We’re now officially into the dog days of summer… a time of year that’s not just painfully hot outdoors, but notoriously slow for stocks. On average, the S&P 500 goes nowhere between mid-July and mid-October.
That doesn’t necessarily mean traders need to head to the sidelines for the next three months though. Rather, it just means traders need to change how the game is played. In a go-nowhere environment like this, the trick is finding the right fast-growing stocks. It also helps if you can find fast-growing stocks with big news in the cue, just to provide an extra little kick… enough to get investors’ (and the media’s) attention and capture their bullish interest.
To that end, here’s a run-down of 10 fast-growing stocks with catalysts likely coming soon. Even without a news-based nudge, however, these names are well positioned to sizzle this summer. In no particular order…
Fast-Growing Stocks: Expedia Group Inc (EXPE)
Expedia Group Inc (NASDAQ:EXPE) is an intuitive enough bet. With at least a sizeable portion of the world at full employment and wage growth being firm even if not red-hot, consumers are traveling a little more now than they have in the recent past. The U.S. Travel Associate’s Current Travel Index (CTI) for May — the most recent reading — was 51.7 — up 3.4% year-over-year, and still in a long-term uptrend.
That’s great news for Expedia, which is expected to grow revenue by nearly 13% this year and just a little less than 12% next year. Earnings are growing even faster.
There’s a kicker on the radar, however. Most traders don’t remember or realize it, but the company has been working diligently to cull costs and improve its technology infrastructure. The catch? When Expedia reported its first quarter numbers in April, it said its EBITDA wouldn’t start to show improvement until the second half of this year. A bunch of investors have already forgotten this important detail, if they ever knew it in the first place.
Fast-Growing Stocks: Sony Corp (SNE)
If you thought Sony Corp (ADR) (NYSE:SNE) was a struggling technology and media outfit that was losing to better competition on all of its business fronts, think again. While it’s not posting double-digit sales growth, for a behemoth like Sony in the tough markets it’s in, any progress is commendable.
It’s also still a cash cow, and arguably undervalued at a forward-looking P/E of 12.9. That relatively low projected valuation may underestimate how much profit the company is about to produce. As research outfit Zacks observed just a few months ago, Sony’s higher-margin business like video gaming and music saw 16% growth and 22% growth during the first quarter, respectively, largely on the heels of digital downloads.
Sony has only begun to scratch that surface though… embracing the full potential of digital sales.
Fast-Growing Stocks: Tableau Software Inc (DATA)
Tableau Software Inc (NYSE:DATA) may not be a terribly familiar name, but don’t let that deter you. It’s a growth machine, plain and simple. The company — which provides analytical tools that let organizations make good use of all the data they’ve been gathering for years — is on a tear. Revenue is projected to grow more than 11% this year, and then accelerate to the tune of nearly 15% next year.
How? UBS analyst Jennifer Lowe explains:
“We see both Tableau and Microsoft as share gainers vs. legacy incumbents. 2018’s product innovations and enhancements, coupled with a revamped sales strategy seasoning under new sales leadership, and reduced buying friction via subscriptions should sustain double-digit topline growth in excess of 8% market growth.”
Lowe specifically thinks this month’s second-quarter earnings release and upcoming investor conferences could really turn the heat up on this stock.
Fast-Growing Stocks: NVIDIA Corporation (NVDA)
NVIDIA Corporation (NASDAQ:NVDA) is a name that needs no introduction. The company, which makes graphics processors and mobile device processors, has been riding the wave of several trends, including the rise of cryptocurrency mining (which is best done, as it turns out, with GPUs).
What’s been making NVIDIA shine more than any other fast-growing stocks, though, is its commanding presence in the world of artificial intelligence. As it also turns out, GPUs are perfectly-suited for the intensive data processing needed done for AI applications. The company has been more than happy to tweak its technology in a way that caters to artificial intelligence developers.
What many investors don’t fully appreciate is that the AI race has only just begun. Industry insiders believe sales of artificial intelligence hardware will soar to $115 billion by 2025, up from only a few billion dollars last year. The bulk of that is NVIDIA’s business to lose.
Fast-Growing Stocks: Honeywell International Inc. (HON)
This is not your father’s Honeywell International Inc. (NYSE:HON). In fact, it’s barely going to be your Honeywell once relatively new CEO Darius Adamczyk is done with it.
At the helm for a little more than a year, Adamczyk has already put a couple of spinoff wheels in motion. Its transportation as well as its homes and distribution businesses are both expected to become standalone companies before the end of the year, freeing the company up to focus on its remaining business lines.
It’s a smart move… smart, and one that activist investor Daniel Loeb had been pushing for a while.
It’s not just the focus that makes Honeywell such an interesting opportunity going forward though. Just as interesting is how the spinoffs, given the $7.5 billion in annual revenue they collectively drive, could plausibly give Honeywell well over $10 billion worth of fresh capital to play with.
Fast-Growing Stocks: Facebook, Inc. (FB)
Facebook, Inc. (NASDAQ:FB) has had more than its fair share of problems of late. Yes, the Cambridge Analytica debacle was one of them, though truth be told, that scandalous drama was more of a symptom than a disease. The company was just pulling the revenue-growth lever too hard, and pushed a little too deep into people’s personal digital data.
The ‘fix’ isn’t going to kill Facebook though. Indeed, less intrusive ads and less intensive presentation of news within a Facebook user’s feed may barely dent the company’s ad revenue growth. We’re addicted to the social networking platform, plain and simple. That’s why the pros think sales are on pace to grow 39% this year, and expand to the tune of 27% in 2019.
There’s even a chance Facebook could top those outlooks.
The social media giant has dabbled in the arena for a while, but it’s not exactly worked hard at cultivating video games as a serious profit center. That’s changing though. As Luke Lango pointed out last month, the company’s game venue now lets developers collect subscription revenue, and it also now offers live streaming of game-play.
Given the success of Twitch, the advent of professional video-gaming and the growing preference for digital game downloads as opposed to disc-based console games, Facebook is in a good position to become a video gaming destination.
Fast-Growing Stocks: Roku Inc (ROKU)
A few years ago, Roku Inc (NASDAQ:ROKU) took the video streaming set-top box market by storm — and by surprise — offering a simple, affordable way of turning any television into a web-connected device that pipes in digital content from Netflix, Pandora, Amazon and the like. In fact, some investors are still surprised to learn that Roku has a commanding lead in the OTT receiver space, controlling 37% of that market.
The company’s not done impressing yet, though, according to KeyBanc’s analyst. After a recent look at the company, KeyBanc explained, “we expect earnings and guidance to be the next major catalysts in the short term,” adding that the Roku Channel itself was poised to become a “first choice” means of connecting viewers and video among a sea of options.
Sales are on pace to grow 36% this year, and expected to rise 32% next year.
Fast-Growing Stocks: Target Corporation (TGT)
OK, struggling retailer Target Corporation (NYSE:TGT) may not seem quite at home on a list of fast-growing stocks. In a good year, its revenue growth is still only going to be in the single digits. On a relative basis though, Target may be on the verge of better days than it’s seen of late.
There are multiple reasons to expect serendipity in the foreseeable future here, not the least of which is the closure of all Toys R Us stores. Though rival Walmart also sells toys, as does Amazon, Target’s savvy treatment of toys has made it something of a destination within this sliver of the consumer market.
Even beyond the absence of a key competitor though, Target has put several other initiatives to work just within the past few months. Its partnership with Shipt allows 1000 stores to offer same-day shipping, and drive-up pickup windows will be available in 1000 stores soon enough.
Target is becoming relevant again.
Fast-Growing Stocks: DXC Technology Co (DXC)
DXC Technology Co (NYSE:DXC) is another one of those names many investors haven’t heard of, but should put on their watchlist all the same.
In short, DXC Technology helps get company’s into the modern era of computing. It offers services like migrating data to the cloud, cybersecurity solutions, and data-management consulting. It’s a great time to be in those businesses, and DXC’s numbers prove it. Analysts are collectively looking for sustained earnings growth from the company going forward.
Merrill Lynch, however, believes the market could be underestimating DXC. At a forward-looking P/E of less than 10.0 and an upcoming analyst-day event in September that will likely supply guidance through 2020, Merrill is maintaining, its price target of $103. That’s more than 20% higher than the stock’s present price.
Fast-Growing Stocks: Neurocrine Biosciences, Inc. (NBIX)
Last but not least, Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is one of the noteworthy fast-growing stocks with catalysts on the radar.
As the name suggests, Neurocrine Biosciences is a biopharma outfit. Its claim to fame is Ingrezza, a drug used for the treatment of tardive dyskinesia (involuntary muscle movements often associated with the use of psychiatric drugs). The company sold $71 million worth of Ingrezza last quarter, which isn’t much, but the drug was only approved a little over a year earlier.
That’s a good start.
It’s not Ingrezza that has the potential to light a fire under Neurocrine Biosciences shares later this month or next month, however. Rather, a drug called elagolix — co-developed with AbbVie for the treatment of endometriosis pain — is up for approval within the next few weeks. A firm PDUFA date hasn’t been set, but it’s supposed to happen sometime in the third quarter. Though the FDA pushed back the approval clock in order to have more time to study some new information about elagolix, the fact that it was still given a priority review status bodes well.
If it gets the green light, analysts believe elagolix could see peak annual sales of $1 billion.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.
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