It is always a good idea to not put all your eggs in one basket. Diversification in investing is beneficial for the portfolio. Choosing growth stocks from different sectors will keep one's portfolio balanced while helping earn fruitful returns over the long term.
These three fascinating stocks from three different sectors are stable companies that have been doing exceptionally well. New York-based cannabis company Columbia Care (CCHWF -1.70%), Ireland-based healthcare company Medtronic (MDT -1.41%), and Washington-based consumer company Costco Wholesale Corporation (COST -0.12%) have high growth prospects that will bring huge returns over the years. Let's take a look at their performance this year and how 2022 is looking for all three.
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Costco Wholesale
This retail company has made its mark globally; it operates 828 warehouses worldwide with the highest number of 512 in the U.S. Surprisingly, the pandemic hasn't put any dent in its performance -- most of the credit goes to its price leadership position in the industry, which acts as a competitive moat for the company. Costco offers consumers reasonable prices for most of the products even in an inflationary environment. It also benefits from its membership fees, which jumped $85 million from the year-ago quarter to $946 million in the first fiscal quarter ended Nov. 21.
Despite the pandemic-induced supply problems, Costco has managed to grow substantially. For its first-quarter fiscal 2022, its total sales (including membership fees) increased 16% year over year to $50.3 billion. Its net income for the quarter also jumped 18% to $1.3 billion. With its recent monthly sales report, Costco gave investors a hint that it is heading into the new year strong. Its total sales for the retail month of December (for the five weeks ended Jan. 2, 2022) jumped 16.2% to $22.2 billion.
Costco is also a dividend-paying stock and consistently pays dividends. Its rising profits indicate investors can be assured of receiving consistent income by investing in this stock.
Columbia Care
This U.S. cannabis company might be small in size with a market cap of just $1.2 billion, but it's heading up to compete against some of the bigger multi-state operators (MSOs). It operates 131 facilities, out of which 99 are retail stores. Its strategy of targeting limited license markets has worked in its favor. Since cannabis is still illegal under U.S. federal law, some states are careful in how many licenses they issue to each operator.
This strategy allowed Columbia Care to garner a loyal customer base for its products. This strategy brought in another stellar quarter. In its third quarter, revenue surged 144% year over year to $132 million. Its adjusted earnings before interest, taxes, depreciation, and amortization ( EBITDA ) grew 634% to $31 million from third-quarter 2020. Its gross profit margin also jumped to 49% from 39% a year ago. Besides the bigger markets of California and Colorado, its presence in limited license markets like Pennsylvania, Illinois, Maryland, Massachusetts, Ohio, and Virginia boosted this performance.
Columbia Care is strengthening its position in Colorado and the Mid-Atlantic through smart acquisitions. It recently completed its buyout of Green Leaf Medical and the acquisition of Colorado-based Medicine Man.
The company isn't profitable yet, but it won't be too long before it starts earning profits when these acquisitions start showing their full potential. Analysts see upsides of 203% for Columbia Care's stock for the next 12 months, which I think is possible given the rapid expansion of the cannabis industry.
Medtronic
This Ireland-based medical device manufacturer has been growing at an outstanding rate. It operates across 150 countries and treats close to 70 health conditions. Despite the pandemic, the company managed to increase sales in all of its segments geographically besides a slight 1% dip in U.S. revenues from the year-ago quarter. Management stated that the "market impact of the pandemic resurgence and healthcare system staffing challenges on medical procedure volumes" had an effect on U.S. revenues, but it still comprised 51% of total revenue for the quarter at $4 billion.
Emerging markets revenue showed amazing 20% year-over-year growth to $1.3 billion. It's good news that with the market recovery of non-elective procedures, all of its product lines (cardiovascular, medical-surgical, neuroscience, and diabetes) showed an increase in revenue for the quarter.
Its total reported revenue grew 3% year over year to $7.8 billion. Medtronic's adjusted net profits also jumped 30% to $1.7 billion from the year-ago quarter. The strong performance made the company reaffirm its full-year EPS guidance range of $5.65 to $5.75. However, management still expects some pandemic-related challenges and expects the fiscal year 2022 revenue growth of 7% to 8% on an organic basis compared to the earlier estimate of 9%.
Another perk of investing in Medtronic is that it is a Dividend Aristocrat that has increased its payouts for the past 44 years. Recently, it increased its third-quarter dividend by 9% from the prior year to $0.63 per share. The Dividend Aristocrat tag is a sign of a stable and growing company. A company that consistently pays a dividend also knows how to consistently grow its earnings so investors can be assured dividend payments aren't stopping any time sooner.
These three exciting and outstanding growth stocks can boost up your portfolio returns in 2022 and beyond.
