By their very nature, growth investors are primarily focused on finding companies whose earnings and revenue are expected grow at a rate that outpaces the market. This investment strategy comes with its fair share of risks, but it also brings the exciting possibility of outsized returns—an end goal that every investor desires.
Over the past several years, Wall Street’s most exciting growth stocks have emerged from the technology sector. From industry innovators like Amazon (AMZN – Research Report) and Netflix (NFLX – Research Report) to exciting foreign stocks such as Alibaba (BABA – Research Report) , tech-focused growth investors have been rewarded with massive profits recently.
Strong earnings and impressive sales imply that the technology sector’s hot streak could continue throughout 2018—despite recent market-wide volatility. That means that growth investors searching for the next great market-beating stock might want to keep their focus on tech companies.
Luckily, we can pair the proven Zacks Rank with our innovative Style Scores system, which includes a “Growth” category, to find strong growth tech stocks. Investors should note that our Growth category values earnings and sales growth, as well as improvements to a company’s financial statements—including strong cash flows and great return on equity. With all of this said, check out these three tech stocks for growth investors to consider now:
Top 5 Biotech Stocks To Own Right Now: ResMed Inc.(RMD)
ResMed is the company solving sleep apnea with its CPAP devices and this is a company that really innovated and brought that technology to the world. For people who are having trouble sleeping with clogged airways as they’re sleeping, ResMed is their best friend.
The stock, a year ago, at $69. Happy to say it’s up to, well, just before this podcast taped it was at $99.91, so we’ll round that one to $169 to $100 — that’s a 45% gain. Not bad in a world where so many people are told it would just be lucky to pick stocks that would beat the stock market. This one has done it and done it handily, so up 45% over the last year vs. the market’s return of 15%. That’s a +30%. So, if you’re scoring with me, the first one was a +72%, then a -6%, then a +30%. We’re solidly in the win column.
Top 5 Biotech Stocks To Own Right Now: Valero Energy Corporation(VLO)
Valero Energy Corporation (NYSE:VLO) is one of the top refiners in the U.S. It now has 15 oil refineries which supply 3.1 million barrels per day, and its 11 ethanol plants deliver 1.4 billion gallons of ethanol per year. Its operations now stretch across the U.S., Canada, the UK and Ireland.
When the economy is in a growth phase, refineries are a great place to have your money. They are one of the leading economic indicators, since demand for fuel is a key sign more the economy is coming back. More demand for fuel means there’s more transportation of goods and services.
There’s no doubt that refining is as cyclical as most parts of the energy sector, but when times are good, they’re very good. And times are getting better every day in the energy patch.
Top 5 Biotech Stocks To Own Right Now: PayPal Holdings, Inc.(PYPL)
The leading digital payment processor posted strong numbers, but the fact that eBay plans to eliminate using the service greatly dampened the enthusiasm.
Presently, shares are resting directly on the 50-day SMA, and I expect an upward move from here.
The reason: Strong results and the fact that eBay only represents around 13% of PayPal’s total payment volume. In other words, the market overreacted to the bad news and underreacted to the sound numbers.
PayPal was the first successful mover in the digital payment space. The numbers, goodwill, global brand recognition, and customer base will push the share price higher over the long term.
Top 5 Biotech Stocks To Own Right Now: Arlington Asset Investment Corp(AI)
Arlington Asset Investment Corp. (NYSE: AI) focuses on the management and purchase of government debt.
With congress adding more money to the national debt than ever, it’s an incredibly lucrative business. AI has almost $5 billion in its portfolio and a net profit margin of 38.8% – over 46% higher than the industry average.
Thanks to these profits, AI pays a huge dividend yield of 17.17%.
Keith sees AI as a company with great long-term prospects – something that should help the company to grow its already large dividend.
"This stability is exactly what you’d expect from a business gathering income through U.S. government-backed mortgages," Keith says. "It may not be the most exciting field, but it sure pays the bills, as you’ll see from this company’s quarterly dividend income stream."
With AI’s dividend up 92% since 2010, Keith is onto something with this play.
Top 5 Biotech Stocks To Own Right Now: Ladder Capital Corp(LADR)
Ladder Capital Corp (NYSE:LADR) is a mortgage REIT with an attractive business model. The company’s core focus is generating first-lien mortgages on commercial properties, and then securitizing them. That can be a risky business, but Ladder has done it well. And it has yet to experience any credit losses since its founding roughly a decade ago.
But Ladder also tacks on ownership of mortgage securities (beyond simply bundling them and securitizing them), as well as owning property directly and through securities like CMBS (commercial mortgage-backed securities). It’s a more diversified model than seen at most mREITs, and it’s been rather successful so far.
Obviously, there is some risk here should real estate soften. But Ladder’s loans and holdings are highly diversified across end markets (like multifamily, hotel, and office) and geographic region. And higher interest rates should help the company, with Ladder saying a 100-basis-point rise in LIBOR would add ~$0.15 per share in annual EPS.
Meanwhile, unlike many mREITs, Ladder is internally managed — and managed well. Just this week, Chairman Alan Fishman bought another $250,000 worth of stock.
There’s the possibility of a takeover by major shareholder Related Cos., and the company offers an 8.8% dividend yield in the meantime. There’s a lot of smart money behind LADR at the moment, and investors would be wise to follow it.