While investors shifted their focus from growth stocks to value stocks earlier this year to capitalize on the economic recovery, many growth stocks have been rebounding lately as investors now bet on the economy’s solid growth prospects. Against this backdrop, we think investing in undervalued growth stocks, such as Regeneron Pharmaceuticals (NASDAQ:REGN), Energy Transfer (NYSE:ET), and POSCO (NYSE:PKX), should allow investors to maximize returns in the near term. Read on.The United States has one of the world’s fastest recovering economies, with its first quarter GDP (for three months ended March 31) increasing at a 6.4% annualized rate. Solid progress on the vaccination front and impressive job growth have been driving the country’s recovery in the second quarter. According to the back-to-normal index, the United States is currently operating at 91% of its pre-pandemic levels.
Stocks with solid growth attributes are expected to be the biggest beneficiaries of this recovery because declining unemployment and rising consumer spending have been driving a substantial rise in corporate sales and profits. The country’s annualized GDP growth expectation of 10.3% in the current quarter (ending June 30) indicates the solid growth prospects of companies that prioritize growth over all else.
However, given that many growth stocks have become expensive now, we think betting on relatively undervalued growth stocks Regeneron Pharmaceuticals, Inc. (REGN), Energy Transfer LP (ET), and POSCO (PKX) could be highly rewarding.