I have explored small and mid-cap stocks in recent articles because this is the ideal climate to buy into these size growth companies.
As the Federal Reserve recently observed, the economy is continuing to expand. These smaller stocks tend to do better in an expanding economy because they are more focused and can grow faster than larger, more diverse companies.
Granted, not all small and mid-caps will benefit from growth, but it you find some that have what it takes — expanding sales growth, growing earnings, strong momentum — they have all the makings of top-notch growth stocks. And these 7 summer stocks should see big growth in the next few months.
What’s more, since they’re lightly followed by the Street, when the hit investors’ radar that will be another big leg up for them.
Granted, there are still big stocks with plenty of growth potential that missed my list — Amazon.com Inc (NASDAQ: AMZN) and NVIDIA Corp (NASDAQ: NVDA), for example. But my 7 triple-A summer stocks are well priced for big growth in coming quarters.
Triple-A Summer Stocks: Gravity Co (GRVY)
GRAVITY Co., Ltd. ADR (NASDAQ: GRVY) has been off investors’ radar screens for a while. The South Korea-based video game publisher was a Wall Street darling before the bottom fell out of the market, nearly a decade ago.
But it’s back now, and having now survived the dotcom collapse and the banking meltdown, it is certainly a company that has a saavy management team in place.
The stock is up nearly 270% in the past year, but year to date it’s off 27%. Its focus on massively multiplayer online role-playing gaming (MMORPG) and its size — it sports a $237 million market cap — mean 2 things: it has lots of room to grow, especially across Asia; and it could be a very tempting takeover target for big game publishers in the US, hoping to expand their markets.
Triple-A Summer Stocks: Match Group (MTCH)
Source: Bixentro via Flickr
Match Group Inc (NADSAQ: MTCH) has been on a strong growth track since it went public in mid 2015, up more than 170%. That’s pretty good for a online dating company.
But MTCH hasn’t just hung its shingle on one product. It diversified across the dating app space and owns not just Match.com, but OkCupid, PlentyOfFish and the massively popular Tinder.
While many oldsters bemoan the lack of physical interaction that the digital native generations consider ‘normal’, the fact is, this is the new normal. And finding strong companies like MTCH that have built a strong brand in these important spaces, means strong long-term growth.
Triple-A Summer Stocks: Floor & Décor (FND)
Floor & Décor Holdings Inc (NASDAQ: FND) is a big box retailer of hard surface flooring and accessories.
Founded in 2000, it has a number of stores across the country, especially in high-growth areas like Florida, the Mid-Atlantic and southern California.
Its Q1 earnings came out in early May and were very impressive, yet the stock sold off on the news. Ironically, most of the brokerages covering the stock raised their prices expectations on the stock in the following days.
Whatever the reason for selling it off — if there actually was one — it’s a great opportunity to get in. Since it sells to commercial as well as residential clients this growth trend will continue as new commercial buildings go up, multi-family housing grows and single-family homes remain in demand.
Triple-A Summer Stocks: LGI Homes (LGIH)
LGI Homes Inc (NASDAQ: LGIH) is a home builder and developer focusing on affordable housing. This sector is especially appealing to first-time buyers and older people looking to downsize.
The majority of its homes are built where the sun is warm, in the South, Southwest and in the West. These areas are currently seeing an influx of new people because of weather or affordability.
The advantage of being in this particular sector right now is, banks are easing up on lending as interest rates rise and most of these people are either upgrading as their circumstances improve or have committed to move to warmer climes and just need the right price.
The housing market is still a bit volatile right now, but that’s to your advantage. LGIH is up 80% for the year, but it’s off 20% year to date. But this discount won’t last long.
Triple-A Summer Stocks: Medifast (MED)
Medifast Inc (NYSE: MED) has sold weight loss plans since 1980. Over 20,000 doctors have recommended MED plans over the years. It was packaging weight loss food plans before it was cool and it continues to thrive in this increasingly competitive sector.
And because it has always focused on foods with a low glycemic index, it is ideal for individuals with type-2 diabetes, which is a growing segment of the US population.
Pre-packaged meal kits are the new craze in diet plans since most people prefer to have meals partially prepared, rather than weigh it all out and make it from scratch. Regardless of the reasoning, MED is a big beneficiary. MED stock is up more than 235% in the past 12 months, and there’s plenty of room left to grow. And if a bigger competitor decides to buy MED, it will go at a big premium.
Triple-A Summer Stocks: GeoPark (GPRK)
GeoPark Ltd (NASDAQ: GPRK) is an exploration and production (E&P) company in the oil and natural gas industry. But unlike many of its peers, it’s not in the US energy patch, exploiting the shale deposits around the nation.
GPRK’s E&P focus is on Latin America. It’s headquartered in Chile and has operations in Colombia, Peru, Argentina, Brazil and Chile.
That may seem like an odd place to set up shop when there’s so much opportunity in the U.S. But there are significant energy deposits in South America, and there are major oil companies that have been doing work there for decades.
Also, given the fact that there’s less competition and it’s cheaper to produce, especially with a strong dollar, it’s a great business opportunity if you know what you’re doing. And GPRK seems to know what it’s doing.
Up more than 50% year to date, GPRK has plenty of room to run from here.
Triple-A Summer Stocks: SolarEdge (SEDG)
Solaredge Technologies Inc (NASDAQ: SEDG) is a solar company based in Israel. Its stock is up more than 50% year to date.
However, SEDG doesn’t sell solar panels. And it doesn’t just sell in Israel.
SEDG sells inverters and power optimizers to customers in over 125 countries. This sector is less competitive than solar panels but just as necessary to solar energy systems.
You see, the electricity that comes off the panels is DC (direct current) power. To use that power in the building or to ship it back to the grid, that electricity needs to be converted to AC (alternating current) power.
That’s what an inverter does. It takes DC from the source and converts it into AC for use. That AC power’s alternating current also needs to be managed so it can be used, and those are the other power management tools SEDG builds.
As more and more buildings opt for alternative energy, SEDG will continue to thrive.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.