These Nasdaq stocks are cheap relative to the broader market and expected to grow earnings
Growth stocks have taken a hit this year as the Federal Reserve raises rates to battle inflation, especially battering the tech-heavy Nasdaq 100 . The index is down more than 20% in 2022 and off by 15.8% over the past 12 months. Still, some investors want exposure to growth names and have adopted a so-called GARP strategy this year. Growth at a reasonable price, otherwise known as GARP, is a strategy that bridges attributes from both growth and value investing, generally including companies with reasonable valuations relative to the broader market along with consistent sales growth and earnings. To find the names meeting the GARP criteria, CNBC Pro used FactSet to screen for stocks with estimated earnings per share growth of 8% this and next year, as well as a forward price-to-earnings ratio below the Nasdaq 100’s 24. The stocks that made the cut are also well liked by analysts, with more than 50% rating them as a buy. The consensus price target for each stock implies upside of more than 10%. Here are the names that made the cut: Booking Holdings is expected to grow earnings per share the most this year — by 108.7% — among the stocks that met the criteria. Shares of the travel company are down about 16% this year and sit 26% off their highs, but could rally 21.2% going forward. About 58% of analysts have a buy rating on the stock. The company’s earnings next year are expected to expand by about 25%. Three semiconductor names also made the cut including Marvell Technology , which was the most loved stock by analysts — with nearly 81% rating it a buy. Semiconductor stocks have tumbled in 2022 amid supply chain constraints and growth fears. Marvell’s shares have plummeted more than 44% from their highs but could rally another 53.8%, based on the consensus price target. The company is expected to grow earnings per share by 48.7% this year and 24.2% in 2023. Advanced Micro Devices and Broadcom also made the cut, down about 35% and 21%, respectively, this year. Analysts expect AMD to grow earnings by nearly 56% in 2022 and 11.4% in the year ahead. A little over 68% of analysts see Pinduduo as a buy, with an expected 44% upside based on the consensus price target. The China-based e-commerce giant, which saw shares jump this week on news that it’s reportedly expanding to the U.S., is expected to grow earnings per share by about 19% this year and 36.7% in 2023. Financial technology stock Fiserv was the only positive stock year to date that made the list.