My GameChangers Watch List: 4 Stocks on My Radar
November 7, 2017, 10:54 am
We talked last week about the value stocks I’ve been watching. Today, I’d like to share the top four growth stocks on my watch list. Let’s jump right in!
Regeneron Pharmaceuticals (REGN) has become a go-to name for money managers when biotech is performing well thanks to the continued growth of its retina drug EYELEA. It also has a strong pipeline, including Dupilumab for treatment of persistent asthma, which recently reported strong Phase 3 trial results, and esophagitis, currently undergoing Phase 2 trials. The stock has come under pressure in recent weeks as concerns about price deflation have swept through many parts of the healthcare sector, but there could be some potential catalysts for a turnaround when the company reports its earnings results on Wednesday. At 25X next year’s EPS estimates, valuation is becoming more attractive.
Gartner (GART) provides strategic advice and insights to 73% of the world’s largest Fortune 500 companies. Through 19,000 analysts, it has over 380,000 client interactions a year. GART offers its customers analysis of 14,000 peer benchmarks and diagnostics covering 35 functional areas, and it also sponsors industry events.
The company’s growth has been very consistent over the past five years, with revenues up 9% last quarter. Given its strong client relationships and steady results, it is a good choice in times of market uncertainty. GART also pays a full tax rate, and could be a beneficiary of tax reform. However, I’d like to see the stock move a little bit lower than its current valuation of 30X forward estimates before buying in.
Oil prices have been on the rise, with Brent Crude recently breaking above $60. However, oil stocks have been somewhat skeptical of this rally as they continue to underperform. At some point, though, the rising oil prices could provide us with an attractive entry point in EOG Resources (EOG). The company is one of the fastest-growing U.S. energy producers, with oil production up 25% and natural gas production up 10% in the second quarter. This is especially impressive considering that management is maintaining good production and financial discipline by limiting spending on their new products to cash generated from operations.
Texas Roadhouse (TXRH) showed signs of breaking out to new highs last Tuesday after reporting solid quarterly results, but it pulled back due to lingering concerns on operating margins with rising wages. However, TXRH’s fundamentals are solid, with total sales up 12.2% in the fiscal third quarter and comparable store sales up 4.3%. Despite a decline in restaurant operating margins from 18.1% to 17.8% on the higher wages, EPS increased from $0.36 to $0.43. I believe there is further room for growth at TXRH, as management is expecting to add 30 stores to their current 540 store base in the January 2019 fiscal year. Trading at 25X forward EPS estimates, valuation is reasonable and could become even more attractive if tax reform legislation passes since the company’s effective 29% tax rate would decline.
I hope this gives you some new ideas to add to your portfolio. If you’re looking to invest right now, there’s one stock in the medical marijuana industry that I’ve recommended to all my subscribers in my GameChangers service that’s a great company to get started with. It’s a solid growth stock with significant upside potential. If you’re interested, I encourage you to sign up for my risk-free trial so you can learn more about it.