Growth stocks have defied the year-long global economic slump to report impressive results amid the COVID-19 pandemic, which has helped their stocks outperform the broader market. The SPDR Portfolio S&P 500 Growth ETF (SPYG), which is an indicator of the performance of growth stocks, has gained 31.4% over the past year compared to the SPDR S&P 500 ETF Trust’s (SPY) 17.8% returns.
We think this bullish run is likely to continue in 2021 on the back of a near-zero interest rates, a macroeconomic recovery fueled by nationwide vaccinations, and fiscal stimulus packages. The new U.S. Presidential administration is currently moving toward the passage of a jumbo fiscal stimulus bill with the goal of boosting consumer spending.
However, the rising popularity of growth stocks have led most of them to trade at lofty valuations, making them risky bets amid surging market volatility.
But, Gold Fields Limited (GFI), Glu Mobile Inc. (GLUU), and Resolute Forest Products Inc. (RFP) possess growth characteristics and are currently trading at affordable prices. So, we think these stocks may still have plenty of upside.
Gold Fields Limited (GFI)
GFI is a globally diversified gold mining company involved in underground and surface gold and copper mining and related activities, including exploration, development, extraction, processing and smelting. The company has reserves and resources in Chile, South Africa, Ghana, Australia, and Peru.
GFI’s revenue has increased at a CAGR of 7.2% over the past three years, while its EBITDA rose at a CAGR of 10.4% over the same period. GFI’s attributable gold equivalent production has increased 6.5% year-over-year to 557,000 ounces in the third quarter ended September 30, 2020. The company generated a revenue of $1,921 per-ounce, up 30.8% from the year-ago value.
Analyst expects GFI’s revenues to rise 34.7% year-to-year to $3.99 billion in the fiscal 2020 ended December 31. A consensus EPS estimate of $0.70 for the last year represents a 67.3% rise year-over-year. The stock has gained 43.2% over the past year to close yesterday’s trading session at $9.18.
GFI’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
The stock has an overall rating of B, which equates to Buy in our proprietary rating system. GFI has a grade of A for both Growth and Momentum, and B for Value. In the 49-stock Miners – Gold Industry, it is ranked #11.
In total, we rate GFI on eight different levels. Beyond what we stated above, we also have given GFI grades for Stability, Quality and Sentiment. Get all GFI’s ratings here.
Glu Mobile Inc. (GLUU)
Based in San Francisco, GLUU is a leading developer and publisher of a portfolio of free-to-play mobile games, which covers various genres, including fashion and celebrity, food, sports and action, social networking and home. It markets, sells, and distributes its games primarily through direct-to-consumer digital storefronts, such as Apple’s App Store, Google Play Store, and others.
GLUU’s revenues have increased at a CAGR of 26.5% over the past three years, while its leveraged free cash flow rose at a CAGR of 33.2% over the same period. We think the company’s impressive track record positions it well to emerge as a leading player in the recreation industry.
GLUU’s focus on margin expansion has ed to significantly higher profitability, driven by a greater return from its marketing spend. The company generated year-over-year bookings growth of 22.3%, totaling $147.3 million in the third quarter ended September 30, 2020. This was driven primarily by strong performance of its Growth Games. Its revenues have increased 48% from their year-ago value to $158.50 million, while its net income per share improved 266.7% over the three-month period.
Analyst expects GLUU’s revenues to rise 14.7% year-over-year to $124.31 million in the about-to-be reported quarter (ended December 31, 2020). A consensus EPS estimate of $0.12 in the fourth quarter represents a 33.3% rise from the year-ago value. The company has an impressive earnings surprise history; it beat the Street’s EPS estimates in three of the trailing four quarters. GLUU has gained 52.3% over the past year to close yesterday’s trading session at $8.98.
It is no surprise that GLUU has an overall rating of B, which equates to Buy in our POWR Ratings system. GLUU has a grade of B for Growth, Quality and Momentum and A for Value. In the 22-stock Entertainment – Toys & Video Games Industry, it is ranked #5.
Click here to see the additional POWR Ratings for GLUU (Stability and Sentiment).
Resolute Forest Products Inc. (RFP)
RFP is a global leader in the forest products industry with a diverse range of products that include market pulp, tissue, wood products, newsprint and specialty papers. The company also produces electricity at six cogeneration facilities and seven hydroelectric dams. RFP owns or operates some 40 facilities and power generation assets in the United States and Canada.
This month , RFP closed a private offering of $300 million senior unsecured notes due 2026 at 4.875%. The financing should provide RFP with sufficient funds to execute its business operations.
RFP’s leveraged free cash flow has increased at a CAGR of 5.7% over the past three years. Its net sales have increased 3.5% year-over-year to $730 million in the third quarter ended September 30, 2020, and its adjusted EBITDA has increased 508.7% from its year-ago value to $140 million. And its adjusted EPS has improved 294.6% over the three-month period to $0.72.
Analyst expects RFP’s revenues to rise 11.3% year-over-year to $743.50 million in the about-to-be reported quarter (ended December 31, 2020). A consensus EPS estimate of $0.53 in the fourth quarter represents a 189.8% rise from the year-ago value. The stock has gained 178.1% over the past year to close yesterday’s trading session at $8.87.
RFP’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to Buy in our rating system. RFP has a grade of B for Value and Quality, and A for Growth. It is currently ranked #1 of 14 stocks in the Industrial – Paper Industry.
Click here to see the additional POWR Ratings for RFP (Momentum, Stability, and Sentiment).
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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GFI shares were unchanged in after-hours trading Thursday. Year-to-date, GFI has declined -2.91%, versus a 3.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More…
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