Finance: Growth stocks to beat market

PHUKET: Growth stocks are always popular with Wall Street and retail investors alike because they are companies with sustainable positive cash flows along with revenues and earnings that are expected to grow at an above-average rate relative to the stock market.

Here are a couple of individual growth stocks that could be a good fit for your portfolio:

Gilead Sciences, Inc (NASDAQ: GILD) is a large cap biopharmaceutical stock with a nearly US$150 billion market cap. Gilead Sciences’ portfolio of products and pipeline of investigational drugs includes treatments for HIV/AIDS, liver diseases, cancer, inflammatory and respiratory diseases and cardiovascular conditions. In other words, a fairly well diversified portfolio covering some of the most common ailments faced globally, plus shares had an attractive 1.68 per cent dividend yield as of late September.

However, there could be an additional risk for investors in biotech/pharmaceuticals to consider as, although the next US Presidential election is still one year away, the political silly season has already begun with a Hillary Clinton tweet railing against drug prices.

Enanta Pharmaceuticals Inc (NASDAQ: ENTA) is a small cap biotechnology stock with a market cap nearing US$700 million. It is focused on developing drugs for viral infections and liver diseases, including hepatitis C virus (HCV) and non-alcoholic steatohepatitis (NASH). An estimated 130–150 million people globally have chronic hepatitis C infections, while NASH is becoming more common in developed countries affecting two to five per cent of Americans, possibly due to rising rates of obesity.

Enanta Pharmaceuticals is also positioned for growth as it developed one of the two direct-acting antivirals used in AbbVie’s (NYSE: ABBV) FDA approved Technivie treatment for hepatitis C (as well as another AbbVie hepatitis C combo therapy) and it’s therefore entitled to milestone and royalty payments on net sales of the drugs.

Synaptics, Incorporated (NASDAQ: SYNA) is a small cap tech stock with a market cap around US$2.4 million. It is a worldwide developer of custom-designed user interface solutions such as touch, display and biometrics products that are designed for mobile computing, communications and entertainment devices in the mobile, PC and automotive industries. Synaptics itself would also be an important supplier to both Apple and Samsung or any other device or technology makers in Asia.

Growth stocks also tend to come with a catch for income-seeking investors, as they usually don’t pay dividends because management is focused on reinvesting any retained earnings into capital projects to keep up the growth momentum.

Finally, individual growth stocks may also be held by the ETFs and other funds that you own – meaning you could have exposure to them without realizing it. That’s why you should always consult with an investment advisor who will make an appropriate asset allocation based upon your entire portfolio.

Don Freeman,BSME is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC). Based in Phuket, he has over 15 years’ experience working with expatriates, specializing in portfolio management, US tax preparation, financial planning and UK pension transfers. Don can be reached at: 089-970-5795 or email: freemancapital@gmail.com.

— Don Freeman

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