Growth stocks suffered in 2022 amid the skyrocketing inflation and consecutive rate hikes. Last year also saw value stocks strengthening over growth stocks. However, this provides the opportunity to scoop up high-growth stocks, Gilead Sciences, Inc. (GILD), Jazz Pharmaceuticals plc (JAZZ), and Masonite International Corporation (DOOR), at great prices.
A bear market doesn’t last forever, and many experts appear optimistic that stocks will recover this year. Goldman Sachs predicted in their 2023 outlook that the stock market would “most likely rally” by the end of 2023.
In addition, Chris Williamson, chief business economist at S&P Global Market Intelligence, said, “February is seeing a welcome steadying of business activity.” He added, “The business mood has brightened amid signs that inflation has peaked and recession risks have faded.”
Investors’ interest in growth stocks is evident from the Vanguard Growth ETF’s (VUG) 2.5% returns over the past month and 9.2% return year-to-date.
Let’s discuss the stocks mentioned above in detail:
Gilead Sciences, Inc. (GILD)
Biopharmaceutical company GILD discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and internationally for over three decades.
On February 3, 2023, GILD stated the U.S. Food and Drug Administration (FDA) had approved Trodelvy for treating breast cancer in adult patients who have received endocrine-based therapy and at least two additional systemic medicines in the metastatic situation.
Also, last month, GILD announced that the European Medicines Agency (EMA) had approved the Marketing Authorization Application (MAA) for Trodelvy to treat adult patients with previously-treated HR+/HER2-metastatic breast cancer. This is anticipated to help expand patient access to Trodelvy throughout the EU.
GILD’s forward EV/EBITDA of 7.18x is 46.3% lower than the industry average of 13.36x. Its forward Price/Sales multiple of 3.90 is 11.9% lower than the industry average of 4.42.
GILD’s trailing-12-month EBIT margin of 40.19% is higher than the negative 0.86% industry average, while its trailing-12-month gross profit margin of 79.26% is 42.3% higher than the industry average of 55.70%.
GILD’s total revenues came in at $7.39 billion for the fourth quarter that ended December 31, 2022, up 2% year-over-year. Its non-GAAP net income attributable to GILD and non-GAAP EPS came in at $2.11 billion and $1.67, up 143.2% and 142%, respectively.
GILD’s revenues have increased at a CAGR of 6.7% over the past three years, while its EBIT has increased at a 5.5% CAGR.
GILD’s revenue is expected to increase 2% year-over-year to $27.24 billion in 2024. Its EPS is expected to grow 5.3% year-over-year to $7.18 in 2024. It surpassed EPS estimates in all four trailing quarters. GILD’s shares have gained 36.9% over the past year to close the last trading session at $83.50.
GILD’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
GILD has an A grade for Growth and Value and a B for Sentiment, and Quality. In the B-rated Biotech industry, it is ranked first out of 407 stocks. Click here for the additional POWR Ratings for Stability and Momentum for GILD.
Jazz Pharmaceuticals plc (JAZZ)
JAZZ is a biopharmaceutical company focused on developing and commercializing products that address various unmet medical needs.
Its leading products include Xyrem for cataplexy and excessive daytime sleepiness; Sunosi for EDS and obstructive sleep apnea; Erwinaze for acute lymphoblastic leukemia; Defitelio for hepatic veno-occlusive disease; and Zepzelca for small cell lung cancer.
JAZZ’s forward EV/EBITDA of 8.58x is 35.8% lower than the industry average of 13.36x. Its forward Price/Sales multiple of 2.50 is 43.5% lower than the industry average of 4.42.
JAZZ’s trailing-12-month EBIT margin of 27.02% is higher than the negative 0.86% industry average, while its trailing-12-month gross profit margin of 93.54% is 67.9% higher than the industry average of 55.70%.
For the fiscal third quarter that ended September 30, 2022, JAZZ’s net revenues increased 12.2% year-over-year to $940.65 million. Its non-GAAP adjusted net income rose 41.7% from the year-ago value to $370.44 million, while its non-GAAP adjusted EPS came in at $5.17, representing a 23.1% increase year-over-year.
JAZZ’s revenue has increased at a CAGR of 20.3% over the past three years, while its EBIT has increased at a 5.5% CAGR.
Analysts expect JAZZ’s revenue to increase 2.6% year-over-year to $3.76 billion in 2023. Its EPS is expected to increase by 32.9% year-over-year to $18.04 in 2023. It surpassed EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 7.4% to close the last trading session at $145.51.
JAZZ has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. It has an A grade for Growth and Value. JAZZ is ranked #8 in the same industry. To see the additional POWR Ratings for JAZZ (Stability, Momentum, Sentiment, and Quality), click here.
Masonite International Corporation (DOOR)
DOOR designs, manufactures, markets, and distributes interior and exterior doors for new construction and repair, renovation, and remodeling sectors of the residential and non-residential building construction markets worldwide.
On January 3, 2023, DOOR stated that it had successfully acquired Endura Products (“Endura”).
Howard Heckes, President and CEO of the company, said, “We are excited to complete the acquisition of Endura and add their high-performance door frames and door system components to our product portfolio.”
DOOR’s forward EV/EBITDA of 5.87x is 46.9% lower than the industry average of 11.05x. Its forward Price/Sales multiple of 0.66 is 52.6% lower than the industry average of 1.39.
DOOR’s trailing-12-month EBIT margin of 11.39% is 19.9% higher than the 9.50% industry average, while its trailing-12-month EBITDA margin of 14.46% is 9.8% higher than the industry average of 13.17%.
DOOR’s net sales increased 6.3% year-over-year to $676 million in the fourth quarter that ended January 1, 2023. The company’s gross profit increased by 5.8% to $142.98 million. Also, its operating income came in at $51.65 million, up 468.2% from the prior-year quarter.
DOOR’s revenue has increased at a CAGR of 9.5% over the past three years, while its EBIT has increased at a 24.5% CAGR.
Street expects DOOR’s revenue to increase marginally year-over-year to $2.88 billion in 2023. Its EPS is estimated to increase by 14.5% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. Over the past three months, the stock has gained 15.2% to close the last trading session at $84.31.
It’s no surprise that DOOR has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has a B grade for Growth, Value, and Momentum. It is ranked #3 out of 59 stocks in the Home Improvement & Goods industry.
Beyond what is stated above, we’ve also rated DOOR for Stability, Sentiment, and Quality. Get all DOOR ratings here.
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GILD shares were unchanged in premarket trading Thursday. Year-to-date, GILD has declined -2.74%, versus a 4.21% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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