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4 Growth Stocks to Buy as Nasdaq Stages Comeback

Aniruddha Ganguly
·5 mins read

The Nasdaq composite climbed 1.71% to close at 10,963.64 on Sep 22, putting an end to its four-day losing streak on gains in technology stocks.

Notably, the Dow Jones Industrial gained 0.52% to close at 27,288.18, while the S&P 500 rose 1.05% to close at 3,315.57.

Markedly, all three major indices witnessed sharp sell-offs this month, primarily due to renewed coronavirus lockdowns in Europe and rising political tensions in the United States related to the upcoming Presidential election.

Moreover, delay in the second round of fiscal relief due to the ongoing feud between congressional Democrats and the White House has been concerning. The tussle between President Donald Trump and Democrats is now expected to worsen over a nominee to replace Supreme Court Judge Ruth Bader Ginsburg, who died on Sep 18.

Nevertheless, positive economic data like solid growth in existing home sales in August and resilient house hold spending are key catalysts.

Nasdaq’s Prospects Remain Bright

Although the September sell-out has been worrisome for investors, we believe Nasdaq has solid prospects, primarily fueled by changing consumer preference and behavior. An e-commerce boom prompted by changing consumer behavior is a key catalyst.

Moreover, we expect the work from home and online-learning wave to keep demand for remote-working tech, cloud services and cybersecurity solutions high, particularly on the backdrop of rising fear of lockdowns in major countries of Europe.

Here we pick four Nasdaq-listed stocks that apart from boasting strong fundamentals have a favorable combination of a Growth Score of A and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Per the Zacks proprietary methodology, stocks with such a perfect mix of elements offer solid investment opportunities.

Notably, each of these stocks has outperformed the S&P 500 composite on a year-to-date basis.

Year-to-Date Performance

 

Top Bets

Builders FirstSource BLDR sports a Zacks Rank #1. The company has been benefiting from a resilient homebuilding market, improving housing starts, record-low mortgage rates and the ongoing shift toward suburban living.

Moreover, the Builders FirstSource pending merger with BMC Stock Holdings BMCH will create a company with combined sales of more than $11 billion. Markedly, existing Builders FirstSource shareholders will own nearly 57% of the combined company.

The combined company will operate a network of 550 distribution and manufacturing locations. It will have presence in 42 states, including 44 of the top 50 metropolitan statistical areas, covering most of the fastest growing regions in the United States.  

The Zacks Consensus Estimate for Builders FirstSource’s 2020 earnings stands at $2.10 per share, having moved 75% north over the past 60 days.

Hibbett Sports HIBB benefits from an expanding customer base driven by its strategy to connect with more customers through e-commerce channel and selective store expansion. This Zacks Rank #1 company is leveraging its omni-channel capabilities, such as home delivery, buy online and pick-up in store, reserve online and pick-up in store, buy online ship to store facility, same day delivery and mobile app services to fulfill online orders and serve customers.

Markedly, the company witnessed 49% growth in online traffic on the back of rise in new customer count in the second quarter of fiscal 2021. Further, Hibbett Sports has a target of growing to more than 1,500 stores in underserved markets.

The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $4.34 per share, having been revised 48.1% upward in the past 60 days.

Zoom Video Communications ZM is riding on the coronavirus-induced work from home and online-learning trend. Easy to deploy, use, manage and solid scalability make Zoom Video’s software massively popular among customers. Moreover, the company’s expanding international presence is a key catalyst.

Further, its efforts to eliminate the security and privacy loopholes as well as new hardware and Zoom From Home solution launch are expected to help in expanding clientele.

The consensus mark for its fiscal 2021 earnings is pegged at $2.26 per share, having moved 79.4% north in the past 60 days.

GrowGeneration GRWG is benefiting from robust demand for products, including LED lights, nutrients, additives, soils and other products that are necessary for Cannabis growers’ gardens. This specialty hydroponics retailer’s newly launched private-label Sunleaves nutrients and additives line of products has gained significant traction within a short span of time.

GrowGeneration has an active pipeline of acquisitions and plans to open new stores in the rest of 2020. This Zacks Rank #2 company targets to open 50 stores and expand footprint in 15 states in 2021.

The consensus estimate for fiscal 2021 is pegged at 15 cents per share, up 87.5% in the past 60 days.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Hibbett Sports, Inc. (HIBB) : Free Stock Analysis Report
 
Builders FirstSource, Inc. (BLDR) : Free Stock Analysis Report
 
BMC Stock Holdings, Inc. (BMCH) : Free Stock Analysis Report
 
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
 
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