While it’s still unclear which direction the market’s winds are blowing here in early 2015, for some stocks, it doesn’t really matter. See, some growth stocks are surrounded by such great stories, traders are going to find a way and a reason to bid them up no matter what happens to the broad market.
After all, that’s what makes a good growth stock — it grows. When the market stays flat, it grows. When the market falls, it inches upward. When the market climbs, a good growth stock races higher.
But which names are the best growth stocks to buy right here, and right now?
Although they’re just a suggested starting point in a search for the market’s top trading ideas, investors may want to start with a closer look at these four companies.
Stocks to Buy — Akorn (AKRX)
Though Akorn, Inc. (AKRX) is generally classified as a generic drug stock, that description doesn’t do justice for the company’s amazingly diverse portfolio. Yes, it has plenty of generics, but it also has plenty of other items on its menu.
More importantly, it’s growing fast. The top line jumped from $256 million in 2012 to $317 million in 2013 to what should be something in the neighborhood of $630 million for 2014 when it reports Q4 numbers in March. After that, the fun really begins. As incredible as it may seem, analysts collectively expect Akorn to drive a little over $900 million sales for the current year.
Has the company done anything special lately to create another banner (and record-breaking) year? As a matter of fact, it has. The company won 14 drug approvals last year, but has only launched three of them. The other 11 are presumably slated for launch this year, and though most of its drug are small-market products, 11 more anticipated drugs is a big deal for this small company.
AKRX stock belongs on almost any list of growth stocks to buy.
Stocks to Buy — Celgene (CELG)
Akorn isn’t the only biopharma name worth a closer look. At the other end of the size spectrum is juggernaut Celgene Corporation (CELG), best known for its blood cancer drug Revlimid. Its newer Abraxane — an approved treatment for a handful of cancers — is no slouch, either.
Throw in a robust pipeline and several more years of patent protection for its key compounds, and CELG stock has more than earned a spot on a list of stocks to buy.
But does it deserve a spot on a list of top-tier growth stocks? Yes. Celgene Corporation’s sales were on pace to grow 18% in 2014, and expected to grow more than 21% in 2015. Per-share earnings are forecast to expand 32% this year, mostly on the heels of further penetration of Abraxane and more approved uses for Revlimid.
Stocks to Buy — LinkedIn (LNKD)
LinkedIn Corp (LNKD) is usually the last name mentioned on a list of social media stocks, largely because it circumvents the socializing and “fun” that have made Facebook Inc (FB) and Twitter Inc (TWTR) such popular destinations.
But the clear purposefulness of the professional networking site and general lack of distraction have made LNKD stock one of the most reliable growth stocks of its ilk.
The proof in the numbers. Revenue growth is likely going to hit 43% for 2014, and is currently projected to grow at a clip of 34% this coming year. Though LNKD was not profitable on a net basis for the past twelve months, that’s only because LinkedIn is spending heavily now for big growth later. The pros say LINKD should swing back into the black this year, which the market should absolutely love.
The clincher: Despite the recent dip into red ink, LinkedIn can afford to invest in itself to a degree (relatively) none of its peers can. Its gross margin rate is near 90%, which is the highest among the 19 biggest internet software and services stocks in North America.
Translation: LNKD stock belongs on a list of stocks to buy sooner than later.
Stocks to Buy — Sprouts Farmers Market (SFM)
Generally speaking, when an investor is thinking of growth stocks worth a shot, grocers don’t often come to mind. If it’s the right grocery store, though, nothing is out of the question.
Enter Sprouts Farmers Market Inc (SFM). With only 190 stores spanning 10 states, it’s not like the company is causing trouble for Kroger Co (KR), though it could shake things up for an organic-oriented competitor like Wild Oats. It’s the company’s small size, in fact, that has set up a sizable growth opportunity for the foreseeable future.
To be clear, much of the stock’s upside and company’s growth is attributable to the advent of organic food and healthy eating as the new norm. Some experts believe the organic food market will grow at an average annual pace of 14% between now and 2018, and though it’s an incredibly competitive arena, Sprouts Farmers Market is clearly doing something consumers love.
Last year’s sales are apt to show 21% growth once Q4’s numbers are finalized, and this year’s top line is projected to grow 20%.
Some investors might want to leave SFM off of their list of growth stocks to buy because of its valuation. It currently trades at a trailing P/E of 57 and a forward-looking ratio of 40. But sometimes you have to pay for quality earnings growth.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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