20 stocks primed for rapid growth while trading at half of Nvidia's valuation
When selecting investments, it is easy to get hung up on a particular metric, such as a dividend yield or a price ratio, but investors need to look deeper or they might miss opportunities.
Amazon.com Inc. AMZN provides an example: Its stock has typically traded at a high price-to-earnings ratio. Investors tend to look at a stock's forward P/E ratio, which is the price divided by analysts' consensus estimate for earnings per share over the following 12 months. Over the past 10 years, Amazon's stock has traded at an average forward P/E of 79.5, while the S&P 500 SPX has traded at an average forward P/E of 18.7, according to FactSet. But Amazon's stock was up 855% for 10 years through Friday, while the S&P 500 returned 235% with dividends reinvested.
My daughter's boyfriend, a guest in my home, offered to powerwash part of my house — then demanded money
What on Earth is going on with the American consumer?
My father-in-law has dementia and is moving in with us. Can we invoice him for a caregiver?
'The situation is extreme': I'm 65 and leaving my estate to only one grandchild. Can the others contest my will?
20 stocks primed for rapid growth while trading at half of Nvidia's valuation
It turns out that for Amazon's management team, bottom-line earnings traditionally weren't a focus. The emphasis was on reinvesting most of the cash being generated to expand the business in multiple directions. So the Amazon story was about revenue growth, rather than EPS growth.
And that brings us to Nvidia Corp. NVDA. Last week Laila Maidan looked into Nvidia's relatively high forward P/E and explained why the stock might still be considered a bargain for long-term investors, based on analysts' expectations for the company's revenue growth. Nvidia's stock traded at a forward P/E of 28.1 at Friday's close, while the S&P 500 traded at a weighted forward P/E of 21.4.
It is not a surprise to see Nvidia trading at a P/E valuation that is 31% higher than that of the index. But based on consensus estimates among analysts polled by FactSet, Nvidia is expected to increase its sales per share at a compound annual growth rate of 41.7% through 2026, versus an expected sales-per-share CAGR of 5.5% for the S&P 500. All such estimates in this article are adjusted by FactSet to match calendar years; about 20% of companies in the S&P 500 have fiscal reporting periods that don't match the calendar.
For Nvidia, investors pay a premium for the higher expected growth rate. And that sets the stage for a stock screen. Which companies trading at low P/E multiples are also expected to increase revenue quickly?
For this screen we are looking at revenue growth projections — specifically sales per share. We are using the per-share numbers because they reflect expected dilution to a company's share count if it issues new shares to help fund an acquisition. Merging with a competitor will obviously make revenue increase. But if the share count rises significantly, sales per share will be lower. The per-share numbers help investors to understand whether or not a company might have overpaid for an acquisition.
Starting with the S&P 500, we narrowed the list to companies trading at forward P/E ratios of 14 or less — half Nvidia's valuation. Actually, we rounded down, so the list was confined to stocks trading at a forward P/E of less than 14.5.
Then we sorted the list by expected sales-per-share CAGR from calendar 2024 through 2026, based on consensus estimates among analysts polled by FactSet.
Here are the 20 stocks in the S&P 500 with the highest expected sales-per-share CAGR through 2025 among those trading at a P/E of less than 14.5:
Company
Ticker
Industry
Forward P/E
Expected sales-per-share CAGR from 2024 through 2026
Expand Energy Corp.
EXE
Integrated Oil
12.0
39.6%
Super Micro Computer Inc.
SMCI
Computer Processing Hardware
14.1
31.9%
EQT Corp.
EQT
Integrated Oil
13.6
26.0%
Micron Technology Inc.
MU
Semiconductors
9.4
23.2%
Coterra Energy Inc.
CTRA
Integrated Oil
8.3
21.2%
First Solar Inc.
FSLR
Solar Power Equipment
8.7
20.5%
Norwegian Cruise Line Holdings Ltd.
NCLH
Hotels/ Resorts/ Cruiselines
7.9
15.9%
Incyte Corp.
INCY
Pharmaceuticals
10.7
15.5%
Seagate Technology Holdings PLC
STX
Computer Peripherals
12.4
15.0%
Gen Digital Inc.
GEN
Software
11.1
13.0%
DaVita Inc.
DVA
Medical/ Nursing Services
11.6
12.0%
Oneok Inc.
OKE
Oil & Gas Pipelines
14.2
11.8%
Molina Healthcare Inc.
MOH
Managed Healthcare
11.7
11.8%
Aptiv PLC
APTV
Electrical Products
9.0
10.9%
UnitedHealth Group Inc.
UNH
Managed Healthcare
12.5
10.7%
Elevance Health Inc.
ELV
Managed Healthcare
10.5
10.4%
Dell Technologies Inc. Class C
DELL
Computer Processing Hardware
11.4
10.2%
American International Group Inc.
AIG
Multi-Line Insurance
12.2
10.2%
HCA Healthcare Inc.
HCA
Hospital/ Nursing Management
14.4
9.9%
Ball Corp.
BALL
Containers/ Packaging
14.3
9.7%
Source: FactSet
You may need to scroll the table to see all of the data.
It is a varied list. Super Micro Computer SMCI ranks second, with a 31.9% CAGR expected for sales per share through 2026. The stock soared last month after President Donald Trump announced investment agreements with Saudi Arabia to build data centers in the U.S., which lifted suppliers of related equipment.
Read: Super Micro's stock keeps surging. Here's what might come next.
It might surprise you to see UnitedHealth Group UNH on the list, in light of the company's numerous difficulties. These have included higher-than-expected costs in its Medicare Advantage business, reports of a government investigation into possible healthcare fraud and the departure of Chief Executive Andrew Witty.
But with the stock having tumbled 40% this year through Friday, with dividends reinvested, analysts working for brokerage and research firms believe the worst is over, with 21 out of 29 analysts polled by FactSet rating UnitedHealth a buy or the equivalent. Only three of the analysts rate the stock a sell or the equivalent.
Leaving the companies passing the screen in the same order, here is a summary of analysts' opinions about the stocks:
Company
Ticker
Share buy ratings
Share neutral ratings
Share sell ratings
May 30 price
Consensus price target
Implied 12-month upside potential
Expand Energy Corp.
EXE
90%
10%
0%
$116.13
$128.45
11%
Super Micro Computer Inc.
SMCI
47%
41%
12%
$40.02
$40.69
2%
EQT Corp.
EQT
72%
24%
4%
$55.13
$60.63
10%
Micron Technology Inc.
MU
85%
12%
3%
$94.46
$123.95
31%
Coterra Energy Inc.
CTRA
83%
17%
0%
$24.31
$33.41
37%
First Solar Inc.
FSLR
78%
20%
2%
$158.08
$202.43
28%
Norwegian Cruise Line Holdings Ltd.
NCLH
72%
28%
0%
$17.65
$23.65
34%
Incyte Corp.
INCY
45%
52%
3%
$65.06
$73.95
14%
Seagate Technology Holdings PLC
STX
59%
36%
5%
$117.94
$119.88
2%
Gen Digital Inc.
GEN
45%
55%
0%
$28.48
$31.83
12%
DaVita Inc.
DVA
9%
83%
8%
$136.26
$167.14
23%
ONEOK Inc.
OKE
67%
33%
0%
$80.84
$106.75
32%
Molina Healthcare Inc.
MOH
42%
47%
11%
$305.04
$356.93
17%
Aptiv PLC
APTV
68%
23%
9%
$66.81
$75.76
13%
UnitedHealth Group Inc.
UNH
73%
17%
10%
$301.91
$376.05
25%
Elevance Health Inc.
ELV
75%
25%
0%
$383.84
$491.94
28%
Dell Technologies Inc. Class C
DELL
81%
19%
0%
$111.27
$136.52
23%
American International Group Inc.
AIG
55%
45%
0%
$84.64
$90.88
7%
HCA Healthcare Inc.
HCA
59%
34%
7%
$381.39
$387.95
2%
Ball Corp.
BALL
61%
33%
6%
$53.58
$61.23
14%
Source: FactSet
Any stock screen has its limits and should only be used as a tool as part of your own research if you are selecting individual companies for investment. Click on the tickers for more about each company.
Read: Tomi Kilgore's detailed guide to the information available on the MarketWatch quote page
'You never know what might happen': How do I make sure my son-in-law doesn't get his hands on my daughter's inheritance?
Strategists forecast a sizzling summer for small-cap stocks
'I am getting very frustrated': My mother's adviser has not returned my calls. He manages $1 million. Is this normal?
My life partner is 18 years my senior. He wants to leave his $4.5 million fortune to me — not his two kids. Do we tell them?
'I'm afraid to ask her': My stepmother won't show me my father's will. What now?
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
28 minutes ago
- Yahoo
Palantir CEO Warns of AI Arms Race With China
Palantir (PLTR, Financials) CEO Alex Karp said Thursday that artificial intelligence poses serious risks and that the ongoing AI arms race will ultimately be won by either the United States or China. There are positive and negative consequences, and either we win or China will win, Karp told CNBC's Squawk on the Street. He emphasized that the U.S. currently holds an advantage due to corporate willingness to embrace new technologies, but said Western allies, particularly in Europe, are lagging behind and must learn from the U.S. approach. In the interview, Karp also addressed a recent New York Times report suggesting Palantir is assisting the Trump administration in gathering data on American citizens. He denied the claim, stating, We are not surveilling Americans. The Denver-based data analytics and AI software firm has gained 74% year to date as investors bet on the company's growing role in U.S. government contracts and defense applications. While the stock continues to outperform broader tech peers, Karp acknowledged investor concerns around its valuation. You don't like the price, exit, he said. This article first appeared on GuruFocus.
Yahoo
38 minutes ago
- Yahoo
NVIDIA Blackwell Fuels AI Surge -- Super Micro Emerges as Top Winner
June 6 - Super Micro Computer (NASDAQ:SMCI) is poised to gain as NVIDIA's (NASDAQ:NVDA) Blackwell GPU rollout accelerates. Analysts point to a $20 billion partnership with Saudi data center firm DataVolt and upbeat upgrades as key drivers. Warning! GuruFocus has detected 5 Warning Signs with SMCI. Last week, NVIDIA reported that Blackwell chips now account for about 70% of its data center revenue, with sales roughly doubling quarter over quarter. These GPUs power cutting-edge AI workloads, and Super Micro's server designs are built to match that demand. SMCI's modular systems feature advanced cooling and power management, making them an ideal match for Blackwell's dense computing requirements. The companies collaborate closely on software integration, ensuring SMCI servers support the latest NVIDIA architectures from day one. Additionally, SMCI's partnership with Saudi data center operator DataVolt, valued at $20 billion, underscores its role in supplying high-density GPU servers. As Blackwell deployments spread across hyperscale facilities, SMCI stands to benefit from strong demand for customizable, high-performance infrastructure. While SMCI's profit margins remain tighter than some peers, its agility in aligning with NVIDIA's AI roadmap helps drive growth. Investors monitoring AI hardware trends view SMCI as a key beneficiary of NVIDIA's expanding GPU ecosystem. Based on the one year price targets offered by 15 analysts, the average target price for Super Micro Computer Inc is $40.00 with a high estimate of $70.00 and a low estimate of $15.00. The average target implies a downside of -1.90% from the current price of $40.77. Based on GuruFocus estimates, the estimated GF Value for Super Micro Computer Inc in one year is $68.35, suggesting a upside of +67.65% from the current price of $40.77. This article first appeared on GuruFocus.
Yahoo
41 minutes ago
- Yahoo
The Trump admin ordered a coal power plant to stay on past retirement. Customers in 15 states will foot the bill
An aging coal power plant that was supposed to shutter last week will run throughout the summer at the order of President Donald Trump's Energy Sec. Chris Wright, a decision that could cost Midwest energy customers tens of millions of dollars. The last-minute federal order to keep the J.H. Campbell plant operating came as a surprise to Michigan officials, including the head of the state's Public Service Commission, given it was at the tail end of a multi-year retirement process that was approved in 2022. 'The grid operator hadn't asked for this, the utility hadn't asked for this, we as the state hadn't asked for this,' said Dan Scripps, chair of the Michigan Public Service Commission. 'We certainly didn't have any conversations with the (Energy Department) in advance of the order, or since.' Wright's May 23 emergency order cited concerns the Midwest could face a summer electricity shortage due to a lack of available coal, gas and nuclear plants that can provide stable baseload power. But Consumers Energy, the utility that owns the coal plant, told CNN in an email it already purchased another natural gas-fired power plant to carry the load when the coal plant went offline. Scripps said the cost to keep the over-60-year-old plant operating, even for 90 days, will be high, and customers in 15 states will foot the bill. 'I can say with a pretty high degree of confidence that we're looking at multiple tens of millions of dollars at the low end,' Scripps said. 'I think there's a range between there and the high end of getting close to $100 million.' It's unclear so far what that will mean for individual electricity bills, Scripps added, given the uncertainty about final cost. 'For years, American grid operators have warned decommissioning baseload power sources such as coal plants would jeopardize the reliability of our grid systems, which has raised alarm bells,' Energy Department spokesperson Ben Dietderich said in a statement. Dietderich didn't say whether the Energy Department had conducted a cost analysis before issuing the emergency order. It's unclear whether the department realized the company already had a plan to maintain baseload power after its closure. Wright issued another emergency order last week to keep a Pennsylvania power plant that runs on natural gas and oil open past its May 31 retirement date. Coal is the dirtiest fuel large plants still burn for electricity, and it's now the most expensive as renewable energy sources like solar have become increasingly cost-effective. Although natural gas is a fossil fuel and contributes significantly to warming the planet, it is still considered a cheaper and less-polluting option. Gas generates 43% of the country's electricity. Michigan Attorney General Dana Nessel said she is considering legal action against the federal government. Nessel and energy experts said such an emergency order from the federal government is extremely rare and usually reserved for the aftermath of severe storms or natural disasters. 'This is a novel case for us,' Nessel said. 'We've not had to do this before.' She reiterated keeping the plant open would 'significantly' raise electricity rates, saying, 'The whole point of closing this plant down was to save money.' More electric utilities are retiring their coal plants because they are old and especially expensive to run. In 2021, the average coal-fired power plant was 45 years old, according to a report from the Energy Information Administration. The Energy Department's order didn't specify exactly how much the Michigan coal plant should run, saying it was requiring the utility to 'take all measures necessary to ensure that the Campbell Plant is available to operate.' Scripps and energy experts said that means the coal plant would likely run continuously at a lower level throughout the summer, or until Wright's order ends. Unlike gas plants, coal plants can't be easily turned on and off with the flip of a switch and take time to ramp up and come online. The Campbell plant is so old — it has been operating since 1962 — that Michigan energy regulators feared it could not physically turn back on once it was powered off. The utility will also have to buy more coal to keep it going. Consumers Energy said it has 'arranged for new shipments of coal to keep the plant operating.' A new report from think tank Energy Innovation found the cost of coal-fired power has grown faster than inflation in the last few years — collectively costing US consumers $6.2 billion more in 2024 than it would have cost in 2021. 'Even existing coal where it has fully depreciated and been paid off, the cost of coal is more than solar and storage at this point,' said Doug Lewin, a Texas based energy expert who authors the Texas Energy and Power Newsletter and host of the Energy Capital Podcast. Lewin covers the energy transition in deep red Texas, where power companies are building wind, solar and battery storage at an incredible pace. Of the significant amount of new electricity added to the Texas grid in the last four years, 92% has been wind, solar and storage, Lewin said. That has paid dividends, keeping energy prices relatively low and meeting the state's exploding power demand from air conditioning, data centers and big industry. 'All throughout the summer months, you're getting maximum solar output,' Lewin said. 'It's very well correlated to peak demand. For a place with massive AC load like Texas, it's fantastic.' Texas has also invested a lot in big batteries that can keep power flowing to the grid after the sun stops shining and the wind stops blowing. Energy Sec. Wright, however, has panned renewables, saying they are not a reliable replacement for fossil fuels. 'There is simply no physical way that wind, solar and batteries could replace the myriad uses of natural gas,' he said at Houston energy conference CERAWeek in March. 'I haven't even mentioned oil or coal yet.' • Trump EPA drafting a rule that would undo decades of progress on limiting pollution from power plants • The jobs and tax credits that could disappear if the 'big, beautiful' bill passes the Senate • A polluting, coal-fired power plant found the key to solving America's biggest clean energy challenge
