“You must have long-term goals to keep you from being frustrated by short term failures.”- Charles C. Noble
“Frustrating” is what most investors would call the stock market right now. Indexes move up for a few days, then reverse and come back down. The trading range becomes tighter and tighter, while the market resists any breakout to the upside or breakdown below.
Friday’s robust Jobs report wasn’t much of a help. If anything, it’s a harbinger of a lift-off at the mid-December Fed meeting.
Add to this the political dysfunction in Washington, D.C., unsound debt levels, a migrant crisis in Europe and the slow growth in China and you will have every reason to be anxious and frustrated.
Shift Your Focus
There is, however, a choice — be frustrated or simply shift your focus to long-term goals.
Volatility is here to stay. Thus, more than ever, it is the time to stick to high-quality stocks that are in growth mode but possess innate strengths that should help them weather a market decline.
And so, we bring you these 5 stocks to survive and prosper in the long term, regardless of the headwinds.
Our Picks
We have identified five stocks with excellent growth potential. These stocks have a favorable Zacks Rank as well
Our Growth Style Score condenses all the essential metrics from the company’s financial statements to achieve a true sense of quality and sustainability of its growth. Our research shows that stocks with Growth Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best investment opportunities in the growth investing space.
What makes these stocks even better bets is that all of them have long-term growth estimate of more than 20%.
1. Facebook, Inc. (FB - Analyst Report)
Zacks Rank #2
Growth Style Score: B
Long-term EPS Growth: 25.45%
Major Growth Drivers:
Facebook is the most popular social networking company. Its products include free Internet-based services for desktop and mobile devices, and products that help advertisers and marketers connect to their users and core audiences.
The company has gained significant traction in its mobile ad business within a short span of time. This, combined with a massive user base and ability to track personal details over time, makes it a formidable force in the online ad market.
In addition, the company is focusing on monetizing Instagram, WhatsApp and Oculus, which are doing pretty well.
In fact, a survey report by eMarketer (Sep 23, 2015) projects that Facebook will generate about $600 million in revenues from Instagram in 2015 (nearly 5% of Facebook's total mobile ad revenue). Moreover, the report forecasts that Instagram will record a massive 149% rise in 2016 bringing ad revenues to approximately $1.48 billion.
2. Amazon.com, Inc. (AMZN - Analyst Report)
Zacks Rank #2
Growth Style Score: A
Long-term EPS Growth: 35.58%
Major Growth Drivers:
We expect Amazon to double down on AWS (if it hasn’t already), while at the same time expand the business internationally. Prime is a major positive, not only because it drives sales, but also because it helps Amazon gather data on consumers’ buying habits that can be used for customer profiling. The easier it gets to use Prime, the more data Amazon has about users, and this will only increase in the future.
Amazon continues to aggressively acquire or create new content, whether it is books, music or other video, and get consumption onto a common platform such as Prime Music, Prime Instant Video and Kindle Unlimited. The platform model will boost consumption — the more users consume, the cheaper it gets for them on a per-unit basis. This makes the Prime proposition compelling, especially since the retail giant continues to lower fulfillment time with programs like Dash. The ultimate winner is the consumer, with Amazon primarily gaining from scale.
3. Ambarella, Inc. (AMBA - Snapshot Report)
Zacks Rank #2
Growth Style Score: A
Long-term EPS Growth: 22.5%
Major Growth Drivers:
Ambarella has been trying to expand its reach in markets like IP security, automotive and drones/flying cameras.
In July, Ambarella acquired VisLab S.r.l. in an all-cash deal worth $30 million. By integrating VisLab’s computer vision and intelligent control systems with its video processing technology, the company will be able to develop high performance products and target its core markets — automotive, IP security, wearable and flying cameras.
This acquisition will boost Ambarella’s product portfolio and help it to compete with Israel-based Mobileye N.V. (MBLY - Snapshot Report), currently the world’s leading provider of driver assistance technology.
Additionally, it should be noted that about 10% of the company’s revenues comes from cameras on drones, which is another growth avenue.
Further, the stock is still nearly 56% down from its 52-week high of $129.19. In view of the significant discount (at which the stock is trading now) and the company’s efforts to counter commoditization risks, we believe it to be a good buying opportunity.
4.Fitbit Inc. (FIT - Analyst Report)
Zacks Rank #2
Growth Style Score: A
Long-term EPS Growth: 24.00%
Major Growth Drivers:
Founded in 2007 and headquartered in San Francisco, Fitbit specializes in wearable activity tracking devices that record personal data, including the number of steps taken, distance traveled, calories burned and other wellness related metrics.
Going forward, new features and services, increased brand awareness, expanded global distribution and presence in the corporate wellness market will continue to drive growth for the company.
5. JetBlue Airways Corporation (JBLU - Analyst Report)
Zacks Rank #2
Growth Style Score: A
Long-term EPS Growth: 50.08%
Major Growth Drivers:
Founded in 1998, this Long Island City, NY-based low-cost carrier has been one of the brightest stars in the airline industry this year. Shares of JetBlue gained over 60% so far this year, with further upside expected on the back of impressive third-quarter 2015 results, strong traffic data and constant expansion efforts.
Time to Think Long-Term
It is true that the market is volatile and frustrating. However, this can be turned into an opportunity by thinking long term and investing accordingly.
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