Growth stocks have weighed heavily on the bear market. However, a handful of stocks are fairly cheap and continue to grow at impressive rates. 3 stocks that investors should consider buying Cigna (CI), Micron (MU), and Freeport McMoran (FCX).
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2 of the most popular schools of investment Value investment And Increased investment. Each school has its own strengths and weaknesses. And, each approach has generated life-changing wealth for successful followers.
The big risk for price investors is that they are buying cheaper stocks as the market often expects a decline in the earnings power of the business due to external forces. Is a prime example Intel (INTC) Which has made impressive financial posts, but also its stocks have performed poorly as its chip technology lags behind competitors which indicates future weakness in revenue growth and pricing power.
And, we are living at great risk for development investors. Valuations can be so extreme that stocks may suffer heavy losses due to a slowdown in growth or a change in economic or monetary conditions.
However, these challenging market environments can create opportunities to buy the best companies at bargain prices. Therefore, those seeking to take advantage of this disarray should consider an increase in fair value (GARP) stocks.
GARP is a strategy that combines growth and value investment and eliminates the worst of each. The GARP approach can reduce the negative side risks of increased investment by filtering out highly valued companies. Overvalued stocks are most vulnerable to large losses when market conditions are sour or the company reports poor earnings.
Here are 3 top GARP stocks that investors should consider.
Cygna Corporation (CI)
CI is a multinational managed healthcare and insurance company with various subsidiaries offering medical, dental, disability, life, and accident insurance. It also offers Medicare and Medicaid plans and products. Most of its plans are offered through employers and large organizations. It operates through three segments – Evernorth, the US medical and the international market.
Rising healthcare costs mean that health insurers are also prospering. These stocks tend to perform well during periods of increasing employment as this means more people will be enrolled in Cigna’s insurance plans. Thus, the company lost its jobs last year during the coronavirus crisis. However, it has rebounded impressively as the economy has begun to recover.
It is clear from this Last income report Last year’s revenue rose 9% to. 41.7 billion, well above expectations. Net income rose 323% to १ 4.1 billion. As a result, analysts have raised their outlook for its full-year results. Currently, they are projecting EPS of $ 20.26 billion and revenue of $ 169 billion, both figures represent a 9% increase from 2020.
CI’s earnings reflect its above average growth prospects. However, its price-to-earnings ratio is 11, which means it is much cheaper than the S&P 500’s price-to-earnings ratio of 44.
The stock has an overall A rating, which is in line with strong buying POWR evaluation. A-rated stocks posted an average annual performance of 30.7%. In terms of its components, CI has B for the value. Looking at the price ahead of the earnings ratio of 11.4, it remains 50% cheaper than the S&P 500.
To see other component grades of CI, including development, sustainability, spirit, speed, quality, and industry, please click. Here.
Micron (MU)
MU is a leading manufacturer of DRAM and NAND memory chips. Memory chips are an integral part of all kinds of consumer technologies, such as smartphones, PCs, cameras and consoles. However, the demand for enterprises is growing as they are increasingly being used in cars and data centers as well. Additionally, there is strong demand from future technologies such as AI and autonomous driving, which is a good indication for the company’s growth prospects.
This is reflected in the recent earnings report of Dynamic Micron, which showed sluggish consumer technology but continued to rise in enterprise spending. Next year, it predicts that demand for DRAM and NAND among teens will increase by 30%.
In the last quarter, MU’s data center business saw a 60% revenue growth. The automotive segment of MU also offers upside growth, and it currently has 50% of the automotive memory market. Cars are becoming increasingly electronic, and many of these require memory.
In terms of price, MU also shines with a P / E ahead of 5.9. The company also has a profit margin above 29% which should be maintained due to the company’s declining production costs and strong demand pricing power.
MU has a B rating POWR evaluation Which translates into a purchase. B-rated stocks posted an average annual performance of 21.1%, which compares favorably with the S&P 500’s annual gain of 8.0%. MU is ranked # 12 in the B-rated semiconductor and wireless chip group of # 12. Click Here To see other top stocks in the region and MU’s full POWR ratings here.
Freeport-McMoran (FCX)
FCX is the world’s largest copper producer operating in North America, South America, Africa and Asia. Overall, Tama accounts for 75% of its total revenue. Therefore, it is not surprising that the stock enjoyed spectacular gains as the price of copper has increased by 65% in the last 2 years.
However, copper prices have fallen by almost 30% due to the lockout in China and concerns that the global economy may slow down, resulting in a 35% pullback for FCX between mid-April and mid-May. However, FCX remains very profitable at these prices and attractive from a valuation basis.
The company has a P / E of 9.4 which is much cheaper than the market average despite good growth and cash flow figures. It is offering cash back to shareholders through its share buyback which is equivalent to 10% of the market cap. And, with increasing electrification, EV adoption and infrastructure costs, the company has the potential for strong, long-term growth.
Therefore, investors should seek to dive into the FCX, especially if the decline is due to the Fed’s focus on reducing inflation. POWR ratings are also bullish on FCX as it has a B rating which translates into a buy.
FCX has a B for quality because it is one of the largest and lowest cost producers of copper in terms of component grade. It also has B for its growth due to its very low debt level and strong cash flow. Click Here View full POWR ratings of FCX.
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CI shares traded down $ 0.36 (-0.15%) at $ 246.74 per share on Thursday afternoon. Year-to-date, the CI has risen 8.43%, against the -22.74% increase in the benchmark S&P 500 index over the same period.
About the Author: Gemini Desai
Gemini Desai has been a financial writer and reporter for nearly a decade. Her goal is to help readers identify market risks and opportunities. He is chief development strategist for StockNews.com and editor of POWR Growth and POWR Stocks $ 10 Newsletter. Learn more about Gemini’s background, as well as links to his most recent articles.
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