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3 High-Growth Stocks to Buy Amid Favorable Inflation Data
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Stocks have enjoyed buying pressure following better-than-expected inflation data, with Wednesday’s CPI and today’s PPI prints helping lift sentiment. As of now, the consensus remains for the Fed to hike another 25 basis points, but the historical tightening campaign is undoubtedly nearing its end.
And for those interested in riding the trend, three high-growth stocks – Airbnb (ABNB - Free Report) , Arista Networks (ANET - Free Report) , and Copart (CPRT - Free Report) – could all be solid considerations. Below is a chart illustrating the year-to-date performance of all three, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
As we can see, all three have been outperformers in 2023. In addition, all three sport a favorable Zacks Rank, indicating near-term optimism among analysts and providing the fuel needed to continue climbing. Let’s take a closer look at each.
Airbnb
Airbnb’s leading platform provides a marketplace for connecting hosts and guests online or through mobile devices to book spaces and experiences. The stock is a Zacks Rank #2 (Buy), with earnings expectations increasing across the board.
Airbnb has consistently surprised the market in a big way, exceeding earnings expectations by an average of 55% across its last four quarters. Just in its latest release, the company reported $1.8 billion in sales, improving 20% year-over-year thanks to continued strength in travel demand.
Impressively, the company booked more than 121 million nights and experiences throughout the mentioned quarter, improving nearly 20% from the year-ago quarter. As we can see below, Airbnb’s revenue growth has been rock-solid.
Image Source: Zacks Investment Research
And analysts expect the growth to continue, with estimates calling for 26% earnings growth in its current fiscal year (FY23) on 13% higher revenues. The stock sports a Style Score of “A” for Growth.
Image Source: Zacks Investment Research
Keep an eye out for ABNB’s upcoming quarterly release expected on August 1st; the Zacks Consensus EPS Estimate of $0.78 suggests a 40% improvement in earnings year-over-year. The quarterly estimate has been revised modestly higher over the last 60 days.
Arista Networks
Arista Networks, a current Zacks Rank #2 (Buy), provides cloud networking solutions for data centers and cloud computing environments. The company utilizes a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud footprint.
The revisions trend has been particularly noteworthy for the company’s current fiscal year, with the $5.87 per share estimate up nearly 40% since July of last year.
Image Source: Zacks Investment Research
Valuation levels are elevated, with the current 27.9X forward earnings multiple sitting on the higher end of the spectrum. Still, on a relative basis, the value is well beneath the 32.9X five-year median. Investors have had little issue forking up the premium, with ANET shares up more than 30% on a year-to-date basis.
Image Source: Zacks Investment Research
And to top it off, Arista Networks is forecasted to grow at a solid pace, with estimates calling for nearly 30% earnings growth in its current fiscal year (FY23) on 26% higher revenues. Looking ahead, estimates suggest a further 10% earnings growth paired with a 9% sales bump in FY24.
Copart
Copart, a Zacks Rank #1 (Strong Buy), provides online auctions and a wide range of remarketing services to process and sell salvage and clean title vehicles. Analysts have raised their earnings expectations across all timeframes.
Image Source: Zacks Investment Research
In addition, the company remains in a favorable financial standing, with reported cash and equivalents of $2.1 billion in its latest quarter growing 25% from the year-ago period. The company carries a small debt load, sporting a cash ratio of 4.2.
Image Source: Zacks Investment Research
As we can see below, CPRT shares have closely followed and respected their 50-day moving average. A pullback to this level could be a solid opportunity for investors, as buyers have consistently stepped up at the spot.
Image Source: Zacks Investment Research
Bottom Line
With favorable inflation data helping buoy the market as of late, high-growth stocks have been solid beneficiaries.
While their valuation levels may appear steep, investors have had little issue forking up the premium given the impressive growth rates.
And all three above – Airbnb (ABNB - Free Report) , Arista Networks (ANET - Free Report) , and Copart (CPRT - Free Report) – could be considerations for those with a growth-focused mindset.
All three sport a favorable Zacks Rank, indicating near-term optimism among analysts.
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3 High-Growth Stocks to Buy Amid Favorable Inflation Data
Stocks have enjoyed buying pressure following better-than-expected inflation data, with Wednesday’s CPI and today’s PPI prints helping lift sentiment. As of now, the consensus remains for the Fed to hike another 25 basis points, but the historical tightening campaign is undoubtedly nearing its end.
And for those interested in riding the trend, three high-growth stocks – Airbnb (ABNB - Free Report) , Arista Networks (ANET - Free Report) , and Copart (CPRT - Free Report) – could all be solid considerations. Below is a chart illustrating the year-to-date performance of all three, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
As we can see, all three have been outperformers in 2023. In addition, all three sport a favorable Zacks Rank, indicating near-term optimism among analysts and providing the fuel needed to continue climbing. Let’s take a closer look at each.
Airbnb
Airbnb’s leading platform provides a marketplace for connecting hosts and guests online or through mobile devices to book spaces and experiences. The stock is a Zacks Rank #2 (Buy), with earnings expectations increasing across the board.
Airbnb has consistently surprised the market in a big way, exceeding earnings expectations by an average of 55% across its last four quarters. Just in its latest release, the company reported $1.8 billion in sales, improving 20% year-over-year thanks to continued strength in travel demand.
Impressively, the company booked more than 121 million nights and experiences throughout the mentioned quarter, improving nearly 20% from the year-ago quarter. As we can see below, Airbnb’s revenue growth has been rock-solid.
Image Source: Zacks Investment Research
And analysts expect the growth to continue, with estimates calling for 26% earnings growth in its current fiscal year (FY23) on 13% higher revenues. The stock sports a Style Score of “A” for Growth.
Image Source: Zacks Investment Research
Keep an eye out for ABNB’s upcoming quarterly release expected on August 1st; the Zacks Consensus EPS Estimate of $0.78 suggests a 40% improvement in earnings year-over-year. The quarterly estimate has been revised modestly higher over the last 60 days.
Arista Networks
Arista Networks, a current Zacks Rank #2 (Buy), provides cloud networking solutions for data centers and cloud computing environments. The company utilizes a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud footprint.
The revisions trend has been particularly noteworthy for the company’s current fiscal year, with the $5.87 per share estimate up nearly 40% since July of last year.
Image Source: Zacks Investment Research
Valuation levels are elevated, with the current 27.9X forward earnings multiple sitting on the higher end of the spectrum. Still, on a relative basis, the value is well beneath the 32.9X five-year median. Investors have had little issue forking up the premium, with ANET shares up more than 30% on a year-to-date basis.
Image Source: Zacks Investment Research
And to top it off, Arista Networks is forecasted to grow at a solid pace, with estimates calling for nearly 30% earnings growth in its current fiscal year (FY23) on 26% higher revenues. Looking ahead, estimates suggest a further 10% earnings growth paired with a 9% sales bump in FY24.
Copart
Copart, a Zacks Rank #1 (Strong Buy), provides online auctions and a wide range of remarketing services to process and sell salvage and clean title vehicles. Analysts have raised their earnings expectations across all timeframes.
Image Source: Zacks Investment Research
In addition, the company remains in a favorable financial standing, with reported cash and equivalents of $2.1 billion in its latest quarter growing 25% from the year-ago period. The company carries a small debt load, sporting a cash ratio of 4.2.
Image Source: Zacks Investment Research
As we can see below, CPRT shares have closely followed and respected their 50-day moving average. A pullback to this level could be a solid opportunity for investors, as buyers have consistently stepped up at the spot.
Image Source: Zacks Investment Research
Bottom Line
With favorable inflation data helping buoy the market as of late, high-growth stocks have been solid beneficiaries.
While their valuation levels may appear steep, investors have had little issue forking up the premium given the impressive growth rates.
And all three above – Airbnb (ABNB - Free Report) , Arista Networks (ANET - Free Report) , and Copart (CPRT - Free Report) – could be considerations for those with a growth-focused mindset.
All three sport a favorable Zacks Rank, indicating near-term optimism among analysts.