This article is excerpted from Tom Yeung’s Profit & Protection newsletter. To make sure you don’t miss any of Tom’s picks, subscribe to his mailing list here . Growth Investing Works On Tuesday, I introduced the Profit & Protection playbook — a good, hard look into beating the markets with data. The big takeaway from that newsletter? Growth investing works. Stocks with high expected growth rates (both sales and earnings) and past growth tend to outperform over the following twelve months. That’s no news to venture capitalists or my Hypergrowth Investing colleague, Luke Lango. But there was a wrinkle: Turnarounds do even better. Stocks that had the worst sales growth in the prior year outperformed their high-growth counterparts by a 1.4-to-1 ratio. I can practically see Warren Buffett and InvestorPlace analyst Eric Fry smiling. But if you’re tired of all this theoretical fluff, I don’t blame you. We’re here for profits, not a lesson in data science or fortune-telling. So today, we’re going to use the Profit & Protection playbook to identify five promising growth stocks that look set to ride out the upcoming 6 to 12 months.
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These are great stocks to sell ahead of the Federal Reserve’s aggressive monetary tightening policy. Globalstar ( GSAT ): High debt, a profitless business and elevated metrics make this global satellite firm a sell in a rising interest rate environment. Wynn Resorts ( WYNN ): The debt burden of the casino operator and lifting interest rates will make debt refinancing pricier, pressuring its stock. Bed & Bath and Beyond ( BBBY ): With net loss expected to accelerate this year, the dip of this overly leveraged retailer is unlikely to stop with the Fed’s monetary tightening. Citrix Systems ( CTXS ): Flattening revenues and deteriorating profitability are bearish catalysts for this highly valued tech specialist. GoDaddy ( GDDY ): Elevated debt and valuation multiples puts pressure on the tech stock. Apollo Commercial Real Estate ( ARI ): Lifting interest rates are expected to squeeze the profitability of this mortgage REIT. Hannon Armstrong Sustainable Infrastructure Capital ( HASI ): Overstretched valuation metrics and rising debt are bearish catalysts for the renewable investment firm.
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