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Hunting for Growth Mixed with Value: Buy These 3 Stocks Now
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The Nasdaq dropped around 2.2% through late-afternoon trading on Thursday, as Wall Street decided to utilize quarterly results from Tesla and Netflix as a chance to start locking in some huge 2023 profits. The tech selling hit many other areas including semiconductor stocks and the biggest players on Wall Street such as Apple and Microsoft.
Given the huge run that many big tech stocks have gone on during the last several months and most of 2023, they were likely going to have to really outperform estimates and offer impressive guidance to avoid at least some profit-taking in the near term. In fact, a pullback over the next several days or even several weeks will likely prove healthy in the long term as a cooldown appeared needed.
The current run helped many big names post fresh all-time highs. Thankfully, there is still breathing room before the Nasdaq and the benchmark summit new peaks, with the two key indexes down about 11% and 7%, respectively from their records.
That said, inflation, the Fed, and the overall earnings picture remains bullish for stocks. Today we look at three highly-ranked Zacks stocks that have outperformed the market over the last several years, while posting solid growth. All three stocks we dig into also offer investors great value at the moment.
AmerisourceBergen ()
AmerisourceBergen operates in the background of the pharmaceutical and healthcare industries. The firm is one of the biggest distributors of medicines and other healthcare products in the U.S. ABC has grown steadily alongside the overall expansion of healthcare, pharmaceuticals, biotech, and medical products without having to undertake the massive amounts of research and development and suffer wider boom and bust cycles many in the space do. AmerisourceBergen averaged roughly 12% revenue growth over the last 10 years, and it is actively expanding outside of the U.S.
Image Source: Zacks Investment Research
The healthcare supply chain standout is even changing its name to Cencora to reflect its global ambitions (set to take place at some point in the second half). AmerisourceBergen’s push outside of the U.S. included some large acquisitions over the last several years. Zacks estimates call for ABC to post 7% revenue growth in FY23 and another 4% in FY24 to reach $265 billion and help boost its adjusted earnings by 8% and 6%, respectively.
Image Source: Zacks Investment Research
AmerisourceBergen’s upward earnings revisions help it grab a Zacks Rank #2 (Buy) heading into its August 2 release. ABC shares have soared 1,111% in the last 20 years vs. the S&P 500’s 360%, with it up 130% in the last five years. ABC currently trades near fresh highs, having ripped higher after finding support at its 50-day moving average at the end of May.
Image Source: Zacks Investment Research
Despite its huge outperformance of both the market and its highly-ranked industry over the last 15 years, it trades at a solid discount to both at 15.4X forward 12-month earnings vs. 19.1X for the Medical - Dental Supplies industry and 20.1X for the S&P 500. AmerisourceBergen also trades at a 33% discount to its own highs. And the company’s dividend yields 1% at the moment, with a very sustainable 17% payout ratio.
Perion is a digital advertising technology company that aims to help its clients reach their audiences and potential customers across search, social media, and display—which includes video and connected TVs. Perion is well-positioned to capitalize on the growing and rapid shift of ad dollars flowing to digital channels.
The company is already adapting to the impact ChatGPT and other AI-focused search engines are having on the market. Perion’s revenue jumped 34% last year, with Zacks estimates calling for another 15% growth in FY23 and 12% higher sales in FY24 to hit $823 million. Meanwhile, PERI is projected to grow its adjusted earnings by 17% in FY23 and another 7% next year to hit $3.08 a share.
Image Source: Zacks Investment Research
Perion has crushed our bottom line estimates by an average of 19% in the trailing four quarters and its overall earnings outlook for FY23 and FY24 has popped since its beat-and-raise first quarter release. Perion grabs a Zacks Rank #2 (Buy) ahead of its August 2 earnings release, and its most accurate/most recent Q2 estimate came in 11% above consensus.
Perion has soared over 1,000% in the last five years as the stock attempts to finally climb above its 2013/14 levels and post new all-time highs. PERI stock has climbed 530% in the past three vs. the Zacks Tech sector’s 38%.
PERI is up 40% YTD, yet the stock has slipped 15% from its 52-week highs in mid-April. PERI began to bounce back after it found support at its 200-day moving average.
Image Source: Zacks Investment Research
PERI is now trading above its 50-day and 21-day moving averages as well. Perion’s average Zacks price target also offers 13% upside to its current levels. Plus, Perion trades at an 82% discount to its five-year highs at 13.1X forward 12-month earnings and right at its median. PERI also trades at a 50% discount to the Zacks Tech sector.
Digital accounted for roughly 51% of total ad spending in 2019, with that figure set to hit nearly 70% by 2025. These trends aren’t likely to reverse, and it is crucial to remember that companies will never stop advertising. And Perion is poised to ride the evolving digital ad wave higher.
Livent ()
Livent is a lithium firm that produces high-quality finished lithium compounds, with manufacturing sites in the U.S., England, China, and Argentina. LTHM’s offerings serve various markets including pharmaceutical, industrial, aerospace, and booming growth areas such as electric vehicles and renewable energy.
Despite some possible boom and bust cycles, lithium demand is projected to outrun supply for years to come. Lithium-ion batteries have been used in electronics such as smartphones for a long time now. But EV batteries are roughly as large as the entire vehicle frame, which are orders of magnitude larger than an iPhone battery. Livent’s growth helps showcase the rapid expansion of EVs across the U.S., Europe, and beyond.
Image Source: Zacks Investment Research
Livent posted 93% revenue growth in 2022 and 45% top-line growth in FY21. Despite those difficult-to-compete-against periods, Zacks estimates call for LTHM’s revenue to surge another 36% in FY23 from $813 million to $1.10 billion and then climb 30% higher in 2024 to over $1.4 billion. And its adjusted earnings are set to surge 51% in FY23 and 25% in FY24.
Livent’s earnings outlook for FY23 and FY24 have soared over the last year and recently, with its most accurate estimates coming in well above consensus—2024’s figure is 25% higher. LTHM lands a Zacks Rank #1 (Strong Buy) heading into its quarterly release on August 3, and it beat by 54% last quarter.
LTHM shares have soared 300% in the last three years and 40% in the past 24 months. Livent has cooled down and chopped around over the last two years following its big post-Covid selloff surge. The stock is up 40% YTD and 30% in the last three months. At around $28 per share, it trades 23% below its highs, with it above its 21-day, 50-day, and 200-day moving averages.
Image Source: Zacks Investment Research
Livent trades at 11.7X forward 12-month earnings to mark a solid discount vs. its Zacks sector’s 12.9X and 93% below its own rather insanely high levels during the past few years. Livent also boasts a strong balance sheet, which will help it continue to expand and capitalize on industry growth and withstand economic storms and lithium price swings.
(Disclosure: Ben Rains owns Livent in Zacks Alternative Energy Innovators)
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Hunting for Growth Mixed with Value: Buy These 3 Stocks Now
The Nasdaq dropped around 2.2% through late-afternoon trading on Thursday, as Wall Street decided to utilize quarterly results from Tesla and Netflix as a chance to start locking in some huge 2023 profits. The tech selling hit many other areas including semiconductor stocks and the biggest players on Wall Street such as Apple and Microsoft.
Given the huge run that many big tech stocks have gone on during the last several months and most of 2023, they were likely going to have to really outperform estimates and offer impressive guidance to avoid at least some profit-taking in the near term. In fact, a pullback over the next several days or even several weeks will likely prove healthy in the long term as a cooldown appeared needed.
The current run helped many big names post fresh all-time highs. Thankfully, there is still breathing room before the Nasdaq and the benchmark summit new peaks, with the two key indexes down about 11% and 7%, respectively from their records.
That said, inflation, the Fed, and the overall earnings picture remains bullish for stocks. Today we look at three highly-ranked Zacks stocks that have outperformed the market over the last several years, while posting solid growth. All three stocks we dig into also offer investors great value at the moment.
AmerisourceBergen ()
AmerisourceBergen operates in the background of the pharmaceutical and healthcare industries. The firm is one of the biggest distributors of medicines and other healthcare products in the U.S. ABC has grown steadily alongside the overall expansion of healthcare, pharmaceuticals, biotech, and medical products without having to undertake the massive amounts of research and development and suffer wider boom and bust cycles many in the space do. AmerisourceBergen averaged roughly 12% revenue growth over the last 10 years, and it is actively expanding outside of the U.S.
Image Source: Zacks Investment Research
The healthcare supply chain standout is even changing its name to Cencora to reflect its global ambitions (set to take place at some point in the second half). AmerisourceBergen’s push outside of the U.S. included some large acquisitions over the last several years. Zacks estimates call for ABC to post 7% revenue growth in FY23 and another 4% in FY24 to reach $265 billion and help boost its adjusted earnings by 8% and 6%, respectively.
Image Source: Zacks Investment Research
AmerisourceBergen’s upward earnings revisions help it grab a Zacks Rank #2 (Buy) heading into its August 2 release. ABC shares have soared 1,111% in the last 20 years vs. the S&P 500’s 360%, with it up 130% in the last five years. ABC currently trades near fresh highs, having ripped higher after finding support at its 50-day moving average at the end of May.
Image Source: Zacks Investment Research
Despite its huge outperformance of both the market and its highly-ranked industry over the last 15 years, it trades at a solid discount to both at 15.4X forward 12-month earnings vs. 19.1X for the Medical - Dental Supplies industry and 20.1X for the S&P 500. AmerisourceBergen also trades at a 33% discount to its own highs. And the company’s dividend yields 1% at the moment, with a very sustainable 17% payout ratio.
Perion Network Ltd. ((PERI - Free Report) )
Perion is a digital advertising technology company that aims to help its clients reach their audiences and potential customers across search, social media, and display—which includes video and connected TVs. Perion is well-positioned to capitalize on the growing and rapid shift of ad dollars flowing to digital channels.
The company is already adapting to the impact ChatGPT and other AI-focused search engines are having on the market. Perion’s revenue jumped 34% last year, with Zacks estimates calling for another 15% growth in FY23 and 12% higher sales in FY24 to hit $823 million. Meanwhile, PERI is projected to grow its adjusted earnings by 17% in FY23 and another 7% next year to hit $3.08 a share.
Image Source: Zacks Investment Research
Perion has crushed our bottom line estimates by an average of 19% in the trailing four quarters and its overall earnings outlook for FY23 and FY24 has popped since its beat-and-raise first quarter release. Perion grabs a Zacks Rank #2 (Buy) ahead of its August 2 earnings release, and its most accurate/most recent Q2 estimate came in 11% above consensus.
Perion has soared over 1,000% in the last five years as the stock attempts to finally climb above its 2013/14 levels and post new all-time highs. PERI stock has climbed 530% in the past three vs. the Zacks Tech sector’s 38%.
PERI is up 40% YTD, yet the stock has slipped 15% from its 52-week highs in mid-April. PERI began to bounce back after it found support at its 200-day moving average.
Image Source: Zacks Investment Research
PERI is now trading above its 50-day and 21-day moving averages as well. Perion’s average Zacks price target also offers 13% upside to its current levels. Plus, Perion trades at an 82% discount to its five-year highs at 13.1X forward 12-month earnings and right at its median. PERI also trades at a 50% discount to the Zacks Tech sector.
Digital accounted for roughly 51% of total ad spending in 2019, with that figure set to hit nearly 70% by 2025. These trends aren’t likely to reverse, and it is crucial to remember that companies will never stop advertising. And Perion is poised to ride the evolving digital ad wave higher.
Livent ()
Livent is a lithium firm that produces high-quality finished lithium compounds, with manufacturing sites in the U.S., England, China, and Argentina. LTHM’s offerings serve various markets including pharmaceutical, industrial, aerospace, and booming growth areas such as electric vehicles and renewable energy.
Despite some possible boom and bust cycles, lithium demand is projected to outrun supply for years to come. Lithium-ion batteries have been used in electronics such as smartphones for a long time now. But EV batteries are roughly as large as the entire vehicle frame, which are orders of magnitude larger than an iPhone battery. Livent’s growth helps showcase the rapid expansion of EVs across the U.S., Europe, and beyond.
Image Source: Zacks Investment Research
Livent posted 93% revenue growth in 2022 and 45% top-line growth in FY21. Despite those difficult-to-compete-against periods, Zacks estimates call for LTHM’s revenue to surge another 36% in FY23 from $813 million to $1.10 billion and then climb 30% higher in 2024 to over $1.4 billion. And its adjusted earnings are set to surge 51% in FY23 and 25% in FY24.
Livent’s earnings outlook for FY23 and FY24 have soared over the last year and recently, with its most accurate estimates coming in well above consensus—2024’s figure is 25% higher. LTHM lands a Zacks Rank #1 (Strong Buy) heading into its quarterly release on August 3, and it beat by 54% last quarter.
LTHM shares have soared 300% in the last three years and 40% in the past 24 months. Livent has cooled down and chopped around over the last two years following its big post-Covid selloff surge. The stock is up 40% YTD and 30% in the last three months. At around $28 per share, it trades 23% below its highs, with it above its 21-day, 50-day, and 200-day moving averages.
Image Source: Zacks Investment Research
Livent trades at 11.7X forward 12-month earnings to mark a solid discount vs. its Zacks sector’s 12.9X and 93% below its own rather insanely high levels during the past few years. Livent also boasts a strong balance sheet, which will help it continue to expand and capitalize on industry growth and withstand economic storms and lithium price swings.
(Disclosure: Ben Rains owns Livent in Zacks Alternative Energy Innovators)