Growth investors count on stocks that can climb year after year. The best growth stocks are able to do well even in times of adversity, while taking full advantage of favorable conditions when they arise to squeeze out every last bit of potential growth. We asked some of The Motley Fool's contributors about their favorite growth stocks, and they picked Wynn Resorts (NASDAQ:WYNN), Qualcomm (NASDAQ:QCOM), and Priceline (NASDAQ:PCLN) as candidates for further gains. Read on to see what they said, and whether these stocks deserve a spot in your growth portfolio.
This bet could continue to pay off big in 2017
Seth McNew (Wynn Resorts): It's been a wild ride the last few years in the casino industry, but Wynn Resorts has started 2017 on a high note, hitting fresh 52-week highs multiple times in recent weeks. Most of the strong results stem from Macau, the gaming mecca in China that also caused so much of the pain in recent years amid its market crash. Now, however, it seems to be turning around just in time to make Wynn's new resort look like a winning bet.
In the first quarter, Wynn reported sales of nearly $1.5 billion, an increase of 48% over Q1 2016, thanks largely to the new resort in Macau. Earnings per share came in at $0.99 per share, up 34%, year over year. As Macau continues to gain steam -- the island's total gaming revenue was up more than 16% in April over April 2016 -- Wynn certainly could continue to beat expectations on both the top and bottom lines in Q2, as its new resort there continues to perform.
Now that Macau is back on the growth trend, things could be good for Wynn, not just in the second quarter, but for the rest of 2017 and beyond. Other than Macau, Wynn is betting on Las Vegas with a planned overhaul of its property there including a 38-acre clear-water lagoon to replace its infamous golf course, as well as new resorts to open on the U.S. East coast in the next few years. However, the most important growth driver for the industry in the next few years -- and one that Wynn will certainly be fighting for -- is recently legalized gambling in Japan.
This, too, shall pass
Tim Brugger (Qualcomm): Qualcomm is trading at a fraction of the industry average due to uncertainties surrounding its pending lawsuits with Apple, a South Korea regulatory body, and the Federal Trade Commission (FTC) here in the U.S. over licensing fees. Whether the chip king will bounce back in the second quarter or the third is a valid question, though it certainly warrants consideration given its value and limited downside risk.
The thing is, Qualcomm has been down this road before. After paying China a $975 million fine and agreeing to lower its royalty fees in early 2015, Qualcomm is already pointing to the world's largest market as a key growth driver. China helped Qualcomm report an 8% jump in revenue last quarter excluding one-time items, along with an 18% improvement in operating income and an impressive 29% gain in per-share earnings.
True, Qualcomm has been forced to lower its guidance for this quarter due to the Apple "situation," but that's just made it a better value. Even if the $47 billion deal for NXP Semiconductors (NASDAQ:NXPI) falls through -- Qualcomm has extended its "deadline" for a shareholders vote twice -- it still has its eyes on cutting-edge new markets, including the Internet of Things (IoT), connected cars, and data security.
At a mere 12.9 times future earnings, Qualcomm's current legal woes could be a boon for growth investors in the second quarter. Toss in its 4% dividend yield, and Qualcomm offers growth, income, and nearly unequaled value.
This stock could fly higher
Dan Caplinger (Priceline Group): It's not often that you get a chance to buy into a growth stock at a discount price. But with Priceline Group, the recent reaction to the online travel giant's first-quarter financial report has created an opportunity to tap into this industry's strong growth prospects.
Priceline has commanded the online travel business for a long time, with its international scope proving extremely useful and giving the company a massive competitive advantage. Yet that created high growth expectations among investors, and earlier this month, Priceline's results failed to live up to those expectations. Revenue growth was still up 13%, but adjusted net income rose only 7%, and that raised concerns about the sustainability of Priceline's growth. The high-priced stock fell almost $100 per share on the news.
In the long run, though, Priceline's prospects still look good. Even the company's own guidance is reasonably solid, with gross travel bookings expected to rise by mid-teen percentages, and hotel-room booking growth climbing in the high teens to low-20s.
Moreover, Priceline has routinely managed to do a lot better than its initial estimates. Even with a sluggish quarter in the books to start 2017, the online travel company has the potential to bounce back quickly as travel season powers up and the summer months approach. That makes cheaper shares look like a bargain, and makes Priceline worth a closer look from growth investors.
Dan Caplinger owns shares of Apple, Priceline Group, and Wynn Resorts. Seth McNew owns shares of Apple. Tim Brugger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple, Priceline Group, and Qualcomm. The Motley Fool recommends NXP Semiconductors. The Motley Fool has a disclosure policy.
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