Investors rotated away from expensive growth stocks earlier this year, but these stocks have again been attracting investors’ attention lately as the major stock market indexes hover near their all-time highs. This is evidenced by the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 13.1% returns over the past three months compared to the SPDR Portfolio S&P 500 Value ETF’s (SPYV) and the SPDR S&P 500 Trust ETF’s (SPY) 0.7% and 7.1% gains, respectively.
While two interest rate hikes are expected in early 2023, interest rates continue to be held near zero for now. So, the availability of cheap money should keep driving the growth of several companies. Furthermore, there has been a substantial decline in the unemployment rate, and the Conference Board expects the U.S. real GDP growth to rise to 7% in the third quarter.
So, we think it could be wise to bet on red-hot stocks POSCO (PKX) and GeoPark Limited (GPRK) that have solid growth prospects. In addition, our proprietary POWR Ratings system has rated these stocks A for Growth along with an overall Strong Buy or Buy rating.
Headquartered in Pohang, South Korea, PKX manufactures and sells steel rolled products and plates internationally. It operates through four segments: Steel; Construction; Trading; and Others. The company’s offerings include hot and cold rolled steel, stainless steel, plates, wire rods, and silicon steel sheets.
PKX announced on March 31 that it would supply 26,000 tons of steel plates to construct commercial facilities built by Shinsegae Eng. & Construction Co., Ltd. This is expected to increase PKX’s revenue.
PKX’s revenue climbed 11.9% year-over-year to 16.07 billion KRW ($14.21 million) for its fiscal first quarter, ended March 31, 2021. Its operating income grew 13.9% year-over-year to 1.55 billion KRW ($1.37 million). The company’s net income increased 161.8% year-over-year to 1.14 billion KRW ($1 million), and its revenue increased at a 3.7% CAGR over the past five years.
The company’s EPS is expected to increase 244.6% year-over-year to $11.26 in its fiscal year 2021. Its revenue is expected to increase 97.8% year-over-year to $61.71 billion in its fiscal year 2022. The stock has gained 24% over the past nine months and 10% over the past six months to close yesterday’s trading session at $66.33.
PKX’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has an A grade for Growth, Momentum, and Value, and a B grade for Sentiment and Stability. Within the A-rated Steel industry, PKX is ranked #15 of 34 stocks. To see PKX’s rating for Quality as well, click here.
GeoPark Limited (GPRK)
Based in Santiago, Chile, GPRK explores for, develops, and produces oil and gas reserves in Chile, Colombia, Brazil, Argentina, Peru, and Ecuador. The company has working and/or economic interests in 31 hydrocarbon blocks and shallow-offshore concessions in Brazil that include the Manati Field. It also has net proved reserves of 124.0 million barrels of oil equivalent.
GPRK declared a $0.041 per share quarterly cash dividend payable on August 31, 2021. The company is doubling its quarterly dividend because it remains committed to returning value to its shareholders while executing self-funded and flexible work programs and paying down debt.
GRPK’s revenue surged 197.3% year-over-year to $165.60 million in the second quarter, which ended June 30, 2021. Its adjusted EBITDA grew 117.6% year-over-year to $60.50 million. Its net loss came in at $2.5 million, representing an 87.4% year-over-year decrease. Its revenue and levered FCF increased at CAGRs of 3.1% and 17%, respectively, over the past three years.
Analysts expect GPRK’s EPS and revenue to increase 1,250% and 67.1% year-over-year to $0.46 and $164 million, respectively, for the quarter ending September 30, 2021. The stock has soared 6.6% over the past nine months and 1.4% over the past year to close yesterday’s trading session at $10.30.
GPRK’s POWR Ratings reflect its solid prospects. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Growth and Momentum, and a B grade for Quality.
PKX shares were trading at $65.86 per share on Friday afternoon, down $0.47 (-0.71%). Year-to-date, PKX has gained 6.52%, versus a 19.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.2 Red-Hot Growth Stocks to Snatch Up in August appeared first on StockNews.com