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3 Growth Stocks to Consider Adding to Your Portfolio

The recent tumble in growth stocks, that many agree was driven by a sector rotation by investors from growth to value names, provides a perfect entry opportunity for growth investors. We think the stocks of Stanley Black & Decker (SWK), Tempur Sealy (TPX) and ArcBest (ARCB) are well-positioned to grow substantially in the near term, given the macroeconomic tailwinds, and therefore could be ideal for one’s portfolio.

Growth stocks have taken a backseat following signs of macroeconomic recovery. Investors have begun  rotating away from growth to focus on solid bargains. This is evidenced by the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 0.7% loss year-to-date versus the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 5.6% gains.

However, despite rising concerns regarding the potential for inflation, the Fed plans to maintain its dovish monetary stance. This provides budding growth companies the opportunity to leverage lower borrowing costs to expand their operations.

Against this backdrop, we believe growth stocks Stanley Black & Decker, Inc. (SWK), Tempur Sealy International, Inc. (TPX) and ArcBest Corporation (ARCB) will outperform the broader markets in the coming months.

Stanley Black & Decker, Inc. (SWK)

Headquartered in New Britain, Connecticut, SWK is a global provider of power and hand tools, mechanical access solutions, such as automatic doors and commercial locking systems, electronic security and monitoring systems, healthcare solutions, engineered fastening systems, and products and services for various industrial applications. The company operates primarily through three segments — Tools & Storage, Security and Industrial.

This month,, the company named Donald Allan, Jr. as its President and CFO. The company also announced a regular first quarter cash dividend of $0.70 per common share payable on March 23, 2021. SWK also announced this month that Jane Palmieri has been elected to the company's Board of Directors.  Its subsidiary, Dewalt, unveiled its latest 2x20V MAX Self-Propelled Mower (DCMWS P244U2) and Push Mower (DCMWP233U2) last month, each of which features a high-efficiency brushless direct drive motor and is powered by two DEWALT 20V MAX 10.0 Ah batteries for high-voltage cutting capacity.

SWK has gained 83.7% over the past five years, which  can be attributed to the company’s continued product and services innovations. Moreover, the company’s revenue and EBITDA increased at CAGRs of 3.9% and 7.1%, respectively, over the past three years. The stock has gained 21.5% over the past year and closed yesterday’s trading session at $174.62.

The company’s net sales increased 18.7% year-over-year to $4.41 billion for the fourth quarter ended December 31, 2020. Its  net sales from the tools and storage segment increased 24.8% year-over-year to $3.26 billion and net sales from the industrial segment increased 10.2% year-over-year to $657.90 million. Its net earnings were reported to be $458 million, up more than 130% year-over-year. Non-GAAP EPS increased 51% year-over-year to $3.29.

A consensus EPS estimate of $2.48 for the current quarter ending March 31, 2021 represents an improvement of 106.7% year-over-year. Moreover, SWK has surpassed the consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $3.91 billion for the current quarter represents a 24.9% rise on a year-over-year basis.

SWK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock has an A grade for Growth and B for Value. We have also graded SWK for Stability, Quality, Momentum and Sentiment. Click here to access all SWK ratings.

SWK is ranked #18 of 64 stocks in the A-rated Home Improvement & Goods industry.

Tempur Sealy International, Inc. (TPX)

Based in Lexington, Kentucky, TPX is a bedding manufacturer that develops, manufactures, markets and distributes bedding products such as mattresses, foundations, pillows and sheets. The company operates mainly through two segments — North America and International. It  sells its products through third party retailers, company-owned stores, e-commerce and call centers, among others. TPX’s brand portfolio includes TEMPUR, Tempur-Pedic, Sealy, Sealy Posturepedic, and Stearns & Foster.

This month, TPX announced that its Board of Directors had authorized a  cash dividend of $0.07 per share of its common stock, which is payable on March 12, 2021. In November Tempur-Pedic brand was again ranked #1 in Customer Satisfaction for the retail mattress category in the United States in the J.D. Power 2020 Mattress Satisfaction Report. And, as it  announced on October 8, 2020, TPX is reacquiring the rights and acquiring the assets to manufacture, market, and distribute Sealy and Stearns & Foster branded products in the United Kingdom. The company’s revenue has  at a CAGR of 10.8% over the past three years. Moreover, its  EPS and EBITDA increased at CAGRs of 25.4% and 18.1%, respectively, over the same time. The stock has gained 63.2% over the past year and closed yesterday’s trading session at $33.41.

The company’s net sales increased 21.3% year-over-year to $1.06 billion for the fourth quarter ended December 31, 2020. This  was driven by a 20.6% year-over-year increase in net sales from the North America business segment and a 25.6% year-over-year increase in net sales from the international business segment. The company’s operating income increased 128.4% year-over-year to $193.20 million and its adjusted EBITDA increased 57.2% year-over-year to $239.50 million. Its net income was reported to be $144.70 million, up 213.2% year-over-year. And its EPS increased 97.1% to $0.67.

A consensus EPS estimate of $0.41 for the quarter ending June 30, 2021 represents an improvement of 141.2% year-over-year. Moreover, TPX has surpassed the consensus EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $968.97 million for the same quarter ending June 30, 2021 represents a 45.7% year-over-year rise.

TPXs strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.

The stock has a B grade for Growth, Sentiment and Quality also. We have also graded TPX for Stability, Momentum and Value. Click here to access all TPX’s ratings.

TPX is ranked #15 in the same industry.

ArcBest Corporation (ARCB)

ARCB, formerly known as Arkansas Best Corporation, provides freight transportation services and integrated logistics solutions worldwide. The company operates primarily through three segments — Asset-Based, ArcBest and FleetNet. The Asset-Based segment offers the transportation of general commodities through standard, time-critical, expedited and guaranteed LTL services-nationally and regionally. While the ArcBest segment includes truckload, expedite, international, warehousing, freight transportation, management services and moving services, the FleetNet segment provides roadside assistance and maintenance management services for commercial vehicles to customers in the U.S. and Canada through a network of third-party service providers.

The company announced on February 25, 2021 that its less-than-truckload carrier ABF Freight has selected members of the 2021 ABF Freight Load Team, which consists of freight-handling professionals from ABF service centers throughout North America. ARCB  was recognized as one of America’s Best Large Employers for 2021 by Forbes. The  company’s Board of Directors declared a quarterly cash dividend of $0.08 per share, which was paid on February 25, 2021. Moreover, as announced by ARCB on December 1, 2020 the company’s less-than-truckload carrier ABF Freight has received awards for Excellence in Security and Excellence in Claims and Loss Prevention.

ARCB has gained 207.3% over the past five years. The  company’s EPS and EBITDA increased at CAGRs of 6.1% and 11.4%, respectively, over the past three years. The stock has gained 184.4% over the past year and closed yesterday’s trading session at $59.89.

ARCB’s revenue increased 13.8% year-over-year to $816.41 million for the fourth quarter ended December 31, 2020. Its  net income hit  $23.91 million, which is a considerable improvement considering the company’s net loss of $5.55 million reported for the fourth quarter of 2019. The company also reported operating income  of  $30.25 million. Its non-GAAP EPS increased 73.2% year-over-year to $0.97.

A consensus EPS estimate of $1.12 for the quarter ending June 30, 2021 represents an improvement of 67.2% year-over-year. Moreover, ARCB has surpassed the consensus EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $807.62 million for the same quarter represents a 25.7% rise on a year-over-year basis.

ARCB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system.

The stock has an A grade for Growth and Value, and B for Quality. We have also graded ARCB for Stability, Momentum and Sentiment. Click here to access all ARCB’s ratings.

ARCB is ranked #3 of 29 stocks in the Auto & Vehicle Manufacturers industry.

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SWK shares were unchanged in after-hours trading Friday. Year-to-date, SWK has declined -2.08%, versus a 1.73% rise in the benchmark S&P 500 index during the same period.



About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.

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