Growth Stocks: Which Ones Are Funds Buying?

In today’s IBD Screen of the Day, the focus is on stocks that funds are buying. These names can present unique opportunities for outperformance because institutional investors tend to be more sophisticated than retail buyers. Here are some growth stocks making the list.

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Mexico-based airline Volaris (VLRS) has been outperforming its industry. While an IBD Composite Rating of 90 isn’t necessarily what makes it special, Volaris does rank second — only behind Copa Holdings (CPA) — by Composite Rating in the group and has a Relative Strength Rating of 95.

This industry outperformance is in large part due to laxer Covid restrictions in Mexico and the airline’s focus on domestic routes, which are less affected by travel restrictions. Volaris is the largest domestic carrier in Mexico, accounting for almost 30% of domestic airline travel.

Volaris will report its fourth-quarter earnings on Thursday.

Analysts are bullish on the airline’s prospects. Of the 13 analysts following Volaris, 12 have issued buy ratings with a median price target of 31.73. If these targets are met, they would represent a 50% increase from current trading levels.

Volaris is forming a cup base and has a 23.42 buy point, according to MarketSmith.

Growth Stock Benefits as Shipping Industry Stays Hot

Dry bulk shipper Genko (GNK) is forming a cup base with a 22.10 buy point. The Relative Strength Rating is a solid 97 as the shipping industry continues to perform strongly. Rising commodity prices and supply-chain bottlenecks have resulted in significant tailwinds for the shipping sector.

Genko will look to continue strong results when it reports fourth-quarter earnings on Thursday. EPS is estimated at $1.96, with total revenue of $140.4 million. These numbers would be record results if met.

Coal miner Peabody Energy (BTU) is forming a cup base after reporting earnings Feb. 10. Fueled by higher coal prices, an EPS of $3.93 trounced analyst estimates of $1.14 as revenue of $1.26 billion also beat estimates.

Shares traded sharply higher by around 10% after the report and have consolidated around that level since. The stock is in a cup base with a 19.82 buy point, according to MarketSmith.

Eastern Bankshares (EBC) has a relative strength line at new highs, a bullish sign as the stock eyes a 22.35 buy point while forming a flat base. The bank operates 110 locations across New Hampshire, Rhode Island and Massachusetts.

While many banks aren’t true growth stocks, Eastern’s growth has been solid, with 2021 full-year EPS coming in at 96 cents up from 58 cents in 2020. Eastern Bankshares is expected to continue to grow, with EPS projected at $1.15 and $1.47 for 2022 and 2023, respectively.

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