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Finance

4 Growth Stocks to Buy in February

Growth stocks have delivered a stellar performance over the past year. Investors have turned to growth stocks strategically positioned to ride the wave of new business and consumer trends driven by the pandemic, which  forced individuals and businesses to operate remotely. Because many analysts expect these  trends to continue this year, growth companies in general should continue witnessing revenue and earnings growth.

The SPDR Portfolio S&P 500 Growth ETF (SPYG), which is a good indicator of the performance of growth stocks, has gained 29.3% over the past year. This compares to the broader market indicator SPDR S&P 500 ETF Trust’s (SPY) 15.5% returns over the same period.

So, Skyworks Solutions, Inc. (SWKS), PerkinElmer, Inc. (PKI), Chegg, Inc. (CHGG), and Wingstop, Inc. (WING) could be good additions to one’s portfolio in February. These stocks outperformed the broader market over the past year, based on consistent growth in revenue and earnings. Strong business models and the continued evolution of their offerings should help them keep climbing this year.

Skyworks Solutions, Inc. (SWKS)

SWKS designs, develops, and markets mixed-signal and analog semiconductors. The company has worldwide operations. SWKS’s stock has gained 33.4% over the past year.

SWKS recently partnered with Asus to develop and launch the world’s first ultra-fast wi-fi 6E extended band router. The company  also announced a $2 billion stock repurchase program.

Over the last five years, SWKS’s revenue has grown at a CAGR of 0.59%. Its  EBITDA grew at a CAGR of 0.59% over the same period.

SWKS is expected to see revenue growth of 21% for the quarter ended March 31, 2021 and 18.9% in 2021. Its  EPS is estimated to grow 24.1% in 2021 and at a rate of 11.95% per annum over the next five years.

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How does SWKS stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

A for Peer Grade

A for Industry Rank

A for Overall POWR Rating

The stock is also ranked #11 of 102 stocks in the Semiconductor & Wireless Chip industry.

PerkinElmer, Inc. (PKI)

PKI designs solutions for application in the life sciences, food, and diagnostics markets. The company has worldwide operations. PKI’s stock has returned 48.4% over the past year.

PKI recently launched industry-first GPCR TR-FRET Binding Assay and Beta-Arrestin Kits that will help with the discovery of new therapeutics. The company  also announced its decision to acquire Oxford Immunotec to grow its portfolio of advanced infectious diseases testing solutions.

Over the last five years, PKI’s revenue has grown at a CAGR of 7.4%. The company’s EBITDA has grown at a CAGR of 25.8% over the last three years.

PKI’s revenue is estimated to increase 68.4% for the quarter ended March 31, 2021 and 14.5% in 2021. Its  EPS is expected to rise 21% in 2021 and 17.2% per year over the next five years.

PKI’s strong fundamentals are reflected in its POWR Ratings. It has a Buy rating with an A for Trade Grade and Industry Rank, and a “B” for Buy & Hold Grade. It is ranked #55 of 189 stocks in the Medical – Devices & Equipment industry.

Chegg, Inc. (CHGG)

CHGG is involved in selling and renting print textbooks. The company also provides e-textbooks, internship services, self-study programs, college admission services, and more. The company’s stock price has increased 120.7% over the past year.

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CHGG has partnered with Arizona State University to offer on-demand training for advanced skills. The company has also launched Honor Shield, which will limit access to its  services during designated exam periods.

Over the last five years, CHGG’s revenue has grown at a CAGR of 12.17%. PKI’s EBITDA grew at a CAGR of 26.58% over the same period.

CHGG’s revenue is expected to grow 21.3% for the quarter ended March 31, 2021 and 18.6% in 2021. Its  EPS growth is expected to be 18.9% in 2021 and 23% per annum over the next five years.

It is no surprise that CHGG has a Strong Buy in our POWR Ratings systems with a grade of A in Trade Grade, Peer Grade, and Industry Rank. In the 69-stock Internet industry, CHGG is ranked #7.

Wingstop, Inc. (WING)

WING runs and franchises restaurants. The restaurants specialize in chicken wings that are cooked-to-order, hand sauced and tossed. WING’s stock has gained 66.6% over the past year.

WING recently opened its 1,500th restaurant worldwide. The has company also launched its first ghost kitchen in response to the spreading coronavirus to meet changing consumer dining behavior.

Over the last five years, WING’s revenue has grown at a CAGR of 25.91%. The company’s EBITDA has grown at a CAGR of 23.53% over the last three years.

WING’s revenue growth is expected to be 18.6% for the quarter ended March 31, 2021 and 11.9% for 2021. Its  EPS growth is expected to be 15.6% in 2021 and 22.3% over the next five years.

WING’s strong fundamentals are reflected in its POWR Ratings. It has a Strong Buy rating with an A for Trade Grade, Buy & Hold Grade, and Peer Grade. It is ranked #2 of 49 stocks in the Restaurants industry.

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SWKS shares were trading at $170.70 per share on Friday afternoon, up $10.91 (+6.83%). Year-to-date, SWKS has gained 11.66%, versus a -0.26% rise in the benchmark S&P 500 index during the same period.

About the Author: Aaryaman Aashind

Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More…

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