Bridgestone Partners – 2019 Growth Focus
Bridgestone Partners, based in the financial hub of Tokyo, has experienced professionals and sound financial strategies. We provide objective solutions to assist individuals, professional and business owners in reaching their financial goals.
There are many attractive growth stocks in today's less certain environment, stocks that play a significant part in the economic recovery. These stocks have the ability to maintain their footing if the broader market should suffer.
Regardless of your attitude to risk the fact is, the shares of high-quality growth companies are still available at reasonable prices.
Some of the best growth stocks for 2019 - Bridgestone Partners
Himax Technologies NASDAQ symbol HIMX: This chip maker is tapped into the booming field of virtual reality/augmented reality (VR/AR).
FireEye NSDQ symbol FEYE: As a leading maker of cybersecurity products, this software firm is positioned to benefit from the worsening scourge of hacking.
But what are growth stocks, let's examine further?
A growth stock is one that is expected to outperform the average gains in the broader market.
Growth stocks are not generally for income investors; plus, they rarely pay dividends. But they vaunt earnings and revenue potential that go beyond the average stock, with increased cash flow as well. Regularly, the earnings growth rate can be huge, in the double-digit or even triple-digit figures.
What is it?
Headquartered in Taiwan, Himax currently supplies, or is expected to supply, display circuits to three of the most popular brands in VR/AR devices: Facebook's (NSDQ: FB) Oculus Rift, Microsoft's (NSDQ symbol MSFT) HoloLens, and the second generation of Alphabet's (NSDQ symbol GOOGL)
The projected profits in the VR/AR industry are enormous. Goldman Sachs (NYSE symbol GS) estimates that the market will reach $80 billion by 2025, with the potential for that figure to actually soar much higher, to more than $180 billion.
Sales of Himax's devices should ignite once VR headsets and AR smart glasses achieve sufficient economy of scale to bring prices down to a broader segment of consumers. As the supplier of the chips that manage the displays in these devices, Himax stands to be one of the first component suppliers to benefit from increased sales.
One of HIMX's most attractive features as a stock is its mid-cap status, in a year when small- and mid-cap stocks are expected to outperform. With a market cap of $679.8 million, the company is big enough to survive the ups and downs of the volatile VR/AR market, but small enough to hand investors the outsized capital gains that are difficult for mature Silicon Valley titans to achieve.
Why is it a good stock?
As a leading supplier with $102.9 million of cash on the books, Himax is poised for market-beating earnings growth.
Operating cash flow (most recent quarter) is a robust $9.9 million. In an industry dotted with small-cap, fly-by-night start-ups, Himax boasts a solid balance sheet and will remain competitive for the long haul.
HIMX's forward price-to-earnings ratio (FPE) is 23.24, a bargain compared to the company's growth prospects.
The average analyst expectation is for HIMX to generate year-over-year earnings growth in 2019 of 240%.
What is it?
FireEye provides cyber security solutions for public and private sector organizations, including network and email security products.
The company's well-known brands include FireEye Security Orchestrator, FireEye Helix, and FireEye iSIGHT Intelligence.
With a market cap of $3.6 billion and based in the heart of Silicon Valley in Milpitas, California, FireEye is closer in size to the mid-cap range but should nonetheless outperform its larger brethren.
This year, small- to mid-cap companies (especially those in the tech sector) are expected to prosper. Aside from its innovative and increasingly popular products, FireEye offers another enticement: the whisper on Wall Street is that cash-rich behemoths such as Cisco (NSDQ symbol CSCO) or IBM (NYSE symbol IBM) are angling to buy-out the company.
The likelihood of a FireEye buyout has grown thanks to the 2017 U.S. tax cut bill, which made it advantageous for tech companies to repatriate their enormous cash hoards from overseas. Tech companies are putting that cash to good use, by playing Pac-Man and gobbling up smaller, entrepreneurial companies. A FireEye acquisition would probably reward its shareholders with a windfall.
Why is it a good stock?
It's a good sign that institutions own roughly 70% of FEYE's stock. Not only is this ownership a vote of confidence from seasoned analysts, but once institutional investors establish large positions in a stock, their next motive is to find ways to drive up its value.
FireEye's FPE is a heady 100.5, but not excessive in light of projected growth.
The average analyst expectation is for FEYE to generate year-over-year earnings growth in 2019 of 137.5%.
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Dennis Aoki -
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