Growth stocks have delivered high returns over the past year as evidenced by the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 35.6% gains over this period. But the ETF has lost 5.8% over the past month versus the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 4.3% gain. This indicates that some investors are rotating away from expensive growth stocks and into solid bargains with the expectation that an impending economic recovery will help these stocks their fair values quickly…
A broader market correction is long overdue given the solid price run up since the mid-March 2020 market correction. However, strong fundamentals and high earnings indicate that investors should buy the dip. Several blue-chip growth companies have by now reported earnings for the December quarter, and most of them have either met or beaten expectations.
Microsoft Corporation (MSFT – Get Rating), Amazon.com, Inc. (AMZN – Get Rating), Facebook, Inc. (FB – Get Rating), and Broadcom, Inc. (AVGO – Get Rating) are four companies that are experiencing price dips lately. But looking at their strong past performance and strong business models, we think investors should take advantage of the lower prices of their stocks.
Microsoft Corporation (MSFT – Get Rating)
MSFT needs no introduction. In addition to the Windows operating system and Office suite of products, the company also provides cloud computing services through Microsoft Azure. MSFT has gained 43.3% over the past year to close Friday’s trading session at $231.60. However, the stock is down 4.4% over the past month.
MSFT recently released its Group Transcribe app, which delivers real-time translation and transcription for in-person meetings. MSFT has also released a slew of new updates to its Azure IaaS service, including easier acquisition of computing capacity, greater options to increase edge and hybrid deployments, and new features for Linux environments.
MSFT’s trailing-twelve-month revenue has grown at a CAGR of 11.7% over the past five years. The company’s trailing-twelve-month EBITDA grew at a CAGR of 19.3% over the past three years.
MSFT is expected to see a revenue growth of 17.2% for the quarter ended March 31, 2021 and 14.8% in 2021. The company’s EPS is estimated to grow 28.5% in 2021 and at a rate of 16.7% per annum over the next five years.
MSFT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
It has an A grade for Sentiment and B for Quality, Stability, and Momentum. In the Software – Application industry, it is ranked #11 of 112 stocks.
In total, we rate MSFT on eight different levels. Beyond what we stated above we have also given MSFT grades for Value and Growth. Get all the MSFT ratings here.
Amazon.com, Inc. (AMZN – Get Rating)
In addition to running the world’s largest e-commerce marketplace, AMZN also develops and sells Kindle readers, Fire tablets, Fire phones, and more. The company also provides cloud computing services through Amazon Web Services (AWS). AMZN has returned 57.8% over the past year, but it declined 10.5% over the past month to close Friday’s trading session at $3000.46.
AMZN recently acquired 11 aircraft to expand its transportation fleet. The company now has a mixture of owned and leased aircraft to power its r delivery services. And it has announced that it will be opening two new fulfillment centers and one new delivery station in San Antonio, Texas.
The company’s trailing-twelve-month revenue grew at a CAGR of…
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