5 Cheap Growth Stocks For Q2 2021

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After a brief selloff in Q1 2021, growth stocks are once again in focus. Investors can take advantage of this by investing in growth companies such as Johnson & Johnson (JNJ), Target (TGT), Dell Technologies (DELL), Agilent Technologies (A), and Goldman Sachs (GS) that are trading at low valuations.

Growth stocks soared in 2020, with tech shares leading the way. The SPDR S&P 500 Growth ETF (SPYG) gained 78.3% from March 23rd to December 31st. When investors learned of the efficacy of the coronavirus vaccines at the end of the year, a rotation out of growth stocks took place in the market, as a rapidly improving economy benefits more cyclical and value names.

But it appears growth stocks are back in favor as the SPGY gained 6.8% last month. The value trade is taking a breather as improving economic conditions look already priced in. With many of the top growth stocks seeing their shares pullback in the winter, now is a great time to invest in growth at a lower valuation. This way, we get the best of both worlds.

So, I ran a screen for top undervalued growth stocks in our POWR Rating system for Buy-rated stocks with a Growth Grade of A or B and a Value Grade of A or B. This makes sure we see the best growth stocks at low valuations, and why I am recommending investors consider Johnson & Johnson, Target Corporation, Dell Technologies Inc, Agilent Technologies, Inc., and Goldman Sachs Group Inc. for the second quarter.

Johnson & Johnson 

JNJ is one of, if not the most recognizable, names in healthcare. The company is well known for providing pharmaceuticals, medical devices, as well as consumer health products. The company has generated further interest by being of the providers approved for the COVID-19 vaccine. JNJ’s pharmaceutical segment makes up close to 50% of total revenue. The pharmaceuticals division also has the best future growth potential.

For instance, the company offers several industry-leading drugs. This includes immunology drugs such as Remicade, Stelara, and Tremfya and cancer treatments Darzalex and Imbruvica. Plus, many of its key drugs and pipeline drugs are specialty treatments with strong pricing power and lower regulatory hurdles for approval. The company also has a significant market share in the medical device industry with orthopedic and Ethicon Endo-Surgery’s surgical devices.

JNJ has an overall rating of A, which translates into a Strong Buy in our POWR Ratings system. The company has a Growth Grade of B, which isn’t surprising as earnings have grown an average of 130.7% per year over the past three years. Earnings are expected to rise 35.3% year over year in the current quarter, and revenues are forecasted to grow 25.9% over the same time frame.

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Roger Keats 1 month ago Member's comment

Good read