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Here are 3 Great Growth Stocks to Buy While they are Cheap
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It hasn’t been a great month for investors. Indeed, the S&P 500 is down 1.75% so far in September, and the index is very close to all-time highs. At this point, it is not very easy to find bargains. It will be even harder to find cheap stocks with impressive growth potential.
Fortunately, we’ve found three great growth stocks that you can buy while they are cheap. Their EPS growth outlook is high, and they all have PEG ratios under 1. Markets may stagnate, but your portfolio’s returns don’t have to.
Nobilis Health Corp. owns and manages ambulatory and acute care facilities for healthcare services. It also operates ambulatory surgery centers, hospitals, and imaging centers. Nobilis’ stock is a Zacks Rank #2 (Buy) and it has an “A” for Value in our Style Scores. It should be noted that the company has a market cap of $253 million.
Nobilis looks like an especially attractive bargain when examining its fundamental valuation metrics. HLTH trades at a forward PE of 6.88 and it has a PEG of just 0.34. With a PEG this low, Nobilis could be undervalued relative to its long term growth rate. One other trait which suggests that value is present is the stock’s price-to-sales ratio of 0.90.
In addition to being a cheap stock, Nobilis also has impressive growth metrics to back it up. This year, earnings and sales are projected to grow by 37% and 23% respectively. Nobilis also has a high trailing twelve month net margin of 22.3%, and it surpassed our EPS consensus estimate by 500% when it reported its last quarterly earnings.
PulteGroup Inc. is one of the nation’s largest and most diversified homebuilders. It focuses on managing its homebuilding and financial services businesses, and the holding company has brands which include Centex, Del Webb, DiVosta, Pulte Homes, and John Wieland Homes and Neighborhoods. PulteGroup is a Zacks Rank #1 (Strong Buy) and it gets a “B” for Value in our Style Scores. The stock also doles out a dividend that yields 1.82% annually.
PulteGroup is cheap across several important valuation metrics. The company has an EV/EBITDA of 10.63, and this is slightly lower than the industry’s average EV/EBITDA of 11.33. The company also has a forward PE of just 12.28. To put this into perspective, the average forward PE of the S&P 500is 18.52.
PulteGroup stands to benefit from the strength in the housing market, and its industry (residential and commercial building) is in the top 25% of all 265 industries ranked by Zacks. This year, the company’s EPS (earnings per share) and sales are forecasted to increase by 27% and 24.7% respectively. Its trailing twelve month net margin of 7.89% is well ahead of the industry’s average net margin of 5.39%.
Over the last 60 days, three analysts have revised their previous EPS estimates higher for the current fiscal year. PHM has beaten our consensus estimate in each of the last three quarters, so there’s a good chance that it could surprise us once again when it releases its next quarterly results in late October.
Semiconductor Manufacturing International Corporation-(SMI - Free Report)
Semiconductor Manufacturing International is one of the largest semiconductor foundries in Mainland China, and it provides integrated circuit manufacturing services. In addition to an in-house assembly and testing facility, it has multiple 300 and 200 mm wafer fabrication facilities. SMI stock is a Zacks Rank #2 (Buy) and it has an “A” for Value in our Style Scores.
Semiconductor Manufacturing International has an EV/EBITDA of just 5.79, while the average EV/EBITDA for the industry is 9.24. SMI is also well ahead of the industry across other valuation metrics such as forward PE (13.97) and PEG (0.90). One trait which could suggest that SMI is undervalued is its price-to-book of 0.91. The company isn’t too leveraged either since its debt-to-capital is just 28%.
Revenues grew by 13.5% last year, and SMI looks to keep the momentum going, with sales forecasted to climb by 27.5% this year. Earnings are also projected to grow significantly, with EPS expected to increase by 21.9% in fiscal 2016. When SMI beats our consensus estimate, it tends to surpass it by a large margin. Fortunately, the company has beaten our estimate in three of the last four quarters. In that time span, it has topped our consensus by an average of 54% per quarter. Our current year earnings consensus estimate for SMI has climbed by 40% over the last two months.
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Here are 3 Great Growth Stocks to Buy While they are Cheap
It hasn’t been a great month for investors. Indeed, the S&P 500 is down 1.75% so far in September, and the index is very close to all-time highs. At this point, it is not very easy to find bargains. It will be even harder to find cheap stocks with impressive growth potential.
Fortunately, we’ve found three great growth stocks that you can buy while they are cheap. Their EPS growth outlook is high, and they all have PEG ratios under 1. Markets may stagnate, but your portfolio’s returns don’t have to.
Nobilis Health Corp-(HLTH - Free Report)
Nobilis Health Corp. owns and manages ambulatory and acute care facilities for healthcare services. It also operates ambulatory surgery centers, hospitals, and imaging centers. Nobilis’ stock is a Zacks Rank #2 (Buy) and it has an “A” for Value in our Style Scores. It should be noted that the company has a market cap of $253 million.
Nobilis looks like an especially attractive bargain when examining its fundamental valuation metrics. HLTH trades at a forward PE of 6.88 and it has a PEG of just 0.34. With a PEG this low, Nobilis could be undervalued relative to its long term growth rate. One other trait which suggests that value is present is the stock’s price-to-sales ratio of 0.90.
In addition to being a cheap stock, Nobilis also has impressive growth metrics to back it up. This year, earnings and sales are projected to grow by 37% and 23% respectively. Nobilis also has a high trailing twelve month net margin of 22.3%, and it surpassed our EPS consensus estimate by 500% when it reported its last quarterly earnings.
Revenue (TTM)
Revenue (TTM) | Quote
PulteGroup Inc-(PHM - Free Report)
PulteGroup Inc. is one of the nation’s largest and most diversified homebuilders. It focuses on managing its homebuilding and financial services businesses, and the holding company has brands which include Centex, Del Webb, DiVosta, Pulte Homes, and John Wieland Homes and Neighborhoods. PulteGroup is a Zacks Rank #1 (Strong Buy) and it gets a “B” for Value in our Style Scores. The stock also doles out a dividend that yields 1.82% annually.
PulteGroup is cheap across several important valuation metrics. The company has an EV/EBITDA of 10.63, and this is slightly lower than the industry’s average EV/EBITDA of 11.33. The company also has a forward PE of just 12.28. To put this into perspective, the average forward PE of the S&P 500is 18.52.
PulteGroup stands to benefit from the strength in the housing market, and its industry (residential and commercial building) is in the top 25% of all 265 industries ranked by Zacks. This year, the company’s EPS (earnings per share) and sales are forecasted to increase by 27% and 24.7% respectively. Its trailing twelve month net margin of 7.89% is well ahead of the industry’s average net margin of 5.39%.
Over the last 60 days, three analysts have revised their previous EPS estimates higher for the current fiscal year. PHM has beaten our consensus estimate in each of the last three quarters, so there’s a good chance that it could surprise us once again when it releases its next quarterly results in late October.
Price and EPS Surprise
Price and EPS Surprise | Quote
Semiconductor Manufacturing International Corporation-(SMI - Free Report)
Semiconductor Manufacturing International is one of the largest semiconductor foundries in Mainland China, and it provides integrated circuit manufacturing services. In addition to an in-house assembly and testing facility, it has multiple 300 and 200 mm wafer fabrication facilities. SMI stock is a Zacks Rank #2 (Buy) and it has an “A” for Value in our Style Scores.
Semiconductor Manufacturing International has an EV/EBITDA of just 5.79, while the average EV/EBITDA for the industry is 9.24. SMI is also well ahead of the industry across other valuation metrics such as forward PE (13.97) and PEG (0.90). One trait which could suggest that SMI is undervalued is its price-to-book of 0.91. The company isn’t too leveraged either since its debt-to-capital is just 28%.
Revenues grew by 13.5% last year, and SMI looks to keep the momentum going, with sales forecasted to climb by 27.5% this year. Earnings are also projected to grow significantly, with EPS expected to increase by 21.9% in fiscal 2016. When SMI beats our consensus estimate, it tends to surpass it by a large margin. Fortunately, the company has beaten our estimate in three of the last four quarters. In that time span, it has topped our consensus by an average of 54% per quarter. Our current year earnings consensus estimate for SMI has climbed by 40% over the last two months.
Revenue (Quarterly)
Revenue (Quarterly) | Quote
The Zacks Rank is a truly marvelous trading tool. Our ranking system has beaten the S&P 500, yielding an average return of 25% per year for the last 29 years! Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>