After an interest rate increase last month, the Federal Reserve is expected to raise rates by half-point each in May and June, according to economists polled by Reuters. Furthermore, increased Western sanctions on Russia are intensifying worldwide supply chain disruptions. However, despite slashed growth estimates, the U.S. economy looks strong enough to sustain its recovery.
According to Freedonia Focus Reports, U.S. nominal GDP is forecast to grow 5.6% per year through 2025. Thus, fundamentally strong growth stocks might offer significant gains amid consistent demand and rising employment opportunities. Investors’ interest in growth stocks is evident in the iShares S&P 500 Growth ETF’s (IVW) 8.6% returns over the past month, compared to the SPDR S&P 500 Trust ETF’s (SPY) 7.5% returns.
Given this backdrop, we think it could be wise to bet on growth stocks IQVIA Holdings Inc. (IQV), West Pharmaceutical Services, Inc. (WST), and Synopsys, Inc. (SNPS), each of which has declined more than 10% in price year-to-date.
IQVIA Holdings Inc. (IQV)
IQV provides advanced analytics, technology solutions, and clinical research services to the life sciences industry in the Americas, Europe, Africa, and the Asia-Pacific. It operates through three segments: Technology & Analytics Solutions; Research & Development Solutions; and Contract Sales & Medical Solutions. IQVIA is based in Danbury, Conn.
On Feb. 15, 2022, Ari Bousbib, IQV’s chairman and CEO, said, “We are now two-thirds of the way through our Vision 22 plan and are on a path to achieving or exceeding our targets. The outlook for our end markets remains favorable and we expect continued strong demand for our differentiated offerings in 2022.”
IQV’s revenues came in at $3.64 billion for the fourth quarter, ended Dec.31, 2021, up 10.2% year-over-year. Its net income came in at $318 million, up 167.2% year-over-year. Its EPS also increased 167.2% year-over-year, to $1.63. The company’s adjusted EBITDA was $828 million, up 12.7% year-over-year.
For its fiscal year 2023, analysts expect IQV’s revenue to increase 9.7% year-over-year to $16.29 billion. Also, the stock’s EPS is expected to grow at an 18.2% rate per annum over the next five years. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has declined 10.6% year-to-date to close Friday’s session at $252.29.
IQV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
IQV has an A grade for Growth and a B grade for Sentiment. Within the Medical - Diagnostics/Research industry, it is ranked #8 of 50 stocks. Click here to see the additional POWR Ratings for Value, Quality, Momentum, and Stability for IQV.
Click here to checkout our Healthcare Sector Report for 2022
West Pharmaceutical Services, Inc. (WST)
WST designs, manufactures, and sells containment and delivery systems for injectable drugs and healthcare products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The Exton, Pa., company operates in two segments–Proprietary Products and Contract-Manufactured Products.
On Feb. 17, 2022, President and CEO Eric M. Green said, “Proudly, we enter the year with a strong outlook in our proprietary products segment and continued HVP growth. Looking ahead, our capital investments and recently announced collaboration with Corning will continue to drive future growth and innovation, as we are well positioned for success in 2022 and beyond.”
WST’s net sales increased 26% year-over-year to $730.80 million for the fourth quarter ended Dec.31, 2021. Its net income came in at $147.70 million, up 50.1% year-over-year, while its EPS came in at $1.93, up 49.6% year-over-year. The company’s gross profit came in at $300.60 million, up 42.4% year-over-year.
Analysts expect WST’s revenue to increase 8.3% to $3.07 billion in 2022. Its EPS is estimated to increase 10.9% to $10.28 in 2023. It surpassed EPS estimates in each of the four trailing quarters. The stock has declined 11.8% in price year-to-date to close Friday’s trading session at $413.58.
Under the POWR Ratings, WST has a B grade for Growth and Sentiment. It is ranked #44 of 161 stocks in the Medical - Devices & Equipment industry. Click here to see the additional POWR Ratings for WST (Stability, Quality, Value, and Momentum).
Click here to checkout our Healthcare Sector Report for 2022
Synopsys, Inc. (SNPS)
SNPS in Mountain View, Calif., provides electronic design automation software products used to design and test integrated circuits. The company offers Fusion Design Platform, Verification Continuum Platform, and FPGA design products that are programmed to perform specific functions.
On Feb.16, 2022, SNPS’ chairman and co-CEO Aart de Geus said, “Our markets are strong, as companies across vertical segments intensify their investments to benefit from increased complexity in critical chips, system design, and immense amounts of software. Synopsys is at the heart of this wave of advanced technology.”
For its fiscal year 2022first quarter ended Jan.31, 2022, SNPS’ total revenue increased 30.9% year-over-year to $1.27 billion. Its non-GAAP net income came in at $376.89 million, up 57.4% year-over-year. Its non-GAAP EPS was $2.40, up 57.9% year-over-year. Also, its operating income came in at $347.04 million, up 133.9% year-over-year.
SNPS’ revenue is expected to increase 14.4% to $4.81 billion in 2022, while its EPS is estimated to increase 16.2% per annum for the next five years. It surpassed EPS estimates in each of the four trailing quarters. The stock has declined 13.2% in price year-to-date to close Friday’s session at $319.83.
SNPS has an overall B rating, which equates to Buy in our POWR Ratings system. It has an A grade for Quality and a B grade for Growth and Sentiment. SNPS is ranked #13 of 158 stocks in the Software - Application industry. Click here to check additional ratings for SNPS (Value, Momentum, and Stability).
Click here to check out our Software Industry Report for 2022
What To Do Next?
If you would like to see more top growth stocks, then you should check out our free special report:
What makes them "MUST OWN"?
All 9 picks have strong fundamentals and are experiencing tremendous momentum. They also contain a winning blend of growth and value attributes that generates a catalyst for serious outperformance.
Even more important, each recently earned a Buy rating from our coveted POWR Ratings system where the A rated stocks have gained +48.22% a year.
Click below now to see these top performing stocks with exciting growth prospects:
IQV shares were trading at $247.02 per share on Monday morning, down $5.27 (-2.09%). Year-to-date, IQV has declined -12.45%, versus a -6.68% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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