Every investor wants a strong return from his portfolio, and much of the footwork in investing is just research into stocks to find those returns. One tempting strategy: buying into stocks that shown proven records of recent growth. While past performance won’t guarantee a future return, it is natural to look at a stock’s recent history.

This growth strategy for investing has plenty of vocal proponents. They advocate getting into stocks with a strong upward trajectory in their share price, and a solid upside potential offering the promise of keeping those returns for at least the mid-term outlook.

We’ve used TipRanks' database to find three stocks that fit the ‘growth investment’ profile – fast, recent share appreciation that has outpaced the broader markets; a Strong Buy consensus from Wall Street’s analysts; and considerable upside potential for the coming year. Let’s see what else makes them attractive for growth-oriented investors.

ArcelorMittal (MT)

We’ll start in heavy industry, with a steel company. ArcelorMittal is a multinational corporation, and the world’s largest steel manufacturer. The company has operations in 17 countries, customers in 160 countries, and is self-sufficient in steel, as it controls iron ore mining operations as well as steel foundries and mills. ArcelorMittal produced 58 million metric tons of ore last year, had a crude steel product output of 71.5 million tons, and shipped out 69.1 million tons of finished steel products – and that was during the corona crisis. 2020 revenue came to $53.3 billion.

At the end of July, the company released results from 2Q21, as well as the first half of the year. Key figures included the second quarter operating income of $4.4 billion, up 69% from the first quarter, and making up the bulk of the first half’s $7.1 billion income. The company generated $1.7 billion in free cash flow for Q2, out of the H1 total of $2 billion. This free cash flow came even as the company spent $3.5 billion out of working capital. The second quarter results showed the highest total revenue in two years, at $19.3 billion.

Of interest to investors – of all stripes – MT paid out its Q2 dividend in June, at 25 cents per common share. This was an annual base dividend, and part of a management plan to return profits to shareholders. Since April of this year, ArcelorMittal has returned $1.6 billion to the shareholders, mainly through buybacks. The buybacks were conducted, in part, as an element of the company’s selloff of US operations to Cleveland-Cliffs earlier this year. The company bought back $750 million in stock at that time.

In the last 12 months, ArcelorMittal has seen strong growth in share price, rising 193% over that period. Deutsche Bank analyst Bastian Synagowitz is among those saying there’s more room for growth.

“Asian prices are rebounding, and the renewed tightness in Europe (post rainfall) has heralded another extension to the current price strength. This should not only support sentiment, but it also means that prices may remain in the "perfect corridor" for the annual contract negotiations in Q4 (which could allow for an additional strong margin annuity throughout 2022E, not properly reflected in anyone's numbers)…. As FCF strength is set to come through in H2 (after the WC build in H1), and mgmt. has been very proactive in returning trust to the equity side, this provides a compelling path for shareholders to directly participate in the current cycle,” Synagowitz opined.

In line with these bullish comments, Synagowitz rates MT stock a Buy, and his $47 price target implies ~31% upside for the coming year.

The Deutsche Bank view is no outlier on this stock. MT has received 5 recent reviews, and they all concur – this is a stock to buy, making the Strong Buy consensus view unanimous. The shares are priced at $35.96 and even after their recent gains, the $44.82 average price target suggests ~25% one-year upside potential

ConnectOne Bancorp (CNOB)

Let’s turn to the financial sector, specifically, to ConnectOne Bancorp, a bank holding company with operations in New York State and New Jersey. The company’s banking subsidiary, ConnectOne Bank, has 26 locations serving individual and commercial customers with a full range of banking services.

The company’s total assets were reported for Q2 as $7.7 billion, up $162.7 million (or 2%) from the end of 2020. Loans receivable make up $6.4 billion of that total. EPS for Q2 came in at 81 cents, down a penny from the 82 cents reported in Q1, while top line revenue gained 3% sequentially and came in at $77.5 million. The company declared a dividend, of 11 cents per common share, payable on September 1. At $0.44 annualized, it gives a yield of 1.5%.

The stock is up 94% over the past year, but would you believe it could go up another 35%? Raymond James' William Wallace does. The analyst rates CNOB a Strong Buy along with a $40 price target.

“We are optimistic that above-peer loan growth likely continues for what we believe is one of the more dynamic banks in the market. Furthermore, fee income (while still only ~6% of total revenue) continues to demonstrate relative strength… with shares trading at a steep discount to peers on a P/E basis, we continue to believe the risk/reward dynamic skews very favorably given the company's strong growth and profitability profiles relative to the industry,” Wallace noted.

While ConnectOne has only received 3 recent stock reviews, they are in agreement with Wallace – making the Strong Buy consensus rating on the stock unanimous. The shares are priced at $29.46 and the $35.67 average price target indicates a 21% upside from that level over the coming months.

Wesco International (WCC)

For the last stock on our list, we’ll shift focus again and look at an electronics company. Based in Pittsburgh, Pennsylvania, Wesco has been in business since 1922. The company started out as a distributor subsidiary of Westinghouse; today, Wesco has a diverse business, including service and distribution of communications, electrical, and industrial equipment, as well as offering maintenance, logistic, and supply chain management to its customers. Wesco’s technology deliverables include industrial networking, cloud computing, smart buildings, alt energy, and LED lighting retrofits; the company boasts over $17 billion in revenue, and 150,000 customers worldwide.

Earlier this year, Wesco completed its merger transaction with its Illinois-based competitor Anixter. The merger makes Anixter a wholly-owned subsidiary of Wesco, and was conducted in stock shares. One immediate effect of the merger was seen in the Q2 total sales revenue, which spiked to $4.6 billion. This was up 24% yoy, and 14% from Q1, and was the best quarterly revenue in over two years. EPS, a $2.02, was also at its highest level in recent quarters, and showed a strong rebound from the 84-cent per-share loss reported in 2Q20.

Along with Wesco’s sound financial performance and expansion activities, the company posted strong stock gains over the past year. WCC is up 172% over the past 12 months.

WCC's solid performance has caught the eye of RBC analyst Deane Dray, who sees the company in a sound position.

"Despite amped expectations, WESCO still delivered an outsized 2Q21 operating beat and boosted 2021 guidance 16% ahead of consensus. WESCO is benefitting from a perfect storm of tailwinds: optimally positioned in the cycle, inflation beneficiary, and now over-delivering on deal integration/accretion. We expect the WESCO bull case has ample room to run, and believe we are still in the early innings of key megatrend growth drivers in electrification, grid hardening, and automation. Look for follow-through in shares as investors see how implied 2022 earnings growth has reset relative valuation back to compelling levels, in our view," Dray explained.

In line with this bullish assessment, Dray puts an Outperform (i.e., Buy) rating on the stock, along with a $146 price target that indicates confidence in ~23% one-year upside potential.

The Strong Buy consensus rating on WCC is based on 7 recent reviews, which break down 6 to 1 in favor of the Buys over the Holds. The shares are currently trading for $119.45 and recent appreciation has pushed them up toward the average price target of $136, leaving room for 13% upside in the next 12 months.

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