Despite witnessing two consecutive quarters of economic contraction, slightly cooled-off inflation, strong job growth, and improved consumer sentiment have renewed investors’ confidence in the market. However, as these factors might prompt the Fed to maintain its hawkish stance, the market could remain volatile in the near term.
Regardless of the macroeconomic uncertainties, substantial government investments and increased focus on domestic production should benefit growth-focused companies. Investors’ interest in growth stocks is evident from the Vanguard Growth ETF’s (VUG) 15.2% gains over the past month versus SPDR S&P 500 Trust ETF’s (SPY) 11.4% returns.
Therefore, Broadcom Inc. (AVGO), Coca-Cola Consolidated, Inc. (COKE), Pilgrim's Pride Corporation (PPC), Modine Manufacturing Company (MOD), and Friedman Industries, Incorporated (FRD), which possess solid growth attributes, could be ideal additions to one’s portfolio now.
Broadcom Inc. (AVGO)
AVGO designs, develops, and supplies a range of analog and digital semiconductor connectivity solutions and infrastructure software solutions. It develops semiconductor devices, focusing on complex digital and mixed-signal complementary metal-oxide-semiconductor-based devices and analog III-V-based products.
Its products include data center networking, home connectivity, broadband access, telecommunications equipment, smartphones, and base stations.
On May 26, 2022, AVGO announced the acquisition of VMware, Inc. (VMW), a cloud computing and virtualization technology company that virtualizes the x86 architecture, in a cash-and-stock transaction of approximately $61 billion and will assume $8 billion of VMW’s net debt.
AVGO’s Broadcom Software Group will rebrand and operate as VMware, incorporating its existing infrastructure and security software solutions and helping accelerate the company’s growth opportunities. This should add approximately $8.5 billion of pro forma EBITDA from the acquisition within three years post-closing.
For its fiscal 2022 second quarter ended May 1, 2022, AVGO’s net revenue increased 22.6% year-over-year to $8.10 billion. The company’s non-GAAP gross profit came in at $6.19 billion for the quarter, up 24.9% from the prior-year period. Its non-GAAP operating income came in at $4.94 billion, representing a 29.9% rise from the prior-year period.
While its non-GAAP net income increased 34.2% year-over-year to $4 billion, its non-GAAP EPS increased 37% to $9.07. As of May 1, 2022, the company had $9.01 billion in cash and cash equivalents.
Analysts expect an EPS estimate of $36.94 for fiscal 2022 ending October 31, 2022, indicating a rise of 31.9% from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive.
The consensus revenue estimate of $32.90 billion for the same fiscal year represents a 19.9% year-over-year improvement. Its EPS is expected to grow at a rate of 13.6% per annum over the next five years.
AVGO’s EBIT grew 72% over the past year, 195.9% above the industry average of 24.3%. Its ROE growth of 94.9% over the past year is 606.7% higher than the 13.4% industry average. Over the past week, the stock has gained 1.6% to close the last trading session at $558.96.
AVGO’s POWR Ratings reflect this promising outlook. It has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Growth and Quality and a B for Sentiment. Click here to see the additional ratings for AVGO’s Stability, Value, and Momentum. AVGO is ranked #4 of 95 stocks in the B-rated Semiconductor & Wireless Chip industry.
Coca-Cola Consolidated, Inc. (COKE)
COKE and its subsidiaries manufacture, market, and distribute nonalcoholic beverages, primarily products of The Coca-Cola Company (KO) in the United States. It also distributes products for various other beverage brands, including Dr Pepper and Monster Energy.
It distributes its products directly to grocery stores, mass merchandise stores, club stores, convenience stores, drug stores, restaurants, and vending machine outlets.
COKE’S net sales for its fiscal 2022 second quarter ended July 1, 2022, increased 11.3% year-over-year to $1.60 billion. The company’s adjusted gross profit came in at $564.41 million, up 14.1% from the prior-year period. Its adjusted income from operations came in at $160.08 million for the quarter, indicating a 32.6% rise from the year-ago period.
COKE’s adjusted net income came in at $112.21 million, representing a 35.9% year-over-year improvement. Its adjusted EPS grew 36% from the year-ago period to $11.97. The company had $188.80 million in cash and equivalents as of July 1, 2022.
Analysts expect the company’s EPS to come in at $36.66 for its fiscal 2022 ending December 31, 2022, representing a 13.9% rise from the prior-year period. It surpassed Street EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $5.93 billion for the same fiscal year represents a 6.5% year-over-year improvement.
Its EBITDA grew 13.4% over the past year, 276.1% above the industry average of 3.6%. Its 19.2% EBIT growth over the past year is 348.5% higher than the 4.3% industry average. Over the past week, the stock has gained 1.5% to close the last trading session at $506.79.
COKE’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Growth and a B for Value, Quality, Stability, and Sentiment. In addition to the POWR Ratings grades we have just highlighted, one can see COKE’s Momentum rating here. COKE is ranked #2 of 35 stocks in the A-rated Beverages industry.
Pilgrim's Pride Corporation (PPC)
PPC engages in the production, processing, marketing, and distribution of fresh, frozen, and value-added chicken and pork products internationally to retailers, distributors, and foodservice operators.
It sells its products to the foodservice market consisting of chain restaurants, food processors, broad-line distributors, and other institutions; and the retail market, comprising grocery store chains, wholesale clubs, and other retail distributors.
PPC’s net sales for its fiscal 2022 second quarter ended June 26, 2022, increased 27.3% year-over-year to $4.63 billion. The company’s gross profit came in at $676.77 billion, indicating a 78% rise from the prior-year period. Its operating income came in at $512.90 million for the quarter, compared to a loss of $123.13 million in the year-ago period.
PPC’s adjusted net income came in at $370.75 million, representing a 141% rise from the prior-year period. Its adjusted EPS rose 144.4% year-over-year to $1.54. As of June 26, 2022, the company had $682.13 million in cash and cash equivalents.
The consensus EPS estimate of $4.30 for fiscal 2022 ending December 31, 2022, indicates a 225.9% year-over-year improvement. It surpassed the consensus EPS estimates in three of the trailing four quarters.
Analysts expect PPC’s revenue to be $17.79 billion for the same fiscal year, representing a 20.4% rise from the prior-year period. Its EPS is expected to grow at a 17.2% rate per annum over the next five years.
PPC’s EBIT grew 313.9% over the past year, 7243.6% above the industry average of 4.3%. Its ROE growth of 82.7% is 3589.4% higher than the 2.2% industry average. Over the past week, the stock has gained 1.1% to close the last trading session at $30.25.
PPC’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Growth and a B for Value, Stability, Sentiment, and Quality. Click here to see the additional ratings for PPC’s Momentum. PPC is ranked #3 of 85 stocks in the B-rated Food Makers industry.
Modine Manufacturing Company (MOD)
MOD provides engineered heat transfer systems and components for on- and off-highway OEM vehicular applications. It operates through Climate Solutions; and Performance Technologies segments.
It serves construction architects and contractors, wholesalers of heating equipment, automobile, truck, bus, and specialty vehicle OEMs, agricultural, industrial, and construction equipment OEMs, heating, ventilation, and cooling OEMs, and commercial and industrial equipment OEMs.
On July 15, 2022, MOD commenced full-scale production of Airedale by Modine products that provide energy and water efficient cooling solutions for the data center market at their new production facility in Rockbridge, Virginia, and further confirmed a significant order with data center giant, Corscale, with plans for further business in the coming months. This will help companies deliver sustainability at scale for hyperscale operators and enterprise clients.
For its fiscal 2023 first quarter ended June 30, 2022, MOD’s net sales increased 9.4% year-over-year to $541 million. The company’s gross profit came in at $83.40 million, up 13.9% from the prior-year period. Its operating income came in at $25.60 million for the quarter, representing a 194.3% year-over-year improvement.
MOD’s net earnings came in at $14.30 million, up 521.7% from the prior-year period. Its adjusted EPS increased 60% year-over-year to $0.32. As of June 30, 2022, the company had cash and cash equivalents of $58.70 million.
Analysts expect the company’s EPS to come in at $1.61 for its fiscal 2023 ending March 31, 2023, representing a 30.9% rise from the prior-year period. It surpassed Street EPS estimates in three of the trailing four quarters.
The consensus revenue estimate of $2.29 billion for the same fiscal year represents an 11.6% year-over-year improvement. Its EPS is expected to grow at a rate of 8.9% per annum over the next five years.
The stock’s forward EBIT growth of 24.7% is 13.6% above the industry average of 21.6%. Over the past week, the stock has gained 5.6% to close the last trading session at $17.14.
MOD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Growth, Value, and Sentiment. Click here to see the additional ratings for MOD (Stability, Quality, and Momentum). MOD is ranked #5 of 68 stocks in the B-rated Auto Parts industry.
Friedman Industries, Incorporated (FRD)
FRD engages in steel processing, pipe manufacturing and processing, and the steel and pipe distribution businesses. The company operates in two segments: Coil and Tubular.
On May 2, 2022, FRD announced the acquisition of two high-quality, strategically located facilities from Plateplus, Inc., a hot-rolled steel coil, sheet, and plate supplier from five steel service centers. This would position FRD as a leading North American steel service center with highly efficient freight access, wide market reach, and processing capabilities.
For its fiscal 2022 fourth quarter ended March 31, 2022, FRD’s net sales increased 52.6% year-over-year to $75.09 million. The company had $2.60 billion in cash and cash equivalents as of March 31, 2022.
The stock’s EBIT grew 81.1% over the past year, 310.1% above the industry average of 19.8%. Its ROE growth of 12.2% is 72.6% higher than the 7.1% industry average. Over the past week, the stock has gained 4.9% to close the last trading session at $10.51.
FRD’s POWR Ratings reflect its solid prospects. It has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has an A grade for Growth, Value, and Momentum and a B for Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for FRD’s Stability and Sentiment here. FRD is ranked #9 of 33 stocks in the A-rated Steel industry.
AVGO shares were trading at $553.10 per share on Tuesday afternoon, down $5.86 (-1.05%). Year-to-date, AVGO has declined -15.62%, versus a -8.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
5 Growth Stocks to Buy Into the End of 2022 StockNews.com
