While everyone seems to love growth stocks due to its above-average market returns, the hard part is to find a growth stock worthy of your money. This is because these stocks have plenty of volatility and risk associated as an investor can lose his/her money if the growth story is nearing its end. However, with proper analysis and growth interpretation, you can pick the right stock to invest in. If you can end up investing in the right growth stock, there are chances that it will outperform the market soon!
As per the given trends, Nvidia is truly one of the booming growth stocks in the market. The historical EPS growth for the stock is 43.9% but investors should focus on the projected growth rate. As per estimates, the EPS is about to grow 32% this year which leaves behind the industry average by a huge margin.
Great asset utilization ratio
In the real growth stock perspective, the asset utilization ratio or the sales-to-total-assets (S/TA) ratio is extremely important to be considered. At this moment, the S/TA ration for Nvidia is 0.71 that means the company receives $0.71 in sales for each dollar they have in assets. The industry average is 0.68, hence it shows why they are leading the pack. Apart from this, the sales growth of the company also paves the way for its success. It is expected that the company will achieve a sales growth of 20.2% whereas the industry average is way below at -1.7%.
Stay and learn from home move
Nvidia (NVDA) is truly the market leader when it comes to providing high-performance graphic processing units for laptops, PC’s data centers or even gaming consoles. The current surge in the work and learn from home is leading to a huge spike in the demand for PCs ad cloud-based services. This will, in turn, benefit the company in a period of global economic slowdown.
Systems used in medical research
The GPUs from this company is also used extensively for medical research and in this Coronavirus outbreak, such usage is expected to multiply. The Parabricks tool from the company will be extensively useful for researchers who are working hard to find a cure to the virus that is spreading mayhem throughout the world. This genome-analysis toolkit, which is also accelerated with GPU, researchers can get the analysis done in a few hours which previously used to take days. With all such benefits and perks in the present scenario, the stocks of Nvidia have gained around 7.4% this year so far.