It has been a surprising about-turn for growth stocks this year after the mauling that this segment experienced in 2022.
The NASDAQ Composite Index and S&P 500 saw declines of 33.1% and 19.4%, respectively, last year.
Both the S&P 500 and the bellwether technology index have performed well year-to-date, rising by 17.7% and 33.7% respectively and almost erasing last year’s losses.
Along the way, many growth stocks have seen their share prices shoot to a 52-week high.
This performance did not happen in isolation as these companies’ earnings have also improved, thereby justifying the rise.
We turn the spotlight on four such US stocks to determine if their run can be sustained for the remainder of this year.
McKesson Corp (NYSE: MCK)
McKesson Corporation is a diversified healthcare services provider that works with biopharmaceutical companies, pharmacies, care providers and governments to deliver quality healthcare products and services.
Shares of the healthcare player have risen by 14.3% year-to-date and are hovering close to their 52-week high of US$437.74.
Revenue for its fiscal 2024’s first quarter (1Q FY2024) ending 30 June 2023 rose 11% year on year to US$74.5 billion.
The higher revenue was driven by a better performance in its US Pharmaceutical segment with higher prescription volumes from retail national customer accounts.
Gross profit also rose 11% year on year while net profit jumped 25% year on year to US$958 million.
McKesson’s board of directors has approved a US$6 billion increase for share repurchases, taking the remaining share purchase authorisation to US$8.9 billion as of July 2023.
As a sweetener, the healthcare conglomerate also increased its quarterly dividend by 15% from US$0.54 to US$0.62.
The company expects its adjusted earnings per share to grow by 2% to 5% for FY2024.
Parker-Hannifin Corp (NYSE: PH)
Parker-Hannifin is a leader in motion and control technologies and manufactures a wide range of products such as pipes, fittings, hoses, pumps, and gas generators.
The company’s shares have soared 45.7% year-to-date, hitting an all-time high of US$425.
For FY2023 ending 30 June, the company’s sales climbed 20% year on year to a record high of US$19.1 billion.
Net profit surged by 58.3.% year on year to US$2.1 billion.
Parker-Hannifin also saw its free cash flow increase by 17.5% year on year to US$2.6 billion for FY2023.
The company also raised its quarterly dividend from US$1.33 to US$1.48, and the business has increased its dividend without fail for 67 consecutive fiscal years.
Parker-Hannifin expects sales to increase by between 3% to 6% year on year for FY2024, with free cash flow coming in at US$2.6 billion to US$3 billion for the fiscal year.
Palantir (NYSE: PLTR)
Palantir is a technology company with platforms for integrating, managing, and securing data.
It also taps into artificial intelligence to drive the analysis of this data to deliver insights to its clients.
Palantir’s share price has soared 166% year-to-date and closed at US$17.04, just shy of its 52-week high of US$20.24.
The company released its fiscal 2023’s second quarter (2Q 2023) earnings recently which saw revenue rise 11% year on year to US$533 million.
It is also the company’s second consecutive quarter of operating profit and its third consecutive quarter reporting a net profit.
Palantir’s free cash flow for the first six months of 2023 (1H 2023) also nearly tripled year on year from US$77.2 million to US$218.9 million.
Its customer count also jumped 38% year on year to 421 while billings for 2Q 2023 surged 52% year on year to US$603 million.
For 2023, Palantir has raised its revenue guidance to above US$2.2 billion (previously: a range of between US$2.19 billion to US$2.23 billion)
Ralph Lauren (NYSE: RL)
Ralph Lauren designs, markets and distributes luxury lifestyle products in five categories – apparel, footwear & accessories, home, fragrances, and hospitality.
The company’s shares have risen by 19.3% year-to-date, just off its 52-week high of US$135.76.
Ralph Lauren’s fiscal 2023 (FY2023) earnings ending 1 April saw a mixed performance.
Revenue rose 3.6% year on year to US$6.4 billion but operating profit fell by 11.8% year on year to US$704.2 million.
Net profit declined by 12.9% year on year to US$522.7 million.
The luxury retailer’s free cash flow also plunged nearly 65% year on year to US$193.5 million.
The company declared a quarterly dividend of US$0.75 for the fourth quarter of FY2023.
For FY2024, Ralph Lauren expects a low-single-digit year on year increase in revenue and is planning to spend around US$275 million to US$300 million on capital expenditures.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
