The U.S. economy has demonstrated a remarkable recovery from its pandemic-led recession, with the total size of the economy now surpassing pre-pandemic levels. Real gross domestic product (GDP) increased at an annual rate of 6.6% in the second quarter of 2021, reflecting the economy’s sturdiness.
In addition, President Biden is confident that the Congress will approve a bipartisan infrastructure bill and a supplementary spending bill, as Democrats seek to inject nearly $5 trillion into the economy. If approved, the bill, with provisions for investment in several sectors, should boost the economy.
QUALCOMM Incorporated (QCOM)
QCOM develops and sells technologies for wireless devices. The San Diego, Calif., company holds crucial patent rights for CDMA, LTE, and 5G services. The company operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI).
On August 5, QCOM submitted an offer to acquire Swedish automotive technology company, Veoneer, Inc. (VNE). If the proposed acquisition succeeds , it might help QCOM gain a competitive edge in the advanced driver-assistance systems (ADAS) space in the rapidly transforming automotive industry space.
In the third fiscal quarter, ended June 27, QCOM’s non-GAAP revenue increased 63.5% year-over-year to $8 million, while its non-GAAP earnings before taxes (EBT) improved 130.5% from the prior-year quarter to $2.55 billion. The company’s non-GAAP net income and non-GAAP EPS rose 124% and 123.3%, respectively, year-over-year to $2.2 billion and $1.92.
An $8.26 consensus EPS estimate for the current year (fiscal 2021) indicates a 97.1% year-over-year increase. Likewise, the $33.02 billion consensus revenue estimate reflects a 52.5% increase the prior year. Furthermore, QCOM has an impressive surprise earning history; it topped consensus EPS estimates in each of the trailing four quarters. Its EPS is expected to grow 32.2% per annum over the next five years. QCOM has gained 17.7% in price over the past year to close yesterday’s trading session at $131.75.
QCOM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
QCOM has a Value, Momentum, Sentiment, and Quality grade of B. In the A-rated Semiconductor & Wireless Chip industry, it is ranked #12 out of the 97 stocks.
To see additional POWR Ratings for Growth and Stability for QCOM, click here.
DENTSPLY SIRONA Inc. (XRAY)
XRAY produces and sells various dental products and technologies for the professional dental market globally. The York, Pa.-based company markets dental and oral health products. In addition, its consumable healthcare products segment provides urological and surgical solutions.
On June 4, XRAY obtained the assets of Propel Orthodontics, a seller of orthodontic devices worldwide. The acquisition might strengthen the company's position in the clear aligner market and provide opportunities for expansion in the orthodontics space.
For its second fiscal quarter, ended June 30, XRAY’s net sales increased 117.3% year-over-year to $1.07 billion. Its non-GAAP gross profit increased 202.4% from the prior-year quarter to $626 million. Its non-GAAP net income attributable to XRAY and its non-GAAP EPS came in at $156 million and $0.71, respectively, up substantially from their negative year-ago values.
Analysts expect XRAY’s EPS to increase 61.5% year-over-year to $2.89 for the current year (fiscal 2021). Likewise, the Street expects its revenue to increase 28.4% from last year to $4.29 billion in the current year. The company’s EPS is expected to increase 26.4% per annum over the next five years. In addition, XRAY has topped consensus EPS estimates in each of the trailing four quarters. The stock has gained 32.6% in price over the past year to close yesterday’s trading session at $59.28.
It’s no surprise that XRAY has an overall grade of B, which translates to Buy in our POWR Ratings system.
The stock has a Growth grade of A, and a Value and Sentiment grade of B. It is ranked #14 of 182 stocks in the Medical – Devices & Equipment industry.
Click here to see the additional POWR Ratings for Momentum, Stability, and Quality for XRAY.
Atkore Inc. (ATKR)
Harvey, Ill.-headquartered ATKR manufactures electrical raceway products. The company operates through the Electrical segment and Safety and Infrastructure segment. ATKR offers electrical raceway products, including electrical conduits and fittings, armored cables and fittings, cable trays and mounting systems, and fittings.
In May, ATKR refinanced and replaced the senior secured term loan facility of its subsidiary Atkore International, Inc. (AII) with a new $400 million senior secured term loan facility that matures in 2028. Regarding this transaction, David P. Johnson, the company’s Chief Financial Officer, said, “These actions demonstrate Atkore’s continued commitment to operating with strong financial management while continuing to deliver value to our customers.”
ATKR’s net sales increased 121.8% year-over-year to $853.66 million in its third fiscal quarter, ended June 25. Its adjusted net income came in at $187.16 million, up 483.5% from the prior-year quarter, while its adjusted net income per share increased 491% from the same period last year to $3.96. Its adjusted EBITDA rose 330.4% year-over-year to $274.26 million.
The Street’s $12.44 EPS estimate for the current year (fiscal 2021) indicates a 229.1% year-over-year increase, and the Street’s $2.83 billion revenue estimate for the current year reflects a 60.5% rise from the prior-year quarter. ATKR has topped consensus EPS estimates each of the trailing four quarters. Moreover, its EPS is expected to increase 24.1% per annum over the next five years. ATKR’s stock has gained 270.2% in price over the past year and 110% year-to-date to close yesterday’s trading session at $86.34.
ATKR’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A which equates to Strong Buy in our POWR Rating system.
ATKR has an A grade for Growth, Momentum, and Quality, and a B grade for Value and Sentiment. It is ranked #2 of 38 stocks in the Industrial – Metals industry.
Click here to see the additional POWR Ratings for ATKR (Stability).
Note that ATKR is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
QCOM shares were trading at $133.02 per share on Wednesday afternoon, up $1.27 (+0.96%). Year-to-date, QCOM has declined -11.41%, versus a 18.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.3 Growth Stocks to Own for The Long Term appeared first on StockNews.com