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4 US Growth Stocks Scaling Their 52-Week Highs: Can Their Run Continue?

Hilton Garden Inn Salina
Hilton Garden Inn Salina

The light at the end of the interest rate tunnel is getting brighter.

US consumer prices remain unchanged in October with the annual rise in underlying inflation shrinking to its lowest in two years.

This lower-than-expected reading sparked a strong market rally with investors feeling optimistic that the US Federal Reserve may be done with raising interest rates.

Improving sentiment has sent the share prices of many stocks to new 52-week highs as investors look forward to peak rates.

We shine the spotlight on four US growth stocks whose share prices hit a year-high to determine if they can continue their run.

Adobe (NASDAQ: ADBE)

Adobe is a multimedia software company that offers a subscription service for design, documentation, and creative ideas.

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Its products and services are mostly used by professional designers and editors.

Adobe saw its shares hit a 52-week high of US$613.70 recently but have settled at US$595.31, still up close to 77% year-to-date (YTD).

The software company reported a record revenue for its third quarter of fiscal 2023 (3Q FY2023) ending 1 September 2023.

Total revenue rose 10.3% year on year to US$4.9 billion while operating income increased by 14.4% year on year to US$1.7 billion.

Net profit improved by 23.5% year on year to US$1.4 billion.

Adobe generated a positive free cash flow of US$1.8 billion for 3Q 2023, 13% higher than the US$1.6 billion a year ago.

For the first nine months of the fiscal 2023 (9M FY2023), Adobe’s revenue rose 9.8% year on year to US$14.4 billion with its net profit increasing by 10.2% year on year to US$3.9 billion.

The company held its Investor Meeting 2023 last month and showcased its strategies on how it plans to keep growing.

The future of digital experiences and artificial intelligence (AI) means personalised experiences for users with real-time optimisation.

These will, in turn, activate the digital experience flywheel in a virtuous cycle to help analyse the data and create more personalised content for customers.

Adobe is looking at a significant and growing total addressable market for its various products totalling US$205 billion, giving the company ample opportunities to continue growing its top and bottom lines.

Roper Technologies (NASDAQ: ROP)

Roper Technologies is a software and technology company with products designed for niche markets.

Roper’s share price has climbed close to 20% YTD to close at US$520.88, just shy of its 52-week high of US$528.44.

The company recently announced a solid set of earnings for the first nine months of 2023 (9M 2023) while also raising its full-year guidance.

Revenue increased 15.8% year on year to US$4.6 billion while operating profit rose 15.3% year on year to US$1.3 billion.

Net profit from continuing operations surged by 34.2% year on year to US$990.9 million.

The business also generated a positive free cash flow of US$1.3 billion for 9M 2023.

In line with the good results, Roper increased its quarterly dividend to US$0.75, up 10% year on year.

This is the 31st consecutive year that the company has raised its dividend.

Hilton Hotels Corporation (NYSE: HLT)

Hilton Hotels is one of the world’s largest hospitality companies with 22 brands in 123 countries and territories worldwide.

The company owns close to 7,300 properties around the world under famous brands such as Hilton, Conrad, and Waldorf Astoria.

Shares of the hotel chain have climbed 32.4% YTD to US$165.57, just a whisker away from their 52-week high of US$168.22.

Hilton reported a commendable set of earnings for 9M 2023 in line with the global travel recovery.

Revenue jumped 20.5% year on year to US$7.6 billion.

Operating profit climbed 14.8% year on year to US$1.8 billion while net profit increased by 7.2% year on year to US$994 million.

A cash dividend of US$0.45 was paid for 9M 2023, 50% higher than the year before.

The company has close to 457,000 rooms in its construction pipeline with around 50% under construction.

Hilton was one of the fastest-growing hotel brands from 2007-2022 with a 127% increase in the total number of rooms, beating out competitors such as Hyatt Hotels (NYSE: H) and Intercontinental Hotels Group (LON: IHG).

Cintas Corporation (NASDAQ: CTAS)

Cintas provides a range of products and services to businesses including uniforms, mats, mops, cleaning and restroom supplies, and safety products.

Shares of Cintas have climbed close to 22% YTD to close at US$547.24, just shy of its 52-week high of US$551.58.

The company reported an encouraging set of earnings for its fiscal 2024 first quarter (1Q FY2024) ending 31 August 2023.

Total revenue rose 8.1% year on year to US$2.3 billion with operating profit increasing by 13.7% year on year to US$500.6 million.

Net profit climbed 9.5% year on year to US$385.1 million.

The business generated a positive free cash flow of US$230.2 million for 1Q FY2024, slightly higher than the US$228.1 million churned out in the prior year.

Cintas increased its quarterly dividend by 17.4% year on year to US$1.35 per share, continuing a track record of such increases since its IPO four decades ago in 1983.

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Disclosure: Royston Yang owns shares of Adobe.

The post 4 US Growth Stocks Scaling Their 52-Week Highs: Can Their Run Continue? appeared first on The Smart Investor.