBITDA grew at a CAGR of 25.8% over the last three years. OLLI’s revenue is expected to see growth of 19.2% for the quarter ending January 2021 and 27% for 2021. The company’s EPS is estimated to grow 55.1% for 2021 and at a rate of 18.6% per annum over the next five years.

In our POWR Ratings system, OLLI has a grade of “B” in Trade Grade. In the 36-stock Specialty Retailers industry, it is ranked #20.

Sleep Number Corporation (SNBR - Get Rating)

SNBR provides sleep-related solutions and services. The company designs, manufactures, and markets mattresses, pillows, sheets, and other related products. SNBR’s stock has gained 40.9% so far this year.

The company recently announced a slew of innovations for its 360 Smart Beds. These innovations include a Heart Rate Variability measuring feature, monthly Sleep Wellness Reports, and Sleep Circadian Insights. These moves will help the company retain its leadership position in the smart bed and sleep solutions market.

SNBR’s revenue grew at a CAGR of 5.5% over the last five years. The company’s EBITDA grew at a CAGR of 11.7% over the last three years. SNBR’s revenue growth is expected to be 2.9% for the quarter ending March 2021, and 3.2% in 2021. The company’s EPS growth is estimated to be 0.5% in 2021 and 18.5% per year over the next five years.

SNBR’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” for Trade Grade and Buy & Hold Grade. It is ranked #18 out of 69 stocks in the Home Improvement & Goods industry.

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TER shares were trading at $113.11 per share on Tuesday morning, up $2.77 (+2.51%). Year-to-date, TER has gained 66.73%, versus a 15.68% 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...