The markets have suffered a major and rapid pullback, which is now providing investors with new buying opportunities. The rate of decline for the stock market and the extreme negativity has led many stocks and the market overall to trade at very oversold levels. Because of this, a significant rally could be coming soon, fueled by short covering and bargain hunters. One area to focus on for a potential rebound is growth stocks. CNBC's Jim Cramer has a number of "ultimate" growth stock picks which have recently pulled back in price, yet still offer above-average growth prospects. Here is a closer look at some of Cramer's favorites:
Starbucks Corporation (SBUX) shares have been on a bull market run for most of 2012. The stock started the year trading around $45 per share and went on to about $62, but thanks to the recent market correction, it now trades at $51 per share. The daily habit of going to Starbucks is catching on around the world as the company expands into emerging market countries like China and Latin America. Sales in the United States also remain strong as Americans want to enjoy the premium, yet still affordable offerings that Starbucks serves. This company is well-managed by CEO Howard Schultz, and while it's not the cheapest stock in the market, it is a high quality and reasonably valued growth investment to consider now.
Here are some key points for SBUX:
Current share price: $51.53
The 52 week range is $33.72 to $62
Earnings estimates for 2012: $1.86 per share
Earnings estimates for 2013: $2.31 per share
Annual dividend: 68 cents per share which yields 1.3%
Chipotle Mexican Grill (CMG) shares have been in a multi-year bull market, and it recently hit new 52-week highs. However, the recent correction has pulled the stock down by about 12%. Since this company operates a chain of restaurants that offers burritos and other Mexican fare, it is likely to perform well even if the economy heads lower. Chipotle is also trying new concepts like an Asian noodle restaurant that could add more growth potential for investors. The average stock in the S&P 500 Index trades for about 13 times earnings, and Chipotle trades for about 40 times, so this stock is not for every investor. One recent concern to consider is that the SEC just announced it launched an investigation into allegations that the company is hiring undocumented workers. This could keep pressure on the stock for awhile, so it makes sense to buy on dips or wait for the shares to stabilize, before taking a sizable position.
Here are some key points for CMG:
Current share price: $392.12
The 52 week range is $267.43 to $442.40
Earnings estimates for 2012: $8.79 per share
Earnings estimates for 2013: $11.11 per share
Annual dividend: none
Celgene Corporation (CELG) shares have pulled back dramatically since peaking out around $80 in April. Currently the shares trade for about $68, and the stock might be a great buy now since it is trading near key support levels (the 200-day moving average which is $67.90 per share). This company develops and markets treatments for cancer and immune-inflammatory diseases, and it continues to show growth potential. Cramer likes that this company has a clear growth plan, large markets to expand into, limited competition thanks to patent protection, international expansion potential, and a very strong balance sheet. With the stock at just $68, the shares trades for about 13 times earnings which is cheap for a growth stock with above average prospects. This stock looks poised to rebound soon, possibly at the first signs of strength with the overall markets.
Here are some key points for CELG:
Current share price: $68.10
The 52 week range is $51.70 to $80.42
Earnings estimates for 2012: $4.79 per share
Earnings estimates for 2013: $5.63 per share
Annual dividend: none
Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.