Growth stocks tend to outperform the broader markets during periods of economic recovery. This is evident in the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 30.3% returns year-to-date, versus the benchmark S&P 500 index’s 24.7% gains over this period. Strong consumer spending and…
favorable government policies have helped growth stocks to rally so far this year as the global economy bounced back from its pandemic-led recession.
However, most European countries are now re-imposing travel restrictions in the wake of a resurgence of COVID-19 cases. This raises concerns regarding the global economy’s recovery. However, the White House has been clear that it has no plans to shut down the economy because 82% of the U.S. population is vaccinated. This, coupled with the recently passed landmark infrastructure bill, should allow the U.S. economy to expand steadily in the coming months.
The conducive macroeconomic backdrop should allow growth stocks to generate momentum in the coming months. Thus, we think fundamentally-sound growth stocks TotalEnergies SE (TTE – Get Rating), Nucor Corporation (NUE – Get Rating), Ulta Beauty, Inc. (ULTA – Get Rating), and Steel Dynamics, Inc. (STLD – Get Rating) could be profitable bets now.
TotalEnergies SE (TTE – Get Rating)
Headquartered in France, TTE is an integrated oil and gas exploration and production company. It operates through four segments–Exploration & Production; Integrated Gas, Renewables & Power; Refining & Chemicals; and Marketing & Services. It also produces renewable energy through its Innovation & Energy Efficiency business segment.
The company has been capitalizing on the steady rise in oil prices over the past year as the global economy bounced back from the pandemic-fueled recession. Gas prices in Asia and Europe rose 85% sequentially in its fiscal third quarter, substantially boosting TTE’s profit margins. For the third quarter, ended September 30, 2021, TTE’s adjusted EBITDA increased 110.1% year-over-year to $11.18 billion. Its adjusted net income improved 462.4% from the same period last year to $4.77 billion. And its adjusted EPS stood at $1.76, up 506.9% from the prior-year quarter.
As a world leader in LNG production, TTE has an impressive growth history. The company’s revenues have increased at a 5.6% CAGR over the past five years. Its total assets and levered free cash flow have risen at CAGRs of 3.8% and 36%, respectively, over the past three years. Furthermore, TTE is taking active steps to reduce its carbon footprint amid rising concerns surrounding climate change and increasing demand for sustainable green energy.
On November 19, TTE partnered with the Government of Suriname to support the latter’s national strategy to reduce greenhouse emissions by preserving the Amazon rainforest. Also in that month, the company partnered with Australian carbon developers, ArgiProve and Corporate Carbon, to develop natural below-ground carbon sinks. These partnerships are aligned with TTE’s plans to eradicate its Scope 1 & 2 emissions.
A $2.15 consensus EPS estimate for its fiscal fourth quarter (ending December 2021) indicates a 367.4% improvement year-over-year. Analysts expect TTE’s revenues to improve 45.6% from the same period last year to $55.24 billion in the current quarter. The company has an impressive earnings surprise history; it beat the Street’s EPS estimates in three out of trailing four quarters.
Shares of TTE have gained 13.6% in price year-to-date to close yesterday’s trading session at $47.60.
TTE’s POWR Ratings reflect this promising outlook. The stock has an overall POWR Rating of B, which equates to Buy in our proprietary POWR Ratings system. It also has a B Growth grade. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Of the 84 stocks in the B-rated Energy – Oil & Gas industry, TTE is ranked #6. Click here to view additional TTE ratings for Momentum, Sentiment, Stability, Quality, and Value.
Nucor Corporation (NUE – Get Rating)
NUE produces direct reduced iron and steel products through three segments–Steel Mills; Steel Products; and Raw Materials. The Charlotte, N.C., company’s customer base includes steel service centers, fabricators, and manufacturers across the United States, Canada, and Mexico.
As manufacturing and production activity picked up globally, NUE witnessed a sharp uptick in its profit margins in the last quarter. Its net sales increased 109% year-over-year to $10.31 billion in its fiscal third quarter, ended October 3, 2021. This can be attributed to an…
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