Because several indicators point to an accelerated economic recovery this year, investors are preparing to ride the recovery by selling pricey pandemic-winner stocks in favor of undervalued turnaround stocks. As a result, growth stocks with lofty valuations, primarily from the technology sector, are witnessing a correction.
However, as the 10-year Treasury yield retreated last week, investors began returning to growth stocks that are fundamentally sound and have the potential to keep growing even in the post-pandemic world. Together with pandemic-driven trends, the recovering economy should help these stocks' continued advance.
Williams-Sonoma, Inc. (WSM), Hibbett Sports, Inc. (HIBB), and Zedge, Inc. (ZDGE) have been pandemic-winners, delivering massive returns over the past year. We believe they are well positioned to keep moving higher.
Williams-Sonoma, Inc. (WSM)
WSM is a specialty retailer of home products. The company operates both physical and online stores. WSM has gained 394.9% over the past year to close yesterday’s trading session at $180.
The company recently forged a collaboration with Trisha Yearwood to launch a new table-top collection. The company has also collaborated with Ghetto Gastro to release a new line of kitchenware.
WSM’s trailing-12-month revenue has grown at a CAGR of 6.4% over the past five years. Its trailing-12-month ebitda has grown at a CAGR of 21.1% over the past three years.
The company’s revenue is estimated to grow 39.7% for the quarter ended April 30, 2021 and 4.1% in 2022. Its EPS is expected to rise 136.5% for the quarter ended April 30, 2021 and at a rate of 9.5% per annum over the next five years.
WSM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It also has an A grade for Growth, Quality and Momentum. In the A-rated Home Improvement & Goods industry, it is ranked #6 of 64 stocks.
In total, we rate WSM on eight different levels. Beyond what we stated above we also have given WSM grades for Value, Sentiment, and Stability. Get all the WSM ratings here.
Click here to checkout our Retail Industry Report for 2021
Hibbett Sports, Inc. (HIBB)
HIBB is a specialty retailer of sporting goods. The company’s stores carry athletic footwear, sports equipment, athletic apparel, and more. HIBB has returned 660.6% over the past year to close yesterday’s trading session at $74.92.
The company’s trailing-12-month revenue has increased at a CAGR of 8.52% over the past five years. Its trailing-12-month EBITDA has increased at a CAGR of 28.3% over the past three years.
HIBB is expected to see a revenue growth of 84.3% for the quarter ended April 30, 2021. The company’s EPS is estimated to grow 693.5% for the quarter ended April 30, 2021 and 7.2% per annum over the next five years.
The company is currently running a promotional giveaway of free sneakers in celebration of Air Max Day. HIBB has also opened a new store in Aiken, South Carolina.
It’s no surprise that HIBB has an overall B rating, which equates to Buy in our POWR Ratings system. HIBB has an A grade for Momentum, and B for Growth and Quality. In the A-rated Athletics & Recreation industry, it is ranked #17 of 33 stocks.
Click here to see the additional POWR Ratings for HIBB (Sentiment, Value, and Stability).
Click here to checkout our Retail Industry Report for 2021
Zedge, Inc. (ZDGE)
ZDGE operates as an online content distribution platform. The company has worldwide operations.
The company’s revenue is expected to grow 75.5% in 2021, while its EPS is expected to grow 760% in 2021. ZDGE’s trailing-12-month revenue has expanded at a CAGR of 5.29% over the past five years. Its trailing-12-month ebitda has expanded at a CAGR of 9.69% over the past five years.
ZDGE’s stock price has increased 1750.4% over the past year, and its last closing price was $15.6. The company recently stated that it is focusing on becoming more relevant to iOS mobile users. ZDGE is also working on introducing new features to its mobile app and improving discoverability for content on its platform.
ZDGE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary ratings system. ZDGE has an A grade for Sentiment and Quality and B for Growth. In the 81-stock Technology - Services industry, it is ranked #24.
Beyond what we’ve stated above we also have given ZDGE grades for Value, Momentum, and Stability. Get all the ZDGE ratings here.
The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
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WSM shares were trading at $180.75 per share on Tuesday afternoon, up $0.75 (+0.42%). Year-to-date, WSM has gained 78.22%, versus a 5.06% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks.
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