Though large-cap growth stocks have been the main drivers of the stock market’s rally since the COVID-19 pandemic-led correction in March last year, mid-cap stocks have been no less attractive to analysts and investors. This is evident in the Vanguard Mid-Cap Growth ETF’s (VOT) 48.9% gain over the past year, compared to the broader market S&P 500’s 29% returns…
There is a risk associated with investing in mid-cap stocks because they tend to be more volatile than their larger peers. However, we think it’s worth considering mid-cap players now because most large-cap growth stocks are trading at lofty valuations, making them more susceptible to a pullback. Moreover, given their relatively smaller size, small-cap companies have more room for growth.
Polaris Industries Inc. (PII – Get Rating), American States Water Company (AWR – Get Rating) and LG Display Co, Ltd (LPL – Get Rating) have delivered strong performance over the past year but we believe they are still well positioned to generate attractive returns on the back of their solid fundamentals and compelling growth attributes.
Polaris Industries Inc. (PII – Get Rating)
PII is a global leader in Powersports that offers off-road vehicles (ORVs), including all-terrain vehicles and side-by-side vehicles, snowmobiles and snow bike conversion kit systems, motorcycles, and low emission, light duty hauling, passenger, and industrial vehicles. Based in Minnesota, PII serves more than 100 countries worldwide through its dealer network and e-commerce website. It operates in five segments – ORV and Snowmobiles, Motorcycles, Global Adjacent Markets, Aftermarket, and Boats.
Yesterday, PII unveiled plans to debut an all-new 2022 electric RANGER utility side-by-side in late December 2021, advancing the company’s strategic rEV’d up electrification strategy. The full-size RANGER is the first electric vehicle PII has developed through its powersports industry-exclusive partnership with Zero Motorcycles, which the two companies forged last September. PII expects the new electric RANGER to begin arriving in dealerships in early 2022.
Over the past three years, PII’s revenue has grown at a CAGR of 8.9%. In the fourth quarter, ended December 31, 2020, the company’s adjusted revenues increased 24% year-over-year to $2.16 billion. Retail demand and industry tailwinds remained strong during the quarter benefiting company performance because new and existing customers continued taking advantage of off-road vehicles, snowmobiles, motorcycles and boats. Its EPS came in at $3.15, nearly doubling from the year-ago value of $1.58.
PII is up 30.5% so far this year. Despite witnessing manufacturing plant shutdowns and supply chain constraints for most of the past year, PII brought in new customers and powersports enthusiasts on the back of its product line-up of ORVs, snowmobiles and boats. In fact, PII introduced more than 120 new products across its portfolio and more than 900 new accessories in its PG&A business and Aftermarket segment combined over the past year. As management shifts its focus to rebuilding the company’s dealer inventories this year, Wall Street analysts expect PII’s current year revenue and EPS to rise 15.2% and 12.8%,respectively, year-over-year.
PII’s POWR Ratings reflect this promising outlook. PII has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
It also has an A grade for Growth and B for Quality and Momentum. It is ranked #9 of 53 stocks in the B-rated Auto & Vehicle Manufacturers industry.
In total, we rate PII on eight different levels. Click here to check additional POWR Ratings for PII (Value, Stability and Sentiment).
American States Water Company (AWR – Get Rating)
AWR is the parent company of Golden State Water Company (GSWC), Bear Valley Electric Service (BVES), and American States Utility Services (ASUS). It provides water and electric services to more than one million residential, commercial, industrial, and other customers in nine states of the United States. It operates through three segments – Water, Electric, and Contracted Services.
Last month , a procedural hearing was held on GSWC’s pending water general rate case that will set new rates for the years 2022 to 2024. In this hearing, the administration confirmed that GSWC is entitled to retain the use of the Water Revenue Adjustment Mechanism (WRAM) and the Modified Cost Balancing Account (MCBA) through the year 2024. GSWC’s next general rate case application will be filed in 2023 to establish new rates for the years 2025 – 2027.
AWR’s revenue and EPS grew at CAGRs of 3.5% and 7.5%, respectively, over the past three years. In the fourth quarter that ended December 31, 2020, AWR’s operating revenue improved 10% year-over-year to…
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