There is never a bad time to invest in a good company. But if you can get into a worthy growth stock at a discount, you’ll obviously get more bang for your buck.
Here’s a closer look at some great growth stocks currently on sale. If you can handle the risk and likely ongoing volatility, they may be a good fit for your portfolio.
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Chances are you’ve never heard of it ASML Holding (NASDAQ: ASML). However, you are even more likely to benefit from his expertise on a regular basis. You may even be taking advantage of its technology right now.
Look, ASML offers chip makers a way to produce high-quality computer chips. The Netherlands-based company has perfected the art and science of lithography, which is the use of light as a screening mask to etch or spray a microchip into existence. Although complex, this approach allows for much smaller chips than could be made with more mechanical processes. ASML’s technology is so complicated and heavily patented that no rival can truly replicate it. That’s why most estimates put lithography’s market share at a 90% margin.
That doesn’t mean there are no risks. Like any other company in the semiconductor industry, this company is subject to economic ebbs and flows (as well as geopolitical factors) that impact corporate spending on new equipment. For example, after last financial year’s revenue growth of more than 40%, ASML’s revenue this year is essentially on track to remain stable. That’s the main reason why shares are down 36% from their July high. The headwinds that investors did not expect were made even more real by disappointing third-quarter results, followed by lowered sales expectations for the coming year.
Now take a step back and look at the bigger picture. Even with weaker-than-expected revenue, the analyst community is calling for revenue growth of at least 19% by 2025. Profits are likely to grow further.
And it’s worth adding that most of these headwinds were already built into this stock before ASML made it official with a lowered outlook. The consensus analyst price target is still just under $924 per share, which is 30% above the current share price. The vast majority of the analyst community also currently rates ASML stock as a strong buy, not despite the recent weakness, but because of it.
The other discounted growth stock worth considering right now is Plug-in power supply (NASDAQ: PLUG)although the story cannot be much different from that of ASML.
Simply put, Plug Power is a sustainable energy company. The technology converts raw hydrogen into electricity by chemically separating hydrogen’s negatively charged electrons from its positively charged protons. The so-called fuel cells that make this possible are used as a power source for equipment as small as a forklift to as large as a building, which of course requires electricity to keep the lights on, power computers and operate HVAC equipment. Perhaps most notably, fuel cells can be used to power cars.
While zero-emissions technology has proven itself in a wide range of applications, there is still a major hurdle to overcome. This primarily involves producing the required hydrogen. The process of splitting water into the core elements oxygen and hydrogen itself requires a lot of electricity. So hydrogen fuel cells are not necessarily more cost-effective or environmentally friendly to use. It takes the right energy generation technology – such as solar energy – to keep fuel cells operating as cleanly and efficiently as intended. Although the costs of wind and solar energy are now roughly comparable to those of more traditional energy sources such as oil or natural gas, these alternatives remain relatively uncommon, accounting for one-tenth of the country’s current energy production. Such energy sources are also infrastructure-intensive to realize.
However, there is a growing movement that could make the energy-consuming process of isolating hydrogen both cost-effective and common. That is nuclear energy. Although this energy source has had a somewhat checkered past, newer nuclear power plant designs have the potential to revive the use of this carbon-free energy source. In fact, companies love it NuScale design small, modular reactors intended to operate in locations where large-scale power is ultimately consumed. This includes facilities where hydrogen is separated and collected for industrial uses such as fuel cells.
This move is still in its infancy, which is one of the reasons why Plug Power stock is now down 97% from its early 2021 high. The market then finally fell in love with the idea and only then realized there was still there was a tremendous amount of work to be done before fuel cells would become mainstream. Most of that work still needs to be done. However, the sellers have demonstrably exceeded their target.
What it comes down to? If you believe the world is ready to continue moving toward a zero-carbon, zero-emissions future and can remain patient while enduring some volatility, then Plug Power is an attractive prospect.
This could help: a Straits Research forecast shows that the global fuel cell market will grow by more than 21% annually between now and 2033. That’s in line with Plug Power’s expected average revenue growth for at least the next few years. years after this year’s economy-induced lull.
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*Stock Advisor returns October 28, 2024
James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.
2 Growth Stocks Down 36% and 97% to Buy Now was originally published by The Motley Fool
