Profit season has arrived! 3 high growth stocks to buy now
It’s that time of year again! The gains are upon us. Unlike last year, when investors were monitoring the extent of the COVID-19 pandemic and the benefits of a vaccine, this quarter is all about the bigger picture. Inflation, interest rates, supply chain challenges and labor shortages are at the top of the list of important themes for this quarter. While these topics are relevant in the short term, they should not interfere with a company’s long-term growth trajectory.
With that, we asked some Fool.com contributors which growth stocks are good buys now. They searched their gift bags and pulled out three treats. This is what makes Fisker (NYSE: FSR), United parcel service (NYSE: UPS), and Electric Emerson (NYSE: EMR) all good shopping now.
A stock of EV to park in your wallet
Scott Levine (Fisker): On its way to present its third quarter earnings report on November 3, Fisker is an electric vehicle company that is a fairly new option for investors, having debuted in the market almost exactly a year ago. Those who follow the electric vehicle industry closely will surely recognize the name of the company; However, it is also likely that many investors are unfamiliar with the EV startup, given the wave of EV companies that have recently gone public through special purpose acquisition company transactions. Add to that the fact that Fisker doesn’t have any vehicles on the road yet, and it’s likely that Fisker isn’t on the radar of many growth investors. But it certainly should be. Between the company’s disruptive approach to funding and the stock price at around $ 14 – 55% below its 52-week high – it’s certainly worth considering.
One of the biggest challenges facing electric vehicle manufacturers is the reluctance of potential customers to charge their vehicles. To help allay those concerns, Fisker is offering customers who find they are not as burdened with switching to electricity as they thought they would have the ability to return leased vehicles at any time without penalty. Management’s willingness to implement an innovative approach to vehicle leasing suggests that they are not only aware of a potential obstacle to their success, but are not ready to give in to conventions.
At the start of August, Fisker had 17,500 reservations for its Ocean SUV, indicating that there is already interest in the company’s offering. By 2025, management is targeting annual sales of 200,000 to 250,000 – a year in which it plans to expand its product offering to four vehicles and where it expects to see significant improvement in its sales. finances. While the company expects to generate negative free cash flow of $ 300 million in 2022, it expects free cash flow of $ 1.9 billion in 2025. This is the kind of growth that can electrify investors’ enthusiasm.
UPS Has Long Term Rise But May Face Short Term Setbacks
Daniel Foelber (United Parcel Service): UPS, the largest US parcel delivery company, announced its third quarter results on Tuesday. In addition to looking at the usual suspects like earnings, margins, and other financial numbers, investors are likely to have their eyes peeled and ears strained to catch a glimpse of management’s thoughts on supply chain constraints and labor shortage.
Investors who follow the parcel delivery space know that FedEx and UPS report income approximately six weeks apart instead of at the same time. This staggered schedule is convenient because it provides a more frequent overview of industry-wide headwinds and tailwinds.
FedEx’s latest earnings report illustrated the extent that the tight labor market and difficult supply chain have on its margins. Its quarter was not pretty, and FedEx stock fell sharply, dragging UPS with it. To fight inflation, FedEx is raising prices next year. Investors should listen to UPS management’s comments on these topics to see how it expects to meet the challenges of the market and to what extent it, too, will raise prices (if at all).
In addition to these short-term talking points, growth investors will likely be watching the growth of UPS e-commerce, the rebound in business-to-business sales, and international performance. UPS is a value stock that has morphed into a growth stock over the past few years as it delved into previously untapped markets. Its investments to develop its e-commerce offer have made it a privileged maritime and logistics partner for small and medium-sized businesses.
Investors should stick together if UPS expects a significant impact on its near-term performance due to macroeconomic factors. But as long as the big picture remains intact, UPS is one of the best industrial stocks on the market today.
Emerson Electric to enter a growth phase
Lee Samaha (Emerson Electric): It was long overdue, but energy spending is back. This is great news for companies with large process automation businesses like Emerson Electric. In total, oil and gas accounts for about 19% of Emerson’s sales, with chemicals and refining still contributing 11% and 6%.
Process automation is the transformation of raw materials into an initial product. As a result, spending in the industry tends to be erratic and contingent on customers feeling confident about the long-term prospects of their end markets. As such, the COVID-19 pandemic has caused a blockage of investments within the processing industry.
However, oil service companies like Halliburton talk about a prolonged rise in oil and gas spending. Meanwhile, Emerson’s rival for process automation Honeywell International noted that its orders for refining catalysts and absorbents jumped 30% in the second quarter. This is important because it suggests that investment in refining is coming back, and as Honeywell management has noted, this usually translates into increased spending in automating processes down the line.
Everything points to a cyclical recovery in Emerson’s process automation. Meanwhile, orders for the company’s commercial and residential solutions segment (climate technology, energy efficiency, refrigeration) grew 43% in the last three months to June, so future revenue growth is assured. And finally, the recent agreement to take a 55% stake in the industrial software company Aspen technology adds another string to the bow of Emerson’s software expansion strategy. All in all, Emerson looks well positioned for growth in the years to come.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.