Dj Ecolab Inc. Stock Underperforms Thursday When Compared To Competitors

When it comes to investing, growth stocks are the high-flyers that can take portfolios to new heights. These are the companies pushing the boundaries, expanding quickly, innovating boldly, and capturing market share across dynamic industries. For investors looking to score big, growth stocks are a must-have, offering the chance for spectacular returns. To this end, Wells Fargo analysts recently unveiled their “Growth List,” a selection of companies they believe hold “above-average growth potential.”

Specifically, this list highlights stocks that marry strong growth potential with profitability at a fair valuation. To make the cut, each company had to meet strict criteria: a minimum market value of $1.5 billion, annual revenue over $500 million, and a projected forward EPS compound annual growth rate (CAGR) of at least 5%. With these criteria in mind, here are three standout stocks from Wells Fargo’s “Growth List” that could beat the market and inject substantial growth into your portfolio.

Growth Stock #1: Meta Platforms

With a staggering $1.5 trillion market cap, Menlo Park-based Meta Platforms, Inc. has emerged as an unbeatable giant in the social media landscape. Since Facebook’s game-changing launch in 2004, Meta has redefined global communication through heavyweights like Messenger, Instagram, and WhatsApp. Now, having reshaped social media, Meta is pioneering the next frontier of tech with cutting-edge augmented and virtual reality experiences.

Shares of this social media icon have delivered impressive gains of 76.2% over the past year and 63.9% on a YTD basis, comfortably outshining the broader S&P 500 Index’s 35.6% return over the past 52 weeks and 25.5% YTD growth.

META stock is trading at 25.8 times forward adjusted earnings - which may seem pricey at first glance, but is quite reasonable, considering the company’s above-average long-term projected earnings growth of 21%.

On Sept. 26, the social media giant paid a quarterly dividend of $0.50 per share. The company’s annualized dividend of $1.50 per share offers a 0.25% yield.

Meta revealed its Q3 earnings report on Oct. 30, which soared beyond both top and bottom line projections. The company reported revenue of $40.6 billion, marking an impressive 19% year-over-year increase and slightly surpassing estimates. Additionally, EPS soared to $6.03, reflecting an annual improvement of nearly 37%, and topped Wall Street predictions by a solid 16.2% margin.

The company wrapped up the quarter with a hefty $70.9 billion in cash, cash equivalents, and marketable securities, showcasing its financial strength. Coupled with an impressive free cash flow of $15.5 billion, Meta is well-positioned to continue fueling growth and innovation. CEO Mark Zuckerberg highlighted a strong quarter fueled by advancements in artificial intelligence (AI) across the company's apps and business.

The CEO also emphasized the growing momentum of Meta AI, the adoption of Llama, and the rise of AI-powered glasses, all of which are driving the company's success. Looking forward to Q4, management is forecasting revenue to range between $45 billion and $48 billion. For fiscal 2024, total expenses are anticipated to range from $96 billion to $98 billion.

Capital expenditures for the entire year are forecast to land between $38 billion and $40 billion, up from the prior range of $37 billion to $40 billion. Meta anticipates a sharp rise in infrastructure expenses in fiscal 2025, with accelerated growth in depreciation and operating costs tied to the expansion of its infrastructure fleet.

Analysts tracking Meta project the company’s profit to increase 51.5% year over year to $22.53 per share in fiscal 2024 and jump another 11.3% to $25.08 per share in fiscal 2025.

META stock has a consensus “Strong Buy” rating on Wall Street. Out of the 50 analysts offering recommendations for the stock, 42 suggest a “Strong Buy,” two advocate “Moderate Buy,” four advise “Hold,” and the remaining two give a “Strong Sell” rating.

The average analyst price target of $650.74 indicates a 12.2% potential upside from current price levels.

Growth Stock #2: Uber Technologies

Since its 2010 launch, San Francisco-based Uber Technologies, Inc. set out to make getting a ride as simple as a tap on a phone screen. Fast forward to over 55 billion trips later, and Uber is much more than just rides. It’s now a dynamic platform moving people, food, and goods through cities worldwide, transforming how we connect and interact. By reimagining mobility, Uber has unlocked new possibilities, reshaping urban life and making the world more accessible than ever before.

Valued at a market cap of around $150.3 billion, shares of this ride-hailing giant have outperformed the broader market over the past year, posting gains of over 36%.

While UBER stock is trading at 25 times forward earnings, this valuation seems reasonable given the impressive 41.2% projected earnings growth over the next three to five years, which significantly outpaces the sector median.

Uber released its stronger-than-expected Q3 earnings report on Oct. 31, with revenue up 20.4% to $11.2 billion. The real standout, however, was its EPS of $1.20, a dramatic jump from last year’s $0.10 that easily crushed the consensus forecast of $0.41.

Drilling into Uber’s segment performance, the mobility segment delivered the strongest growth, generating $6.4 billion in revenue, up 26% from the previous year. The delivery segment also performed well, contributing $3.5 billion in revenue, marking an 18% year-over-year increase. The freight segment reported $1.3 billion in revenue, up 2% from the prior year.

CFO Prashanth Mahendra-Rajah noted, “We hit another important milestone this quarter, delivering over $1 billion in GAAP operating income for the first time in our company's history, and are on track to deliver 20% Gross Bookings growth on a constant currency basis for the full year.”

Uber repurchased almost $375 million of its common stock under the February 2024 authorization, demonstrating its commitment to returning value to shareholders. At the close of Q3, the company held $9.1 billion in unrestricted cash, cash equivalents, and short-term investments, providing a solid financial foundation.

Looking forward to fiscal 2024 Q4, the company is forecasting gross bookings to range between $42.75 billion and $44.25 billion, reflecting a solid 16% to 20% year-over-year growth on a constant currency basis. The company expects trip growth to remain in line with Q3 trends. Additionally, Uber anticipates adjusted EBITDA to land between $1.78 billion and $1.88 billion, marking a 39% to 47% year-over-year increase.

Overall, the mood on Wall Street is highly optimistic, with a consensus “Strong Buy” rating for UBER stock. Of the 44 analysts covering the stock, 36 advise a “Strong Buy,” three recommend “Moderate Buy,” and the remaining five maintain a “Hold.”

The average analyst price target of $91.36 indicates a potential upside of 28.4% from Wednesday’s closing price.

Growth Stock #3: Ecolab Inc.

Minnesota-based Ecolab Inc. is the trusted sustainability powerhouse for millions worldwide, providing essential water, hygiene, and infection prevention solutions to protect people and critical resources. With over a century of innovation and a presence in more than 170 countries, Ecolab’s 48,000+ associates bring science-driven solutions and data-backed insights to the table.

From enhancing food safety to optimizing water and energy, Ecolab empowers industries including food, healthcare, life sciences, hospitality, and beyond to achieve safer, cleaner, and more sustainable operations globally. With a market cap of approximately $70.3 billion, shares of this water solutions provider have rallied almost 40% over the past year, outshining the broader SPX’s healthy returns during the same time frame.

From a valuation perspective, ECL stock is trading at 37.3 times forward earnings, which is in line with its historical average premiums.

The company is also highly dedicated to rewarding its shareholders through dividends, as well as share repurchases. With an impressive 31 years of consecutive dividend increases, the quarterly dividend of $0.57 per share translates to a modest 0.91% yield. Plus, in Q3 alone, ECL repurchased around 1.9 million shares.

The Minnesota-based company reported its Q3 earnings results on Oct. 29, which revealed a mixed performance. Ecolab posted $4 billion in sales, a 1% increase from the previous year, despite a 2% drag from the sale of its global surgical solutions business. While the top line fell slightly short of Wall Street’s expectations, the company’s adjusted EPS of $1.83, which registered a strong 19% year-over-year improvement, managed to edge past analyst estimates.

For Q4, management expects adjusted EPS to arrive between $1.75 and $1.85, marking a solid 13% to 19% year-over-year increase. Looking forward to fiscal 2024, the company raised its adjusted EPS outlook, forecasting a range between $6.60 and $6.70, reflecting expected 27% to 29% year-over-year growth.

ECL stock has a consensus “Moderate Buy” rating overall. Of the 25 analysts covering the stock, 11 suggest a “Strong Buy,” two recommend a “Moderate Buy,” and the remaining 12 back a “Hold” rating.

The average analyst price target of $278 indicates an 11.2% potential upside from the current price levels.

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On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.