Editor’s note: This column is part of our Best Stocks for 2017 contest. Louis Navellier’s pick for the contest is Nvidia Corporation (NASDAQ:NVDA).
Self-driving cars. Virtual reality headsets. Artificial intelligence. The past year has brought incredible advances in technologies that defied the imagination not too long ago. My best stocks for 2017 pick is at the forefront of these fast-growing technologies — and is profiting handsomely from them.
Nvidia Corporation (NASDAQ:NVDA) is a leading computer graphics company, making graphic processing units (GPUs) for consumers and businesses. From video games to professional visualization, datacenter and automotive applications, Nvidia’s graphics cards enhance the processing capability of its users’ computers.
The company has been in the computer graphics business for more than two decades — it invented the GPU in 1999 — so it is a well-established player. To date, Nvidia owns 7,300 patents relating to computer graphics, the largest portfolio of its kind.
NVDA Stock Powering Up
While NVDA stock got its start as a graphics card company that catered to video game enthusiasts, it turns out that the GPU has a wide range of powerful applications. Graphics cards can be used to aid computers in applications like financial modeling, oil and gas exploration, virtual reality and even in self-driving cars.
To that last point, Nvidia currently has partnerships with many leading automakers, including Audi, Tesla Motors Inc (NASDAQ:TSLA), Mercedes-Benz, Volvo, Honda Motor Co Ltd (ADR) (NYSE:HMC) and BMW. As self-driving cars become more widely adopted, NVDA stock’s artificial intelligence car computing platform will be in hot demand.
This is on top of Nvidia’s already explosive growth. Last quarter, revenue soared 54% to a new record of $2 billion, up from $1.3 billion in the third quarter a year ago. Earnings per share surged 104% year-over-year to 94 cents, up from 46 cents in the same quarter a year ago.
The analyst community was expecting earnings of 57 cents per share on $1.69 billion in sales, so NVDA stock posted a stunning 65% earnings surprise and an 18.3% sales surprise.
And Nvidia is expected to keep up the pace for the foreseeable future. For the fourth quarter, NVDA now expects revenue of $2.1 billion, which represents 50% annual sales growth. Analysts are also forecasting 137% earnings growth. For the next several quarters, the company is expected to maintain double-digit sales and earnings growth.
I must also mention that for more than four years, Nvidia has paid a consistent quarterly dividend. In November 2012, the quarterly payout was 7.5 cents per share. This past quarter, it paid 14 cents per share, over an 86% increase. At current prices, NVDA has a 0.6% annual dividend yield and a 22% 12-month dividend growth rate. Next fiscal year, Nvidia plans to return $1.25 billion to shareholders.
So, NVDA is one of those rare stocks that rates well in both Portfolio Grader, my growth stock rating tool, and Dividend Grader, my dividend stock rating tool. And while it has been on a tear in recent months, I see plenty of upside potential from here.
So if you’re looking for a top technology play for 2017 that offers a solid dividend to boot, NVDA stock is it.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
