The macroeconomic stars might very well be aligned for a big rebound by the stock market. First of all, as Investor’s Business Daily reported on March 13, despite the “market correction” the “indexes (are) off [their] lows.” The latter development is very positive; it indicates that the worst of the correction — and the year-long decline by growth stocks — may very well be behind us.
Likely calming the markets are the realization by many investors that the interest rate hikes and the Russian-Ukrainian war probably will not cause the proverbial sky to fall. Interest rates will remain historically low, and high oil prices only caused a U.S. recession once, in 1973 when the cost of petroleum quickly quadrupled.
Moreover, with the EU having enough natural gas to make it through winter, a lack of Russian natural gas won’t lead to disaster for those countries. And the U.S., the EU and Russia will, in all likelihood, continue to seek to prevent the conflict from widening.
Also encouragingly, “legendary quant investor Louis Navellier” expects the market to surge in the second half of March, InvestorPlace Contributing Editor Jeff Remsberg recently reported.
With investors becoming less fearful, there’s a good chance that growth stocks will rebound.
Among my favorite sectors now are solar energy names, electric vehicle (EV) charging companies, mining companies and biotech firms. I believe that the market is, in general, greatly underestimating the strength of these groups.
With that in my mind, these seven hot growth stocks definitely have what it takes to triple during the rest of the year:
- EVgo (NASDAQ:EVGO)
- ChargePoint Holdings (NYSE:CHPT)
- Shoals (NASDAQ:SHLS)
- Freeport McMoran (NYSE:FCX)
- Novavax (NASDAQ:NVAX)
- Enphase Energy (NASDAQ:ENPH)
- Plug Power (NASDAQ:PLUG)
Hot Growth Stocks: EVgo (EVGO)
From Feb. 24 to March 10, the shares jumped 30%. The rally came after the EV charging company announced that it had made deals to provide fast chargers for some customers of two huge Japanese automakers — Subaru and Toyota (NYSE:TM).
On Feb. 1, EVgo and Midwestern retailer Meije announced that the first of five EVgo charging stations had been opened at a Meijer store. EVgo indicated that it would add many more charging stations in partnership with the retailer, which has “more than 240 stores.”
EVgo reports that it has the “largest public fast charging network for electric vehicles” in the U.S. and is likely to add many more retail and hotel partners down the road. And making EVgo more attractive for automotive, hotel, and retail partners, the company says that it’s the “only public network powered by 100% renewable electricity.”
Also likely fueling EVgo’s surge was ChargePoint’s stronger-than-expected fourth quarter revenue and full-year sales guidance, which I will describe in some detail in the next section.
ChargePoint Holdings (CHPT)
The EV charging company reported that its sales had soared 90% year-over-year in the fourth quarter to $80.7 million, exceeding analysts’ average outlook by $4.6 million. And for its upcoming fiscal year, ChargePoint predicted that its sales would come in at $450 million – $500 million. The company stated that: “At the midpoint, this (guidance) represents an anticipated increase of 96% as compared to the prior year.” The guidance was also way above analysts’ average estimate of $238 million.
Reacting to the results and guidance, Oppenheimer’s (NYSE:OPY) Colin Rusch wrote that, “We believe the company is executing well on port growth and is gaining traction in the EU with the aid of its recent acquisition.” He added that the company “could substantially outpace our revenue estimates through FY26” and kept an “outperform” rating on the name.
Later this year, the company, along with EVgo, should benefit from the rapid growth of EV sales in the U.S. and Europe. This growth is driven by the release of many new EV models and by the recent jump in gasoline prices. Moreover, CHPT stock and EVGO stock should also get lifts from the Infrastructure Law which includes significant funding for EV chargers.
Hot Growth Stocks: Shoals (SHLS)
In the wake of Russia’s invasion of Ukraine, the EU is looking to meaningfully expand its use of solar energy over the next eight years, a Yale publication recently reported. Meanwhile, as I’ve noted in previous articles, China and many U.S. states are also implementing policies that should accelerate solar sector growth. By the end of the year, I expect the U.S. Congress to extend important tax breaks for the solar sector.
Shoals, which makes solar energy components, recently received the last certification that it needed to sell its products in the EU.
As of the end of Q4, the company’s backlog jumped almost 100% year-over-year (YOY). Shoals’ “backlog and awarded orders” has reached nearly $300 million.
For 2022, Shoals expects its sales to soar 40% – 64% and predicted that its earnings, excluding certain items, would jump 40% – 54% to $300 million to $350 million.
To meet strong demand, Shoals plans to open a new U.S. factory next quarter.
Since Feb. 24, its shares have jumped more than 40%.
Freeport McMoran (FCX)
The copper producer’s Q4 revenue jumped 37% YOY to $1.1 billion, while its earnings per share (EPS), excluding certain items, was 96 cents. Last quarter, Freeport sold an impressive “1.020 billion pounds of copper,” and its expenses declined.
On March 4, the price of copper reached a record $4.938 per pound. As I noted in a previous article, “Although Russia mines just 4% of the world’s copper, the price of the metal has surged about 10% since the invasion,” while the huge jump in the demand for electric vehicles and clean energy are also having a positive impact on the demand for copper.
Additionally, Seeking Alpha reported that just before the invasion, “copper inventories at London Metal Exchange registered warehouses totaled less than 70K metric tons, their lowest level since 2005.”
A skilled technical analyst, and InvestorPlace columnist Bret Kenwell named FCX stock as one of eight “Uptrend Stocks to Watch.”
He recently reported, “Analysts expect about 14% revenue growth this year to go alongside almost 23% earnings growth. Despite the growth, shares trade at just under 13 times earnings.”
Amid the energy transition, continued strong inflation, and global instability. I believe that FCX stock can indeed triple this year. That would put the shares at slightly over double its 2010 high of just over $60.
Hot Growth Stocks: Novavax (NVAX)
As I pointed out in a recent column on the shares, earlier this month, The Wall Street Journal stated that the company’s vaccine “for the coronavirus ‘is moving toward U.S. authorization.’ The progress came “after the company proved the effectiveness of its manufacturing process to the Food and Drug Administration (FDA),” I noted.
As a result of The Journal’s report, I expect the jab to be approved by the end of June.
Meanwhile, Novavax is distributing its shot in Europe and Australia and obtained an approval for the shot in Canada.
With vaccination rates still low in many parts of the world, particularly in Africa, the demand for Novavax’s shot around the world will probably be much stronger than the Street expects. With the shares trading at a price-revenue ratio of 1.26, based on the company’s 2022 revenue guidance, its valuation is very attractive.
Enphase Energy (ENPH)
Like Shoals, with the EU poised to greatly expand its solar capacity, ENPH stock has risen meaningfully since the Russian invasion. The EU’s initiative, along with the likely extension of key tax breaks for solar energy in the U.S., is likely to give ENPH stock a big jolt higher later this year.
Making me more confident that Congress will act on the tax breaks is a letter sent by 89 House Democrats to President Joe Biden. The letter calls on the President to advance the climate provisions that were included in Congressional Democrats’ budget proposal which have since apparently been dropped.
On Feb. 8, Enphase reported much stronger-than-expected fourth quarter results Its Q4 revenue climbed 56% YOY to $412 million, beating analysts’ average outlook by $13 million. The company’s operating income, excluding certain items, was an impressive $97.7 million.
Analysts, on average, expect the company’s EPS to jump to $3.06 this year and $3.93 in 2023, versus $2.41 in 2021. If Congress passes extensive tax breaks and incentives for solar energy, Enphase will likely be able to easily eclipse those numbers.
Meanwhile, research firm Solar Media recently predicted that solar module costs would “remain elevated for the next 18 months at least.” The estimate suggests that strengthening demand for solar energy is at last causing solar component prices to remain elevated, boding very well for Enphase and ENPH stock.
Hot Growth Stocks: Plug Power (PLUG)
Another company likely to benefit meaningfully this year from the energy transition and the Russian invasion is Plug Power. The company should also get lifts from the high prices of oil and natural gas. And from the implementation of the Infrastructure Law passed last year.
In past columns, I’ve pointed out that the EU is looking to greatly increase the use of hydrogen within its borders. In the wake of Russia’s invasion of Ukraine, that initiative should meaningfully intensify. And with the Russian sanctions in play, South Korea is also likely to intensify its already ambitious hydrogen goals. Plug Power is partnering with South Korean conglomerate SK Group on multiple hydrogen projects.
Among the other trends that should lift PLUG stock this year are the higher oil and natural gas prices, the Infrastructure Law, and any additional efforts by Congress to incentivize clean energy.
As I pointed out in a previous column, Plug expects its margins from green hydrogen to increase going forward and reach “about 30% in 2024.” Given the current high prices of fossil fuels and likely further, upcoming support for green hydrogen by multiple governments, that target is probably conservative.
By the middle of the year, PLUG stock should start reflecting Plug’s improved outlook, resulting in big rallies by the shares.
On the date of publication, Larry Ramer held long positions in Novavax, Shoals, Evgo, and PLUG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.