We recently compiled a list of the 8 Best Cheap Growth Stocks To Invest In Now. In this article, we are going to take a look at where Jazz Pharmaceuticals plc (NASDAQ:JAZZ) stands against the other cheap growth stocks.
What Should Your Portfolio Look Like in the Current Bull Market
The current market data shows that the economy of the United States is normalizing, especially with an active Federal Reserve, global stimulus from China, and higher consumption rates. In one of our recent articles, 7 Best Low Cost Stocks To Buy Under $50, we talked about the areas that could potentially benefit the most in the current bull market. We also discussed points of view from different analysts. Here is a piece from the article:
“The Fed rate cut and the Chinese stimulus are expected to affect the market positively. Adam Parker, Trivariate Research founder and CEO; Lauren Goodwin, New York Life Investments chief market strategist; and Kristina Hooper, Invesco chief global market strategist joined CNBC recently to talk about the best opportunities in the current bull market.
Adam Parker expressed that the market is outpacing the Federal Reserve’s action. He highlighted a sense of optimism surrounding AI deployment over the next few years, but he also raised concerns about market valuations exceeding economic realities. Parker likes the healthcare sector as it is driven by AI and believes that this will put the industry in a leading market position. He also believes that the Chinese Stimulus is a positive sign for the energy and industrial sectors.
On the other hand, Lauren Goodwin talked about how the rate cuts are supposed to affect the market. She thinks growth is the key indicator while analyzing the market. When the Fed is cutting rates, profit, and earnings margins typically stay where they are until growth starts to slow down. Moreover, she also pointed out that it is difficult to see the real economic catalyst that gives growth an upstart, without inflation. She also thinks that the upcoming period is going to be volatile between growth kicking up and then slowing down. Goodwin mentioned that she is going to be the buyer of the rally until unemployment starts rising and growth becomes a problem.”
Gabriela Santos, JPMorgan Asset Management’s chief market strategist, joined CNBC recently to talk about how investors’ portfolios might not be adequately adjusted to align with the current economic normalization, particularly in fixed-income allocations.
Santos emphasized that a proactive Federal Reserve, ongoing U.S. economic expansion, and stimulus from China create a favorable environment for risk assets to perform well. Santos highlighted that portfolios typically hold only about 36% in core fixed income, while she believes a more appropriate range is 65% to 75%. She suggested reallocating cash into credit rather than equities, focusing on investment-grade bonds and securitized debt.
Moreover, she thinks that within equity as well portfolios are overly emphasized on growth and technology stocks, whereas there lies significant potential outside of these industries. Gabriela Santos also pointed out that consumer spending remains robust, tracking around 3% to 3.5%. This resilience supports the notion of a “soft landing” for the economy. She also noted that it is a good sign that the market is less concerned about inflation, and instead, the focus is now more on consumer spending data, which has been tracking around 3% to 3.5% during the current quarter.
Our Methodology
To compile the list of 8 best cheap growth stocks to invest in now, we used our previous articles and Finviz screener. Using these two sources we shortlisted 20 growth stocks from industries including Technology, Biotech, Healthcare, and Renewable energies among others. We made sure that we only selected stocks that were trading below the forward price-to-earnings ratio of 23.98 (the market’s forward P/E as per the Wall Street Journal) with earnings expected to grow during the year. Next, we ranked these stocks based on the number of hedge fund holders in Q2 2024. The list is ranked in ascending order of the number of hedge fund holders.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A biopharmaceutical scientist in their lab, studying a newly-diagnosed therapy-related acute myeloid leukemia. .
Jazz Pharmaceuticals plc (NASDAQ:JAZZ)
Forward P/E Ratio: 5.68
Earnings Growth This Year: 7.00%
Number of Hedge Fund Holders: 44
Jazz Pharmaceuticals plc (NASDAQ:JAZZ) is a biopharmaceutical company that specializes in treatments for neurological disorders and oncology. Xywav, Epidiolex/Epidyolex, and Rylaze/Enrylaze among others are three of its top-performing medicines contributing significant growth for the company.
The already existing treatments developed by Jazz Pharmaceuticals plc (NASDAQ:JAZZ) posted a significant increase in sales during the second quarter results. Xywav’s net product sales grew 13% year-over-year, Epidiolex sales grew 22%, and Rylaze grew 6% during the same time. The combined performance led the total revenue to grow 15% when compared to the same quarter last year. Its oncology department also witnessed a 10% increase during the same time, indicating a robust performance overall.
While the current progress is impressive, what stands out is that the prospect of growth continues to improve for the company. Its Zanidatamab has been granted a priority review by the FDA and is said to be market-ready 2 months from now.
Jazz Pharmaceuticals plc (NASDAQ:JAZZ) is a cheap growth stock to invest in now. We say this because it is trading at only 6 times its forward earnings. Moreover, its earnings are also expected to increase by 7% during the year.
Aristotle Capital Global Equity Strategy made the following comment about Jazz Pharmaceuticals plc (NASDAQ:JAZZ) in its Q3 2023 investor letter:
“During the quarter, we sold our position in Magna International and invested in a new position, Jazz Pharmaceuticals plc (NASDAQ:JAZZ). Founded in 2003, Jazz Pharmaceuticals is a global biopharmaceutical company headquartered in Ireland. The drugmaker’s portfolio of nine approved products focuses on conditions with limited therapeutic treatments in neuroscience (~75% of 2022 revenue) and oncology (~25%).
Jazz’s drug Xyrem was added to its portfolio in 2005 and was approved for use in patients with narcolepsy. The drug’s strong efficacy propelled it to be the standard of care for this incurable sleep condition and has achieved wide adoption for the treatment of excessive daytime sleepiness and cataplexy (episodes of loss of muscle control).
Xyrem’s patent exclusivity ended in January 2023, and authorized generic versions of the product have entered the market. To prepare for the patent cliff, the company developed Xywav, a lower‐sodium version of Xyrem, which is touted for its potentially better heart safety. The drug has received FDA approval for the treatment of narcolepsy and idiopathic hypersomnia and has orphan drug exclusivity through 2027…” (Click here to read the full text)
Overall JAZZ ranks 7th on our list of the cheap growth stocks to invest in. While we acknowledge the potential of JAZZ as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
