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4 Picks for Fast Growth and Value
11/20/2014 8:00 am EST
The strength in the market over the past month has been across-the-board, with standouts in every major growth sector, as institutional investors stopped dumping and began buying with a vengeance, observes Stephen Quickel, growth stock specialist and editor of US Investment Report.
The stocks recently added to our Recommended List are those with credible 25%-to-40% five-year earnings growth expectations.
This has upped our average growth rate to nearly 22% a year and lowered our average P/E to Growth (PEG) to an even more attractive 0.79, despite sharply rising prices.
Our median forward P/E of 15.4 is actually less than the S&P 500’s P/E and our stocks figure to grow more than twice as fast as the S&P universe.
Here, in brief, look at four of our new buy recommendations and what we like about each of them:
Activision Blizzard (ATVI)
As the yearend holidays approach, video game stocks are doing well. Activision trades at a 14.7 P/E and a 0.89 PEG, well under the 1.00 PEG ideal. Products such as World of Warcraft and Call of Duty are expected to be top sellers. All 24 analysts tracking Activision rate it a Strong Buy or Buy.
Lithia Motors (LAD)
Shares of this Oregon-based auto dealership chain offer 27% a year earnings growth and a 13 forward P/E. LAD is still 19% below it 52-week high, but rose 5% last week as 3Q earnings met estimates. Wall Street’s encouraging view: Five Strong Buys and five Moderate buys out of ten ratings.
Micron Technology (MU)
Micron has just announced a $1 billion stock buyback program to boost its shares. It’s also used its cash-laden balance sheet to pay down debt. And now its semiconductor business is picking up. This augurs well for a stock whose P/E is only eight times year-ahead earnings. Its PEG is a mere 0.54.
PRA Group (PRAA)
Formerly Portfolio Recovery Associates, PRAA specializes in taking over its clients’ troubled accounts receivable, which net it a 20%-plus return on shareholders’ equity. Its stock stalled in 2014 but jumped from 53 to 63 last week. It’s been is lauded as one of the best-run small-caps by Forbes and Fortune.
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