3 Growth Stocks That Can Make You Richer

Earnings growth comes in all shapes and sizes. The fascinating thing about these three companies — namely agri-science company Corteva (NYSE:CTVA), Google parent Alphabet (NASDAQ:GOOGL), (NASDAQ:GOOG), and Goodyear Tire & Rubber (NASDAQ:GT) — is how differently each one intends to reach the aim of boosting profits. Nevertheless, all three are attractive stocks in their own way. Here’s why.

Image source: Getty Images.

Growing earnings

First, here’s a look at Wall Street analysts’ consensus forecasts for earnings before interest, taxation, depreciation, and amortization. All three are likely to increase EBITDA by at least a double-digit annual rate over the next few years.

Moreover, hitting these EBITDA forecasts would leave all three trading on attractive multiples of enterprise value (market cap plus net debt) to EBITDA relative to their growth prospects.

Data source: marketscreener.com

Corteva

The company sells seeds and crop protection. These products tend to be complementary as agri-science companies aim to sell them as part of a system. The seeds are designed to be resistant to specific crop protection products (herbicides). As such, seeds and crop protection (such as Corteva’s proprietary Enlist soybean system).

The word “proprietary” in the previous paragraph is the key to the investment case. Management aims to expand sales of its proprietary systems, like Enlist, to grow sales, but more importantly, EBITDA margin. It can do this because, by selling Enlist versus a product that requires a competitor’s product, Corteva can avoid hefty royalty payments to other companies.

Image source: Getty Images.

The progress the company is making with Enlist is giving investors confidence Corteva can reach its aims. For example, on the second-quarter earnings call, CEO James Collins told investors, “further penetration of the Enlist soybean system for 2021, now estimated to be on approximately 35% of U.S. soybean acres, and that’s up from prior estimates of 30%.”

He promptly raised full-year 2021 EBITDA guidance to $2.5 billion to $2.6 billion, from a previous range of $2.4 billion to $2.5 billion. It augurs well for the development of the business, and if the Enlist system can demonstrate good yield versus competitors, then Corteva looks well placed to grow earnings in the coming years.

Alphabet

It’s no secret that Google search is driving revenue and earnings at Alphabet. That will continue to be the case for the foreseeable future. However, as you can see below, Alphabet’s other revenue items have a higher compound annual growth rate (CAGR) than Google search.

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