The market has been rangebound since the start of 2015, yet even in a flat market, investors can make a boatload of money by picking the right individual stocks to buy.
To wit: Many of the stocks that sold off late last year and earlier in 2016 are starting to soar, with the market realizing that another recession or massive correction is unlikely given the economic benefits of low gas prices, low unemployment and high consumer sentiment.
The opportunities are far from completely bought into, however.
At the moment, I count at least nine stocks in the market right now that are prime buying opportunities. These are stocks that trade in many sectors and industries, most of which reflect growing companies at undervalued prices.
With most of these names trending higher at the moment, now is likely a great time to dip into some (or all) of these growth stocks to buy:
Growth Stocks to Buy: Fitbit Inc (FIT)
Shortly after its initial public offering last June, Fitbit Inc (FIT) was expected to create revenue of $1.4 billion. It ended up with $1.85 billion on growth of 150% for the year. Looking ahead, expectations are far less lavish for 2016 and beyond, with the stock down nearly 50% this year on fears that Fitbit will become the next GoPro Inc (GRPO).
However, the fact that its newest fitness tracker, the Alta, and its first smartwatch, the Blaze, have already sold over 1 million devices each paints a very bullish picture for growth that once more exceeds all analyst expectations.
Fact is, many analysts were forecasting pressure on its average selling price of devices due to feared discounts, But instead, Fitbit’s ASP is likely to jump through the roof, with both its Alta and Blaze priced well above its ASP from last year.
In other words, FIT stock is looking real good right now, and at 11 times forward earnings, its stock is ready to soar.
Growth Stocks to Buy: Valeant Pharmaceuticals Intl Inc (VRX)
Look, I am not a big fan of what Valeant Pharmaceuticals Intl Inc (VRX) stands for, and quite frankly, I think its management team danced around a thin line between incompetent and also criminal.
However, underneath all the drama and problems that have pushed its stock lower by 82% over the past 12 months rests the fact that its business will still likely grow in 2016. And VRX stock is very cheap at just 3.5 times the company’s guided FY2016 EPS.
In biotech, or any industry, it is hard to find a company trading at such low multiples. After gains of 35% spread across the past three trading days, it also appears that investors are starting to realize the cheapness of VRX stock.
That said, VRX’s recent stock gains were not by accident.
Bill Ackman recently implied that he will not sell any shares, instead choosing to take a “much more proactive role,” and Valeant’s ad hoc committee concluded its investigation by saying that no further financial restatements should be required. VRX also won majority lender support to avoid a default on its debt.
When you put all this together, it is clear that the days are starting to improve for VRX, and the worst-case scenario that pushed its stock down below $30 is no longer a likely reality.
Growth Stocks to Buy: Alibaba Group Holding Ltd (BABA)
Since the market shot higher in early February, Alibaba Group Holding Ltd (BABA) has been one of the best big tech stock performers, now up 30% from its February low.
And best of all, BABA is still a buy.
Here’s what you need to know: Alibaba has a market cap of $200 billion, and within that business is the world’s (newly crowned) largest retailer with at least $482.1 billion in trailing 12-month gross merchandise sales. Notably, Wal-Mart Stores, Inc. (WMT) has a market cap of $215 billion.
The difference between WMT and BABA is the latter is expected to grow sales 30% in each of the next two years. So it will be the world’s largest retailer by a mile. However, BABA also own the “PayPal of China” with Ant Financial, reportedly worth $60 billion, and has made $18 billion in additional investments over the last few years that are starting to create value for BABA shareholders.
Collectively, Alibaba is a fast-growing, diversified technology company that also happens to be the world’s largest retailer, all bottled up in a $200 billion market capitalization. In other words, BABA is going higher, and there is a strong case to be made that long-term, Alibaba could challenge the likes of Alphabet Inc (GOOG, GOOGL) or Apple Inc. (AAPL) in worth due to the investments it is making and growth it is achieving.
Growth Stocks to Buy: Twitter Inc (TWTR)
The big problem with Twitter Inc (TWTR) — and the reason its stock has lost three quarters from its peak value — is the troubles in growing its user base.
Yes, the company’s revenue is growing nicely, and expected to expand by 33% this year and 26% next year, due to better monetization. However, social media companies are ultimately judged by their ability to expand a user base, thereby having a bigger pool to monetize later down the road.
Well, Twitter CEO Jack Dorsey has made two huge moves in recent months.
First, TWTR announced plans to monetize the 500 million users who see tweets and consume Twitter without actually having an account. According to Dorsey, these users will be monetized at half the rate of logged in users. Next, Twitter won rights with the NFL for Thursday night Football. This is important because it represents a massive audience, many of whom are not Twitter users, but likely will familiarize themselves with Twitter to watch their favorite games.
With that said, Twitter’s growth outlook is unchanged since Dorsey made these two big moves. When coupled with a beaten-down stock price, the fact that Twitter is poised for accelerated growth and potential user growth from the NFL means there could be tremendous upside in store over the next year.
Growth Stocks to Buy: Regeneron Pharmaceuticals Inc (REGN)
Regeneron Pharmaceuticals Inc (REGN) is another big biotech that finds its stock more than 25% off its 52-week high. This loss is quite telling given that REGN stock has surged 17% over the last five sessions.
The company’s recent clinical success in treating moderate to severe atopic dermatitis with the product dupilumab means an extra $2.5 to $4 billion in revenue will be added to the company’s top line over time. That’s nice since REGN will top $5 billion in revenue this year on 25% growth without any help from this new drug, or sales from another drug that treats rheumatoid arthritis that also should be FDA-approved later this year. That latter drug has already proven successful up against AbbVie Inc’s (ABBV) Humira, which created more than $14 billion in sales last year.
Nonetheless, 25x forward earnings is a good price to pay for REGN stock, and the fact that it is $170 from its all-time high suggests it has quite a bit of room to run.
Growth Stocks to Buy: Five Below Inc (FIVE)
What has investors excited is the growth plan.
Currently, FIVE has just more than 400 stores, and has remained largely a regional brand that expands from the inside out relative to existing stores. The company has a long-term plan to operate 2,000 stores, with major markets in California, Ohio, southern Florida and southern Texas still untapped.
Hence, investors realize that FIVE is going to grow much larger, and is likely to succeed due to the opportunity in massive regional areas.
Given this bullish outlook, I don’t expect FIVE stock or its growth to slow any time soon.
Growth Stocks to Buy: Celgene Corporation (CELG)
Obviously, I am quite bullish on biotech stocks right now, with the iShares Nasdaq Biotechnology Index (ETF) (IBB) being beaten over the last few months and many of the industry’s strongest companies falling victim to industry-wide panic.
Celgene Corporation (CELG) is another, and the final stock in this class that looks poised to soar.
Celgene has one of the best-selling drugs in the world with Revlimid, and despite the company producing $9.2 billion in revenue last year it is still expected to grow 20% and 18% over the next two years, respectively. Furthermore, CELG is guiding for revenue of $21 billion by 2020, essentially growing to become twice the size it is today.
So, when you consider that CELG stock is trading at only 15 times next year’s EPS, it is clear that this is a stock with tremendous upside due to its valuation coupled with the level of growth that should occur beyond 2017.
In other words, Celgene is a steal when you consider how much larger this company is going to become.
Growth Stocks to Buy: FireEye Inc (FEYE)
After a bad start to the year, and a worse end to last year, FireEye (FEYE) stock has jumped more than 50% from its early February lows. The stock has struggled as the company’s growth slows and investors adjust their expectations.
Still, the company is expecting organic growth around 20% over last year and overall revenue to rise more than 33%. That’s rather impressive.
While FEYE has recovered some of its losses from earlier this year, it is still down more than 55% from this point in 2015. With FireEye being one of the better performers since mid-February, investors should like what they see in its short-term chart and the chances for its recent momentum to push the stock even higher.
After all, FEYE is still oversold.
Growth Stocks to Buy: Tableau Software Inc (DATA)
Tableau Software Inc (DATA) is much like FEYE, a stock that has been beaten this year with losses of 50% overall, and even more from its all-time high, down 65%.
Yet, in the market’s recent rally, DATA has been one of the big beneficiaries, now up 25% from its lows.
That said, Tableau’s losses were well-deserved. The company gave investors a big, unexpected warning that demand and revenue will not be what investors expect. Nevertheless, the company is still expected to grow nearly 30% this year and 27% next year, and now trades at a level we have not seen before in DATA stock — 4 times this year’s expected sales.
In addition, I give the company a moderate break with its warning because it had never missed analyst expectations in any quarter since going public three years ago.
Hence, Tableau is deserving of one bad quarter/mishap per three years. I can live with that.
As of this writing, Brian Nichols was long BABA, CELG, FIT, FIVE, REGN, TWTR and VRX.