There’s no denying that Tesla (TSLA) is one of the top stocks in 2020, up 414.9% so far. But there are three other growth stocks that I believe are much better buys right now.
While TSLA is attempting to revolutionize the automobile industry, the stock price is not reflective of its real value. Morningstar has a fair value price of $195 for the stock, well below its closing price today of $430.83. The stock also has a sky-high trailing P/E of 1,062.
Those figures make me think that its future success is already factored into the stock’s price…
In finding growth stocks, I want stocks with an impressive past growth history and the potential for robust growth next year. I also wanted stocks that had more down to earth valuations. The valuations don’t need to be in value territory; I just want a valuation that isn’t ridiculous.
After running the numbers, I found three stocks that fit these criteria. Advanced Micro Devices (AMD), The Boston Beer Company (SAM), and Quidel Corporation (QDEL) are impressive growth stocks that aren’t trading at absurd valuations.
Advanced Micro Devices (AMD)
AMD has been performing quite well during the pandemic due to the fact that its customers still require AMD’s portfolio of offerings. As people work from home, the demand for laptops and desktops have surged. These products require the chips that AMD provides. The need for servers has also increased due to the rise of cloud computing services.
The company will also benefit from the rollout of 5G and the need for more advanced chips for smartphones and IoT (Internet-of-Things) devices. Also, Microsoft (MSFT) and Sony (SNE) are launching gaming consoles this quarter, which should surely benefit AMD.
AMD was recently in the news as it is in advanced talks to buy its rival Xilinx (XLNX). This is on the heels of Nvidia (NVDA) acquiring Arm Holdings. A combined AMD and XLNX would be valued at approximately $30 billion. XLNX creates programmable chips used in data centers for artificial intelligence and telecommunications. This should enhance AMD’s capabilities in those areas.
While AMD has an elevated trailing P/E of 159.94, its valuation is justified by its growth projections next year of 26.9% for revenues and 178.9% for earnings. The stock is rated a “Buy” by our POWR Ratings system. It holds a grade of “A” for Trade Grade and Industry Rank, and a “B” for Buy & Hold Grade. Those are three out of the four components that make up the POWR Ratings. The stock is also ranked #17 in the Semiconductor & Wireless Chip industry.
AMD is expected to report earnings next week on October 27th after the market closes.
The Boston Beer Company (SAM)
SAM, known for its Samuel Adams line of beers, is a U.S. high-end malt beverages market leader with strong positions in craft beer, hard cider, and hard seltzer. In addition to Samuel Adams, the company sells products through three other brands, including Angry Orchard, Twisted Tea, and Truly Hard Seltzer.
The company saw growth in the second quarter on the back of strong shipments and depletions growth. Depletions growth is a term in the beer industry that refers to the rate at which beer, which has already been shipped from a producer to a distributor, leaves the distributor’s warehouse to end-users. The second quarter was…
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