4 Must-Own Growth Stocks to Buy on the Dip

U.S. stock indexes are trading higher today shrugging off concerns over the omicron coronavirus variant. Although the economy is under inflationary pressure, a recent decline in weekly jobless claims and President Biden’s declaration for fewer travel restrictions and lockdowns should keep the market’s momentum alive. 

Moreover, the surge in U.S consumer spending in the holiday season should support the market’s rally. Therefore, it could be wise to bet on fundamentally sound growth stocks as they tend to outperform broader markets in times of economic recovery. Investors’ interest in growth stocks is evident from the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 33% gains over the past year. 

Micron Technology, Inc. (MU), HP Inc. (HPQ), Dick’s Sporting Goods, Inc. (DKS), and ZIM Integrated Shipping Services Ltd. (ZIM), which have recently witnessed price dips, could be solid bets now. They possess solid growth attributes and are expected to gain in the upcoming months.

Micron Technology, Inc. (MU)

MU provides micron memory and storage solutions that accelerate the transformation of information into intelligence. The company also delivers a broad portfolio of technologies such as artificial intelligence and autonomous vehicles. It operates through four segments - Compute and Networking Business Unit; Mobile Business Unit; Storage Business Unit; and Embedded Business Unit.

Last month, MediaTek Inc. validated MU’s low-power double data rate 5X (LPDDR5X) DRAM for MediaTek’s new Dimensity 9000 5G flagship chipset for smartphones. MU believes that this collaboration with MediaTek to validate the advanced mobile memory empowers MU’s ecosystem to deliver the next wave of rich mobile features enhanced by 5G and AI.

MU’s revenue increased 36.6% year-over-year to $8.27 billion in the fiscal fourth quarter ended September 02, 2021. The company’s gross margin grew 89.2% from the year-ago value to $3.91 billion. Its operating income rose 155.4% from the prior-year quarter to $2.96 billion. Also, the company’s net income increased 174.7% year-over-year to $2.72 billion.

Analysts expect MU’s revenue for the fiscal year 2022 to be $31.88 billion, representing a 15.1% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Also, its EPS is expected to grow 44.7% in the current year. Its stock price has increased 31.1% over the past year. Also, it is currently trading 13.4% below its 52-week high of $96.96, which it hit on April 12, 2021.

The company’s revenue has increased at a CAGR of 17.4% over the past five years, and total assets have increased at a CAGR of 10.7% over the past three years.

MU’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

Also, the stock has an A grade for Momentum and a B grade for Value and Growth. We’ve also graded MU for Sentiment, Stability, and Quality. Click here to access all of MU’s ratings. MU is ranked #9 of 101 stocks in the A-rated Semiconductor & Wireless Chip industry.

HP Inc. (HPQ)

Formerly known as Hewlett-Packard Company, HPQ provides and develops a wide variety of hardware components, software, and related services to consumers, small and medium-sized enterprises, and large enterprises in the United States and internationally. Personal Systems; Printings; and Corporate Investments are the segments through which the company works.

In October, HPQ acquired Teradici Corporation, a global innovator in remote computing software that enables users to securely access high-performance computing from any PC, Chromebook, or tablet. Through this acquisition, HPQ should enhance its capabilities in the Personal Systems category by delivering new computer models and software-enabled digital services tailored for hybrid work.

During the fiscal fourth quarter ended October 31, 2021, HPQ’s net revenue increased 9.3% year-over-year to $16.68 billion. The company’s earnings from operations grew 24.8% from the year-ago value to $1.24 billion. Its net earnings rose 363.9% from the prior-year quarter to $3.1 billion. Also, the company’s EPS increased 453.1% year-over-year to $2.71.

HPQ’s revenue is expected to increase 3.2% year-over-year to $65.55 billion in the fiscal year 2022. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Also, its EPS is expected to increase 10% in the current year.  Moreover, the stock has gained 21.8% over the past nine months and 60.9% over the past year. Also, it is currently trading 2.6% below its 52-week high of $36.21, which it hit on November 24, 2021.

HPQ’s revenue has increased at a CAGR of 5.7% over the past five years, and total assets have increased at a CAGR of 3.7% over the past three years.

HPQ’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has an A grade for Value and a B for Quality.

In addition to the POWR Rating grades I’ve just highlighted, one can see HPQ’s ratings for Growth, Stability, Momentum, and Sentiment here. The stock is ranked #11 of 52 stocks in the B-rated Technology - Hardware industry.

Dick’s Sporting Goods, Inc. (DKS)

Sporting goods retailer DKS offers hardlines, sports goods equipment, fitness equipment, hunting and fishing gear products, apparel, footwear, and related accessories. In addition, the company operates through Golf Galaxy; Field & Stream, a youth sports mobile application for scheduling, communications, live scorekeeping, and video streaming; and GameChanger. It also sells its products through e-commerce websites.

Last month, DKS and NIKE, Inc. (NKE) created a connected partnership to enhance the shopping experience for DKS and NIKE customers. This collaboration should allow both the companies to reach more customers and provide best-in-class products, experiences with great offers to the athletes.

DKS’ net sales increased 13.9% year-over-year to $2.75 billion for the third quarter ended October 30, 2021. The company’s gross profit grew 25.5% from the year-ago value to $1.06 billion. Its income from operations rose 70.6% from the prior-year quarter to $419.87 million. Also, the company’s net income increased 78.6% year-over-year to $316.51 million.

DKS’ revenue for the fiscal year 2021 is expected to be $12.2 billion, representing a 27.5% year-over-year growth. The company has surpassed the consensus EPS in each of the trailing four quarters. Its EPS is expected to increase at the rate of 143.1% in the current year. DKS’ stock price has surged 109.1% year-to-date. Also, it is currently trading 20.2% below its 52-week high of $147.39, which it hit on September 7, 2021.

The company’s revenue and total assets have increased at a CAGR of 11.9% and 20.4%, respectively, over the past three years.

It’s no surprise that DKS has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Quality and Momentum.

Click here to see the additional POWR Ratings for DKS (Growth, Value, Stability, and Sentiment). DKS is ranked #8 of 38 stocks in the B-rated Athletics & Recreation industry.

ZIM Integrated Shipping Services Ltd. (ZIM)

Headquartered in Haifa, Israel, ZIM is a shipping company that provides smart, efficient networked, and reliable services with a unique approach. The company also offers seaborne transportation breakbulk and cargo services, inland transport services, ZIMonitor, a reefer cargo tracking service, and other carrier services.

In October, ZIM purchased seven secondhand vessels, including five 4,250 TEU vessels and two 1,100 TEU vessels, for a total consideration of approximately $320 million. Through this acquisition of the seven vessels, the company has maintained and expanded its operating fleet to meet growing customer demand and remain committed to delivering superior profitability.

ZIM’s income from voyages and related services increased 209.7% year-over-year to $3.14 billion for the third quarter ended September 30, 2021. The company’s gross profit grew 742% from the year-ago value to $1.91 billion. Its profit for the period rose 913% from the prior-year quarter to $1.46 billion. Also, at the end of the period, the company’s cash and cash equivalents increased 600.9% year-over-year to $2.45 billion.

Analysts expect ZIM’s revenue for the fiscal year 2021 to be $10.34 billion, representing a 159.1% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Also, its EPS is expected to grow 619.7% in the current year. Its stock price has increased 177.2% over the past nine months. Also, it is currently trading 11.1% below its 52-week high of $62.2, which it hit on September 16, 2021.

Its revenue and EBITDA have increased at a CAGR of 39.8% and 238.2%, respectively, over the past three years.

ZIM’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has a B grade for Growth and Quality.

In addition to the POWR Rating grades I’ve just highlighted, one can see ZIM’s ratings for Value, Stability, Sentiment, and Momentum here. ZIM is ranked #3 of 46 stocks in the C-rated Shipping industry.

MU shares were trading at $86.72 per share on Wednesday afternoon, up $2.72 (+3.24%). Year-to-date, MU has gained 15.51%, versus a 23.56% rise in the benchmark S&P 500 index during the same period.

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.

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