As stocks rallied from their March lows, growth stocks led the way. The S&P 500 Growth ETF (SPYG) is up 43.4% since April, compared with the S&P 500 Value ETF’s (SPYV) gain of 23.7%. Technology and healthcare stocks have primarily driven growth. Technology companies have paved the way for society’s full embrace of the digital world, and…
healthcare companies have seen a demand for COVID-related therapies in addition to the long-term need for treatment and medicine to combat critical diseases.
Growth stocks are companies that are expected to grow significantly above the average growth rate of the market. I like to look at both revenue and earnings growth to getter a better idea of a company’s prospects. I consider a growth stock to be one that has a growth stock rate above 25% for earnings and revenue over different time frame of one to five years.
I also like to consider technical aspects of stocks to make sure they are in a bullish trend. One technical indicator I like to consider is On Balance Volume (OBV). OBV uses volume flow to predict changes in stock price. It was developed by Joseph Granville who believed volume was the main force behind markets, and OBV would predict market moves based on volume changes.
Another technical indicator I like to use is MACD, which is the Moving Average Convergence/Divergence. This indicator is a trend-following indicator that shows the relationship between two moving averages of a stock’s price. It is calculated by subtracting the 26 Day Exponential Moving Average (EMA) from the 12 Day average. The signal line is a 9-day EMA of the differential line. A buy signal occurs when the MACD crosses above the signal line.
Horizon Therapeutics (HZNP)
The company reported earnings this morning with record second-quarter results. It increased its full-year 2020 net sales and adjusted EBITDA based on the continued strength of its thyroid eye disease drug, TEPEZZA. HZNP had net sales of $462.8 million for the quarter, which was an increase of 44 Percent. The stock is up almost 20% today due to the news. The company has also recently received FDA approval for Procysbi, a delayed-release oral medicine for adults and children with nephropathic cystinosis.
If you look at the chart below, you can see HZNP stock is showing bullish On Balance Volume, and its MACD is above the 9-day signal line. The company is also above its 10 Day, 21 Day, 50 Day and 200 Day moving averages.
Courtesy of StockCharts.com
HZNP is rated a Strong Buy in our POWR Ratings system. It holds grades of A for every possible POWR Rating Score. It is also the #8 ranked stock in the Medical-Pharmaceutical industry.
TSLA needs no introduction. The company, which aims to covert the world to electric mobility, is a strong growth stock. TSLA has a five-year revenue growth rate of 47.3%, with a sales estimate of 37.9% for next year. Its earnings per share (EPS) is estimated to grow 79.2% over the next year and 416.1% over the next five years. On July 22, the company reported EPS of $2.18 compared with the consensus estimate of -$2.35.
The company has a first-mover advantage in electric vehicles with long-range capacity and high-caliber technology and software. TSLS should benefit from booming demand for the Model 3, an increase in Model Y production, and considerable progress on its Shanghai Gigafactory. The company is investing heavily to boost production capacity, increase sales, and build Gigafactories.
If you look at the chart below, you can see TSLA stock is showing…
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