Notwithstanding a long list of apprehensions, 2015 has so far been a great year for some corners of the investment universe.
Stepped-up economic activities, rising business and consumer confidence, an improving job market, recovering housing fundamentals and an accommodative monetary policy stance indicate that the winter blues are done with. The U.S economy is thus showing a steady turnaround. However, Fed rate hike worries, oil price unpredictability and the looming Greece crisis tend to threaten the economic balance.
With the U.S. bull market entering its seventh successive annual run, it is a great time to indulge in growth stocks as they ensure outsized returns in a trending market. Growth investing offers one of the fastest means of compounding wealth by zeroing on stocks that show positive signs of proliferating earnings.
Further, the International Monetary Fund's projection of a 3.1% growth rate of the U.S. economy in 2015, in its "World Economic Outlook" for Apr 2015, also injects optimism.
Meanwhile, the S&P 500 is as well gaining momentum buoyed by the improvement in the U.S. economy. We note that since the markets bottomed in Mar 2009, the S&P 500 has gained over a whopping 207%. Naturally, when the broader market sentiments are positive, there is hardly any strategy as lucrative as growth investing.
However, these stocks can also tumble downhill when their growth story reaches the peak. So it is important to select companies that are still seeing strong momentum in their businesses and are slated for further growth in the rest of 2015.
7 Best Performing Growth Stocks in 1H15
With the help of our new style score system , we have identified seven stocks that have crushed the markets so far in 2015, hold excellent prospects and are well-positioned for future earnings growth as well.
Our Growth Style Score condenses all the essential metrics from a company's financial statements to get a true sense of the quality and sustainability of its growth. Our research shows that stocks with Growth Style Scores of 'A' or 'B' when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the best investment opportunities in the growth investing space.
All the stocks selected herein flaunt a solid Zacks Rank #1, have a Growth Style Score of 'A' and have witnessed a relative price change (comparison of calendar year-to-date price change of each stock with that of the S&P 500 over the same time period) of more than 50%, so far in 2015.
The company is engaged in the design and manufacture of photonic integrated circuit, or PIC, based modules and subsystems for bandwidth-intensive, high-speed communications networks. NeoPhotonics has seen a relative price change of about 170%. Moreover, the company has been topping Zacks Consensus Estimates lately with the last four quarters averaging at a hearty 138.5%.
NeoPhotonics has a projected EPS growth rate of 170.4% on a year-over-year basis, as compared to a meager industry average of 27.3% for 2015. Its current cash flow growth is pegged at a massive 277.5% and revenues are expected to grow 9.2%. The stock has also witnessed a momentous 325% upward revision in earnings estimates to 34 cents per share for its current year, over the last 60 days.
Isle of Capri Casinos, Inc.ISLE
The company is a developer, owner and operator of branded gaming and related lodging and entertainment facilities in the U.S. Isle of Capri Casinos has witnessed a relative price change of over 116%. Also, in the last four quarters, the company has delivered an average positive earnings surprise of 69.4%.
This gaming company has the potential to be another great growth stock as it has a projected EPS growth rate of almost 44%, crushing the industry average of just 2.3% in comparison. The company is currently seeing cash flow growth of 35.5%. Notably, the stock also has a Return on Equity (ROE) of 146.8% - a massive premium over the industry ROE of 11.6%. Further, the stock has seen its current year estimates surge 53.5% over the last 60 days to $1.09.
The company manufactures and markets a broad line of specialty chemicals and commodity chemical intermediates. Cambrex has witnessed a relative price change of over 102%. Also, over the last four quarters, the company has delivered an impressive average positive earnings surprise of over 28%.
Cambrex has a projected EPS growth rate of roughly 28%, against an industry average of just 8.2%. The company's cash flow growth of almost 26% also offers significant upside potential. Moreover, for full year 2015, revenues are expected to grow 15%.
The company is a developer of video compression and image processing semiconductors. This Santa Clara, CA-based company has witnessed a relative price change of over 102%. Moreover, it has delivered an average earnings beat of 35.6% over the last four quarters.
The company has a projected EPS growth rate of 70.4%, as compared to a meager industry average of 27.5%. Full year 2015 revenue growth is pegged at 45.2%, while its cash flow growth of almost 97% indicates room for future growth. The company has a ROE of 28.7%. Adding to the positives, the stock has witnessed a 60% upward revision in estimates to $2.67 for its current year earnings, over the last 60 days.
Multi-Fineline Electronix, Inc.MFLX
The company engages in the engineering, design, and manufacture of flexible printed circuit boards and related component assemblies for the electronics industry. A relative price change of about 94.3% speaks for a superb past performance.
This Irvine, CA-based company has a projected EPS growth rate of 171.8%, as compared to a meager industry average of nearly 16%. Further, its current cash flow growth is pegged at 5.1% while revenue growth is expected at 13.1% for full year 2015. Moreover, the stock has seen its current year earnings estimates surge 18.4% over the last 60 days to $1.48.
INSYS Therapeutics, Inc.INSY
This commercial-stage specialty pharmaceutical company has seen a relative price change of over 70%. Notably, in the last four quarters, the company has delivered an average positive earnings surprise of about 77.4%.
Based in Chandler, AZ, the company has a projected EPS growth rate of almost 76%, crushing the industry average which calls for EPS growth of just 10% in comparison. INSYS Therapeutics is also currently seeing cash flow growth of 16.5% and has a ROE of 43.2%, a premium of nearly 130% over the industry ROE of 18.8%.
A 7% upward revision in current year estimates over the last 60 days to 92 cents per share coupled with expected full year 2015 revenue growth of 36.3% further add to the optimism.
This global materials company and manufacturer of plastics, latex and rubber operates through four segments: Latex, Synthetic Rubber, Performance Plastics, and Basic Plastics and Feedstocks. The company has witnessed a relative price change of 53.5%.
It has a projected EPS growth rate of a massive 2192.6%, crushing the industry average which calls for EPS growth of just 32.3% in comparison. The company is currently seeing cash flow growth of a little over 47%. Also, the stock has seen a whopping 94.8% revision in earnings estimates to $4.13 per share for the current year, over the past 60 days.
With the U.S. economy picking up steam, this is the perfect time to indulge in growth stocks to make sure your portfolio sizzles with the rising mercury! While we keep our fingers crossed for a profitable second half, let these hot bets spell magical returns given their ranks, past performances and solid future growth projections.
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