Amid the backdrop of persistent high-interest rates, there is a noticeable rise in bankruptcies, indicating potential economic hardship in the coming years. This is particularly evident in the office real estate sector, which faces challenges from both elevated rates and reduced occupancy. Analysts are apparent on a potential follow-up of banking issues. A recession may have been simpler given the possible interest rate rises. However, it is important to remember that the United States economy has still been resilient. The country has historically rebounded from hardships. As investors and businesses adapt to the changing landscape, new opportunities for innovation and growth emerge.
Despite the current concerns, which are merely short-term, history has shown that in the long term, stocks have the potential to weather these storms and continue their upward trajectory. These are driven by technological advancements and key growth catalysts. Here are three strong and promising growth stocks that suit those criteria and are worthwhile investments.
Aehr Test Systems (AEHR)
Aehr Test Systems (NASDAQ:AEHR) is a global supplier of test systems for integrating logic, optical and memory devices into the automotive and mobility sectors. In July alone, AEHR grew 26.5% which places this business among the fastest-growing stocks.
AEHR is up 142.63% YTD, currently sitting around $45 per share. Analysts issued AEHR with six “buy” ratings since May, with a median 12-month price target of $60.00.
The microprocessor market was valued at $116.3 billion in 2022 and is projected to reach $188 billion by 2030 at a 7.1% CAGR. With the increasing demand for smartphones and digital appliances, these factors are set to have a positive impact on this market.
The company’s finances are performing well, with revenue of $50.83 million in 2022 growing from $16.60 million in 2021. This represents an increase of 206.20% YoY. EPS has also increased drastically, from -0.14 in 2021 to 0.42 in 2022, a 400% YoY rise.
Considering the diverse markets and sectors that Aehr supports with its semiconductors, this growth stock is a wise addition to your portfolios.
Applied Materials (AMAT)
Applied Materials (NASDAQ:AMAT) is an equipment, services, and software for manufacturing semiconductor chips and is the top provider of semiconductor equipment globally in terms of revenue. Applied Materials works in the solar PV manufacturing industry as well as display technologies.
AMAT stock is up 55.05% YTD with 23 analysts offering a 12-month median-high upside of 6.7%-16.7% or a $160.00 to $175.00 price forecast.
The global semiconductor manufacturing equipment market size is currently held at $96.68 billion as of 2022. It is expected to grow at a CAGR of 9.20% from 2022 to 2030 to $208.88 billion. Increases in consumer technologies including the development of advanced technologies drives semiconductor manufacturing equipment growth.
Applied has shown strong growth since its IPO in 1994. FY22 grew to $25.79 billion from its FY21 price of $23.06 billion, demonstrating an 11.80% YoY change. This impressive profitability is evident by its levered FCF margin of 20.23% exceeding competitors in the sector whose average levered FCF margin is only 6.97%. These remarkable financial metrics underscore Applied Material’s sustained achievements, robust foothold in the market, and capacity to provide substantial value to its investors.
AMAT stock stands as a prime investment due to its strong market stakeholder and unbeatable technology that enables the world to progress into a more advanced future.
Elf Beauty Incorporated (ELF)
Elf Beauty Incorporated (NYSE:ELF) is a cosmetics company that focuses on making beauty products targeted at the masses. It does so with cheaper prices and a strong focus on social responsibility.
ELF stock is up 141% YTD. Yahoo! Finance reports 13 analysts having a mean 12-month price target of $146.00. The range spans from a low of $110.00 to a high of $164.00. The beauty industry is projected to reach $579 billion by the end of 2023 and $689 billion by 2028 at a 3.1% CAGR.
Elf’s earnings growth is faring well in this economy. Revenue of $216.34 million grew 76.46% YoY. Furthermore, total sales at Ulta Beauty grew by 70% without increasing shelf space, and this in turn will boost financial growth.
With its rapidly increasing popularity, ELF stock emerges as a ‘buy’ for growth investors.
On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
