2020 was the year of the growth stock, with technology shares leading the way. As vaccine approvals hit the news late fall, a rotation into more cyclical names took place. This made sense as an improving economy would undoubtedly benefit stocks that were hammered in 2020. But that rotation appears to be running out of steam, which means certain growth stocks are ripe for the picking.
So far in April, the SPDR S&P 500 Growth ETF (SPYG) has gained 7.7%, compared to a 4.2% gain for the SPDR S&P 500 Value ETF (SPYV). With many parts of the country already opened up, much of the pent-up demand is likely priced into the market. On the other hand, growth stocks appear to be gaining momentum, as evidenced by SPYG's ETF Trade Grade of A in our POWR Ratings system.
While a diversified growth ETF may have played well last year, we need to be more selective this year as not all growth stocks will see their shares increase. That's why I ran a screen for the top growth stocks in our POWR Rating system, with a Growth Grade of A and a Momentum Grade of A. This gives us the best of both worlds: top-ranked growth stocks exhibiting price strength. Here are my top three: Corning Incorporated (GLW), Whirlpool Corporation (WHR), and Louisiana-Pacific Corporation (LPX).
Corning Incorporated (GLW)
GLW is a leader in materials science, specializing in the production of glass, ceramics, and optical fiber. Its advanced glass substrates are used in a large number of applications across multiple markets. The company supplies its products for flat-panel displays in televisions, gasoline particulate filters in automobiles, and optical fiber for broadband access, with a leading share in many of these markets.
The company has been benefiting from an increase in demand for its products. For instance, GLW's fiber optic solutions are in demand due to the increasing use of mobile devices requiring efficient data transfer and networking systems. GLW sees strong demand for its premium cover materials in the specialty materials space due to the growing importance of semiconductor-related optical glasses.
Plus, the company is poised to generate growth by disrupting the automotive market with its auto glazing offerings. GLW has an overall grade of B, which translates into a Buy rating in our POWR Ratings system. It has a Growth Grade of A, which certainly isn't surprising as Wall Street analysts forecast 100% year over year earnings growth in the current quarter.
GLW also has a Momentum Grade of A, as its stock has shown bullish momentum since late January and is up 26.3% for the year. We also provide Value, Stability, Sentiment, and Quality grades for GLW. You can access those here. GLW is ranked #9 in the A-rated Industrial – Manufacturing industry. You can find other top stocks in the industry by clicking here.
Whirlpool Corporation (WHR)
WHR is one of the largest manufacturers of home appliances in the world. If you've been in a kitchen or laundry room, I'm sure you've seen one of its many products with brand names, including Whirlpool, KitchenAid, and Maytag. The company manufactures and sells laundry appliances, refrigerators and freezers, cooking appliances, and more. The majority of its revenue, though, is generated from laundry appliances and refrigerators/freezers.
WHR has benefited from increased global demand for household appliances that initially started with the work-at-home trend but has accelerated due to a strong housing market. The company should also see increased growth in Asia and Latin America as their demand for household appliances grows. The company has a solid history of positive earnings surprises with eleven straight beats that bode well for the next quarter.
WHR has an overall grade of A, which is a Strong Buy rating in our POWR Ratings system. Like GLW, it has a Growth Grade of A, indicating strong growth potential. Its earnings have grown an average of 74.9% per year over the past year and are expected to rise a whopping 175.8% year over year in the current quarter.
The company also has a Momentum Grade of A as its stock has soared over the past two months. WHR is up 32.9% so far for the year and over 1000% in the past year. To access the rest of WHR's grades (Value, Stability, Sentiment, and Quality), click here. WHR is ranked #5 in the A-rated Home Improvement & Goods industry. For more great stocks in this industry, click here.
Louisiana-Pacific Corporation (LPX)
LPX is primarily an oriented strand board (OSB) producer while also offering engineered wood siding and engineered wood products used in home construction. Its products are also used in remodeling and outdoor structures. Given the reasonably low mortgage rates, housing markets have shown resilience, which increases the need for OSB.
As the economy continues to open, the demand for these housing and wood products should continue improving. In addition to lower-priced homes in high demand from millennials moving out of the city, there is likely to be an increase in demand for larger and more expensive single-family homes as the economy improves.
The company's SmartSide Strand and ExpertFinish offerings are especially in demand for repair projects. LPX has an overall grade of B, which reflects a Buy rating in our POWR Ratings system. It has a Growth Grade of A, which makes sense as earnings grew over 8,000% over the past year and EBITDA grew 504%. Analysts expect earnings to rise 685.3% in its upcoming earnings release next week.
LPX also has a Momentum Grade of A as its stock has been heading north since last April. Over the past year, the stock is up 229.6%, not bad for a building material stock. In April alone, it is up 23.1%. For more grades on LPX, such as Value, Stability, Sentiment, and Quality, click here. LPX is ranked #27 in the A-rated Industrial – Building Materials industry. For other top-ranked stocks in the industry, click here.
GLW shares . Year-to-date, GLW has gained 26.20%, versus a 12.72% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a Consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.
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