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. stocks have climbed a wall of worry in 2021.
Investors have fretted over rising inflation, the emergence of coronavirus variants, and historically rich stock valuation metrics throughout the year.
These anxieties led to bouts of rotation between large-cap & small-cap stocks and between growth & value stocks. They, however, did not deter investors from owning stocks.
With just a few weeks to go, the S&P 500 is up 25% in 2021.
Investors found solace in the Federal Reserve’s ultra-easy interest rate policies and robust corporate earnings growth.
The Federal Reserve supported the economy through the pandemic with near-zero interest rates and $120 billion in monthly bond purchases.
Corporate earnings are up quite spectacularly during the past four quarters. The S&P 500 companies have grown their profits by 39% during this period that ended with the third quarter of 2021.
The past few weeks have brought about a perceptible increase in investor unease.
Fears of an economic slowdown are up.
South Africa first reported a highly transmissible form of the virus variant, omicron. The virus variant has now made its way around the globe.
The central bank has changed its monetary policy due to continued high inflation.
Last week, the Federal Reserve announced plans to reduce its monthly bond purchases by $30 billion a month to end the program in March 2022.
Chairman Powell dropped his characterization of inflation as ‘transitory’ and acknowledged the risk of inflation staying high.
The central bank also projected three quarter-point interest rate increases in 2022.
Corporate earnings growth should slow in 2022 as the Fed tightens monetary policy and the omicron variant impedes reopening.
High Growth Sectors for 2022
Here is what FactSet data show as of December 17:
Analysts currently forecast the earnings of S&P 500 companies to grow by 9.2% in 2022.
As shown below, analysts now expect earnings to grow year-over-year in ten of the 11 sectors.
Analysts expect year-over-year earnings growth to exceed 28% in sectors sensitive to economic activity, such as industrial, consumer discretionary, and energy.
They expect modest 6-7% earnings growth in defensive sectors, such as consumer staples, health care, real estate, and utilities.
Stock valuation metrics are not low even after accounting for the strong growth in earnings in 2021. The forward 12-month P/E ratio, a commonly used metric to value stocks, now stands at 21.2, above its 5-year and 10-year average of 18.5 and 16.6, respectively.
The right stocks can deliver outsized rewards even in this seemingly rich market.
High-growth sectors are a logical place to look for the best growth stocks to buy now. Companies with rapidly growing earnings also offer the added advantage of either initiating or growing their dividends.
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 better than the 9.2% growth expected for the S&P 500 index.
Companies with a market capitalization of over $41 billion are included in this list.
The list is pruned to three companies in sectors where several companies show above-average growth.
The asterisk (*) shows the stock yields over 2% in dividends.
1. Best Growth Stocks to Buy Now in Communication Services Sector
• T-Mobile US (TMUS): 41%
• Charter Communications (CHTR): 39%
• Walt Disney (DIS): 37%
2. Best Growth Stocks to Buy Now in Consumer Discretionary Sector
• Tesla (TSLA): 35%
• Nike (NKE): 32%
• Amazon.com (AMZN): 26%
3. Best Growth Stocks to Buy Now in Consumer Staples Sector
• Estee Lauder Companies (EL): 15%
• Monster Beverage (MNST): 14%
• Kimberly-Clark* (KMB): 10%
4. Best Growth Stocks to Buy Now in Energy Sector
• ConocoPhillips* (COP): 33%
• ExxonMobil* (XOM): 17%
• Chevron* (CVX): 13%
5. Best Growth Stocks to Buy Now in Financials Sector
• Progressive (PGR): 29%
• Chubb Ltd (CB): 19%
• Charles Schwab (SCHW): 13%
6. Best Growth Stocks to Buy Now in Health Care Sector
• Pfizer* (PFE): 40%
• Merck* (MRK): 24%
• UnitedHealth Group (UNH): 15%
7. Best Growth Stocks to Buy Now in Industrials Sector
• Boeing (BA): 355%
• General Electric (GE): 94%
• Raytheon Technologies* (RTX): 19%
8. Best Growth Stocks to Buy Now in Information Technology Sector
• Mastercard (MA): 27%
• NVIDIA (NVDA): 20%
• Visa (V): 19%
9. Best Growth Stocks to Buy Now in Materials Sector
• Ecolab (ECL): 24%
• Sherwin-Williams (SHW): 20%
• Linde PLC (LIN): 10%
10. Best Growth Stocks to Buy Now in Real Estate Sector
• Equinix (EQIX): 40%
• Crown Castle International* (CCI): 27%
11. Best Growth Stocks to Buy Now in Utilities Sector
• Exelon* (EXC): 20%
AlphaProfit’s Recommendations of Best Growth Stocks to Buy Now
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