In this article, we discuss 5 high growth low debt stocks to buy. If you want to see more high growth low debt stocks to buy, the risk/reward, and methodology of this list, go directly to 10 High Growth Low Debt Stocks to Buy.
5. Dollar Tree, Inc. (NASDAQ:DLTR)
EPS Next 5 Year Ratio: 17.22%
Debt-to-Equity Ratio: 0.46
Dollar Tree, Inc. (NASDAQ:DLTR) is a leading discount chain that analysts expect will grow its EPS by an average annual rate of 17.22% over the next 5 years. For Q3 fiscal 2022, Dollar Tree, Inc. (NASDAQ:DLTR)’s consolidated net sales rose 8.1% year over year to $6.94 billion with the company’s Dollar Tree segment same store sales rising 8.6% year over year and the company’s Family Dollar segment same store sales increasing 4.1% year over year. Dollar Tree, Inc. (NASDAQ:DLTR) has relatively low debt with a debt to equity ratio of 0.46.
4. Salesforce, Inc. (NYSE:CRM)
EPS Next 5 Year Ratio: 18.30%
Debt-to-Equity Ratio: 0.18
Salesforce, Inc. (NYSE:CRM) is a leading cloud based software company that analysts expect will earn $4.69 per share in FY2022, $4.93 per share in FY2023, $5.86 per share in FY2024, and $7.06 per share in FY2025. For its third quarter fiscal 2023, which is the company’s quarter ended October 31, 2022, Salesforce, Inc. (NYSE:CRM)’s sales rose 14% year over year to $7.84 billion. Adjusted EPS was $1.40 per share. Salesforce, Inc. (NYSE:CRM) has substantial financial flexibility given its low debt to equity ratio of 0.18 and its profitability. In the third quarter, Salesforce, Inc. (NYSE:CRM) returned $1.7 billion to shareholders in the form of share repurchases.
3. The Walt Disney Company (NYSE:DIS)
EPS Next 5 Year Ratio: 20.64%
Debt-to-Equity Ratio: 0.50
The Walt Disney Company (NYSE:DIS) is an entertainment giant that has a debt to equity ratio of 0.5 and a fairly rapid EPS next 5 year ratio of 20.64%. In terms of yearly estimates, analysts see the company earning $3.78 per share in FY2022, $4.14 per share in FY2023, $5.49 per share in FY2024, and $6.72 per share in FY2025.
With the company’s expected future profitability and its relatively low debt, The Walt Disney Company (NYSE:DIS) has financial flexibility to potentially purchase more companies that might add value. The Walt Disney Company (NYSE:DIS) does not currently pay a dividend and thus has more cash flow to potentially improve its balance sheet further or to potentially buy back stock.
2. NVIDIA Corporation (NASDAQ:NVDA)
EPS Next 5 Year Ratio: 21.30%
Debt-to-Equity Ratio: 0.51
NVIDIA Corporation (NASDAQ:NVDA) is an AI stock given its leadership in GPUs which is used for some AI processing. As a result of the expected growth in AI processing in the next 5 years, demand for NVIDIA Corporation (NASDAQ:NVDA)’s GPUs could rise assuming that the company succeeds in maintaining its market share. In terms of estimates, analysts expect the company to increase its EPS by an average annual rate of 21.3% over the next 5 years. Some big tech companies may eventually design or produce their own chips that could reduce overall demand in the future. As a result, NVIDIA Corporation (NASDAQ:NVDA) will need to continue to innovate and the company is potentially riskier than some other stocks on this list.
1. ASML Holding N.V. (NASDAQ:ASML)
EPS Next 5 Year Ratio: 29.80%
Debt-to-Equity Ratio: 0.48
ASML Holding N.V. (NASDAQ:ASML) ranks #1 on our list of 10 High Growth Low Debt Stocks to Buy given analysts expect the company to grow its EPS by an average annual rate of 29.80% over the next 5 years. Given semiconductors are essential for many modern technologies that are growing at a fair rate, demand for ASML Holding N.V. (NASDAQ:ASML)’s leading semiconductor producing equipment is also expected to increase in the future. ASML Holding N.V. (NASDAQ:ASML) also has a strong balance sheet given its debt to equity ratio of 0.48.
Baron Opportunity Fund commented on ASML Holding N.V. (NASDAQ:ASML) in a Q2 2022 investor letter,
ASML Holding N.V. designs and manufactures semiconductor production equipment. It specializes in photolithography equipment, where light sources are used to photo-reactively create patterns on wafers that become printed circuits. ASML is the dominant leader across all types of lithography but, most importantly, is the only company selling equipment for extreme ultra-violet (EUV) lithography, the latest generation technology.
Indeed, because of the stalling out of Moore’s Law, advanced lithography of larger and multi-patterned silicon chips has been critical for leading-edge chip manufacturing and continued improvement in semiconductor chip performance over time. The company is well positioned to continue growing above industry rates as it rapidly adds capacity across its entire business to meet rising industry demand, especially from leading-edge customers continuing to invest to stay ahead of their competitors and drive chip performance forward.
Additionally, the introduction of high-NA EUV technology in the middle of the decade will add another leg to the growth opportunity.
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