With surging COVID cases, a contested election, and a temporarily halted stimulus plan, the markets continue to provide uncertainty to investors. While we received positive news on the vaccine front from Pfizer (PFE) and BioNTech (BNTX) last week and Moderna (MRNA) today, vaccination of the public remains far off. Amid this uncertainty, I have four growth stocks that should perform well in the current environment.

Most growth stocks have already performed well this year, with the SPDR S&P 500 Growth ETF (SPYG) up 27.8% year to date. But with the recent volatility, it’s tough to find stocks that investors can feel comfortable with. That’s why I suggest looking at the so-called “Safe Stocks.” These are stocks with healthy balance sheets, a long history of outperforming the market, and low beta. Beta is a measure of a stock’s volatility compared to the market. 

I further filtered this list only to include companies with a strong history of growth. I’ve chosen four stocks from that list that I have high conviction due to current and long-term growth drivers. This includes Thermo Fisher Scientific Inc (TMO), Dollar General Corporation (DG), STERIS plc (STE), and PerkinElmer, Inc. (PKI).

Thermo Fisher Scientific Inc (TMO)

TMO sells scientific instruments and laboratory equipment, diagnostics consumables, and life science reagents. The company had a strong quarter, beating expectations in both earnings and revenue. Earnings were up 91.5% year over year, and revenue was up 31.6%. TMO has been benefiting through its pandemic response.

In addition to its testing products, the company is manufacturing enzymes and nucleotides for vaccine production and developing a product to isolate mRNA, which is an essential tool for producing mRNA-based therapies. Both the PFE and BNTX vaccine and the MRNA vaccine are based on mRNA.

TMO also sees strong growth in its Life Sciences Solutions and Specialty Diagnostics segments. The company’s dual growth strategy of investing heavily in internal innovation and pursuing mergers and acquisitions bodes well for the future.

The company, which has a beta of 0.73 and a current ratio of 2.9, is rated a “Buy” in our POWR Ratings system. It holds a grade of “A” for Trade Grade and Peer Grade, and a “B” for Buy & Hold Grade and Industry Rank. The stock is also ranked #9 in the Medical – Diagnostics/Research industry.

Dollar General Corporation (DG)

DG is a great stock to hold during recessions due to its low-cost must-have products. The stock, which is up 37.7% year to date, soared earlier this year as consumers stocked up on products during the lockdown. While many retailers struggled during the initial lockdown, DG performed well due to its product staples, low prices, and convenient locations.

This makes DG a perfect stock for uncertain times. The company is looking to grow even more by launching new stores and improving its existing stores’ profitability. Plus, DH recently announced a new store concept, popshelf, that targets consumers with higher household incomes. The stores will include seasonal and home décor, health and beauty products, home cleaning supplies, party goods, and more, with 95 percent of items priced at $5 or less.

DG has a strong history of both earnings and revenue growth. Sales have increased 14.8 over the past year, while EPS grew 44%. The company is expected to release its latest financial results next month. With an expansion into e-commerce such as pickup, DG is well-positioned to take its competitors’ market share.

The stock, which has a beta of 0.50, is rated a “Strong Buy” in our POWR Ratings system. It holds a grade of “A” in three out of the four components that make up the POWR ratings, including Trade Grade, Buy & Hold Grade, and Industry Rank. The fourth component, Peer Grade is a “B.” DG is ranked #4 in the Grocery/Big Box Retailers industry.

STERIS plc (STE)

STE is a U.K.-based medical device company focused on sterilization services and infection prevention. The company is considered a global leader in contract sterilization services, which ensures the safe delivery of single-use and implantable medical equipment to hospitals worldwide. The company reported its latest financial results earlier this month. Both sales and EPS came in ahead of estimates.

The firm saw strong revenue growth across its Life Sciences and Applied Sterilization Technologies segments. The Life Sciences segment, in particular, rose 16%. The acquisition of outsourced sterilization services provider Synergy Health made STE the global leader in infection prevention and sterilization. STE recently announced it is acquiring Key Surgical. This will help expand the company’s lineup of infection prevention products, which includes surgical masks.

As the bulk of the company’s revenue is from the healthcare and pharmaceutical industries, STE is poised to gain from an aging population. An increasing number of people will be spending more on healthcare in the years to come. The firm has a strong history of EPS growth, with earnings up an average of 43.1% over the past three years.

STE is rated a “Strong Buy” in our POWR Ratings system. It has a grade of “A” in Trade Grade, Buy & Hold Grade, and Peer Grade, and a “B” for Industry Rank. The company is the #8 ranked stock in the Medical – Devices & Equipment industry.

PerkinElmer, Inc. (PKI)

PKI provides instruments, consumables, and services to the pharmaceutical, biomedical, chemical, environmental, and general industrial markets. The company, which reported earnings last month, saw its EPS come in ahead of estimates and up 97.2% year over year. PKI exhibited strong growth in its core Diagnostics segment.

PKI has benefited from the pandemic due to an increased demand in testing. The company is seeing modest growth in the United States and strong growth in Europe. Acquisitions and partnerships have been key key drivers for the company. PKI recently acquired DANI Instruments, which should help accelerate workflow solutions in the food, pharmaceuticals, and environmental markets.

Its buyout of Meizheng Group, a leading food safety testing company in China, should strengthen its food safety abilities in emerging markets. Future growth will most likely be driven by pregnancy diagnostics, as PKI is a leader in reproductive screening.

The company has a strong history of growth, a healthy balance sheet, and a beta of 0.72. PKI is rated a “Buy” in our POWR Ratings system. It holds a grade of “A” in Trade Grade and Peer Grade, and a “B” in Buy & Hold Grade and Industry Rank.  

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TMO shares fell $0.79 (-0.16%) in after-hours trading Monday. Year-to-date, TMO has gained 48.34%, versus a 14.27% rise in the benchmark S&P 500 index during the same period.

About the Author: David Cohne

David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More...

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