In picking growth stocks, investors aren’t limited to top stocks like Facebook, Apple, Amazon, Netflix and Alphabet (Google) known as FAANG. There are cheaper alternatives to stocks that can perform well.
Shares of leading tech companies Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX) and Alphabet Google (GOOGL, GOOG), also known as FAANG, have hit big heights in the past year, but investors face the risk of being overvalued these shares.
Among the growth stocks, there are enough less overvalued stocks, which at the same time promise significant growth in the coming year, among them we can single out: Pfizer (PFE), Oracle (ORCL) and UPS (UPS) stocks.
Each of these companies has a strong, growing business and each pays dividends to shareholders, while their shares can be bought much cheaper.
Should you still buy Pfizer stock?
Pfizer shares have been very volatile over the past year, with an 18.7% gain on the stock, which is less than the annual gains of the major US indices, the Dow Jones or the S&P 500, and is by no means overvalued.
If you look at the Pfizer stock chart, you can see that the price is approaching a high at the end of last year, while still far from the high of 2019.
However, the core of Pfizer’s business hasn’t gotten any worse than it was two years ago. The pharmaceutical company was one of the first to produce the COVID-19 vaccine in partnership with BioNTech (BNTX), distributing it first in the United States and then around the world.
Pfizer is currently testing the COVID-19 vaccine in young children (6 months to 11 years old) and is working on an oral drug to treat COVID-19 that people can take at home.
While investors may be concerned that Pfizer stock is losing its momentum as more people gain immunity through vaccinations, the World Health Organization believes that people may need revaccinations on an annual basis, including due to mutations in the virus.
Pfizer predicts $ 26 billion in vaccine sales this year, with total revenues ranging from $ 70.5 billion to $ 72.5 billion, compared to just under $ 42 billion in 2020.
In addition, Pfizer is now fully focused on vaccines and new drugs, as it spun off its Upjohn business in November 2020 – it is now 43% owned by Mylan and is a separate Viatris company.
Pfizer saw strong overall revenue growth for the first time in the first quarter of 2021, after seven consecutive quarters of declines, which may indicate a rebound in sales following the pandemic.
Pfizer shares are up 11.5% YTD and 5.2% in the last quarter.
Oracle accelerates growth and capital expenditures
Oracle shares are up 60% over the past year and 37% since early 2021, with the main impulse of the + 12% price gain coming in the last quarter.
The Oracle share price chart is showing a stable upward trend.
Oracle has outperformed analyst average estimates for EPS and earnings in each of the past three quarters, with its first quarter 2021 financials showing stronger growth.
The tech company has made strong profits with a net margin of at least 25% in each of the past three fiscal years.
Oracle executives have long embraced cloud computing services and recently reported doubling their annual capex to nearly $ 4 billion. The investment will open up new growth opportunities and should pay off, giving Oracle shareholders equity in a company with more valuable business.
All forecasts are in favor of UPS
The coronavirus pandemic has accelerated the growth of e-commerce, and industry data since early 2021 shows consumers continue to shop online even after physical stores have opened.
Against this backdrop of increased demand, large private carriers such as the international logistics company United Parcel Service (UPS) are seeing strong revenue and profit growth.
UPS financials have outperformed Wall Street’s earnings and earnings per share estimates in the last four quarters, with revenue growth in the last two being 21-27% yoy.
The company’s operating income of $ 2.8 billion more than doubled $ 1.1 billion a year ago.
By 2023, UPS executives predict that the company could surpass $ 100 billion in revenues, roughly 18% higher than the $ 85 billion reported in 2020 sales.
UPS shares are currently the most highly valued compared to Oracle and Pfizer, but this is due to the very strong industry trend in online commerce and logistics.
Investors should also consider that the company has a UPS Flight Forward drones supply unit that can deliver small packages.
UPS is the first company to receive FAA approval for a regular drone delivery service in the United States and the first to receive stable revenue from this business through a contract with the CVS Health (CVS) pharmacy chain.
The market for third-party logistics services will grow at an average annual rate of 8.5% from now until 2028, when it will reach a value of almost $ 1.7 trillion, according to research firm Grand View Research.
UPS shares are up nearly 80% year-over-year and 26% since early 2021. At the same time, one of the highest Wall Street price targets from JP Morgan analysts foresees growth of 14.4% to $ 243 per share from the price of $ 212.46 at the close of trading on July 20.
Thus, not all tech growth stocks are overvalued, and Pfizer, Oracle and UPS are excellent examples of this and the opportunity to buy a good asset cheaper than FAANG stock.