Best Growth Stocks to Buy Now in Top Sectors for 2018
Sam Subramanian PhD, MBA
If you are looking for the best growth stocks to buy now, this list of stodgy stalwarts from top sectors is worth checking. For one, all of them have strong near-term growth prospects. Second, some of them provide meaty dividends as well.
U. S. companies have exceeded investors' second-quarter profit expectations.
S&P 500 members grew their profits by 25% year-over-year last quarter compared to analysts' forecasts for 20% growth at the end of June.
As of September 21, the S&P 500 index is up 11% year-to-date while the Dow Jones Industrial Average is up 10%.
After lagging small-cap stocks in the first-half of 2018, large-cap stocks have caught up for the most part. Worries of large-cap company earnings being impacted by a rising dollar and global trade issues have eased.
The Russell 2000 index of small-cap companies is now up 12% leading the S&P 500 by just 1%.
As the third quarter of 2018 draws to a close, optimism on continued synchronized global economic expansion is being challenged by worries of rising trade protectionism, inflation, and interest rates.
How is this tug-of-war between the positive and negative forces impacting earnings expectations at a sector level?
Which sectors do analysts expect to show the highest growth for 2018?
High Growth Sectors for 2018
Here is what FactSet data show as of September 21:
Analysts are forecasting S&P 500 companies to grow earnings by 20.4% in 2018.
That's up from their forecast for 19.6% growth in earnings on June 30.
Earnings are expected to grow in all 11 sectors.
Analysts have raised their earnings growth forecasts for nine of the 11 sectors since June 30; consumer staples and energy are the only exceptions.
The energy sector is forecasted to contribute substantially to the S&P 500's earnings growth in 2018. Analysts expect earnings to grow at 30 of the 31 energy companies included in the S&P 500 index.
Earnings growth is expected to be strongest in the energy, materials, and telecom services.
Earnings growth is expected to be less robust in defensive sectors like utilities, consumer staples, and real estate.
High growth sectors are a logical place to look for the best growth stocks to buy now.
So, what specific companies currently offer above-average earnings growth prospects?
Best Growth Stocks to Buy Now
The following is a compilation of large U. S. companies forecasted to grow their EPS at a rate higher than the 20.4% rate for the S&P 500 index.
Companies with a market capitalization of over $25 billion are included in this list.
The list is pruned to three companies in sectors with several companies showing above-average growth.
1. Best Growth Stocks to Buy Now in Consumer Discretionary Sector
- Amazon (AMZN): 283%
- Netflix (NFLX): 114%
- Charter Communications (CHTR): 62%
2. Best Growth Stocks to Buy Now in Consumer Staples Sector
- Archer Daniels Midland (ADM): 43%
- Monster Beverage (MNST): 25%
- Costco Wholesale (COST): 22%
3. Best Growth Stocks to Buy Now in Energy Sector
- ConocoPhillips (COP): 636%
- EOG Resources (EOG): 396%
- Chevron (CVX): 114%
4. Best Growth Stocks to Buy Now in Financial Sector
- Charles Schwab (SCHW): 49%
- Bank of America (BAC): 37%
- JPMorgan Chase (JPM): 32%
5. Best Growth Stocks to Buy Now in Health Care Sector
- Vertex Pharmaceuticals (VRTX): 93%
- AbbVie (ABBV): 41%
- UnitedHealth Group (UNH): 26%
6. Best Growth Stocks to Buy Now Stocks in Industrial Sector
- Caterpillar (CAT): 69%
- CSX Corp. (CSX): 57%
- Boeing (BA): 42%
7. Best Growth Stocks to Buy Now in Information Technology Sector
- Salesforce.com (CRM): 85%
- Adobe Systems (ADBE): 58%
- NVIDIA (NVDA): 57%
8. Best Growth Stocks to Buy Now in Materials Sector
- Sherwin-Williams (SHW): 28%
- DowDuPont (DWDP): 24%
9. Best Growth Stocks to Buy Now in Real Estate Sector
- Weyerhauser (WY): 34%
- Equinix (EQIX): 28%
- Crown Castle International (CCI): 23%
10. Best Growth Stocks to Buy Now in Telecommunication Services Sector
- Verizon Communications (VZ): 25%
11. Best Growth Stocks to Buy Now in Utilities Sector
AlphaProfit's Investment Selection Process
Selection of sectors with strong earnings growth prospects by itself does not guarantee winning picks.
To increase the odds of selecting winning sector ETFs & selecting winning Fidelity Select Funds, AlphaProfit evaluates sectors on valuation, momentum, and news quality with earnings growth being one of the news quality metrics.
This multi-factor analysis ensures investments in the chosen sector are attractively priced and have the catalysts needed to sustain growth in future.
Fully 75% of investments selected by AlphaProfit have made money ... and this includes the 2008 financial crisis and the dot-com bust at the turn of the millennium.
The high percentage of winning investment selections translates into lower risk and higher return for AlphaProfit Premium Service investment newsletter subscribers.
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Compounding at an annual rate of 18.7%, a dollar invested in AlphaProfit's selection process in 1994 is now worth $69.92 while a comparable investment in the S&P 500 is worth just $10.20.
Consistent selection of winning mutual fund picks has enabled AlphaProfit's Premium Service to rank #1 in Hulbert Financial's investment newsletter rankings multiple times.
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