If you are looking for the best growth stocks to buy now, this list of stodgy stalwarts from top sectors is worth checking. First, all of them have strong near-term growth prospects. Second, some of them provide meaty dividends as well.
To say 2022 has been a tough year for investors would be an understatement.
The S&P 500 (SPY) is down 17.3% for the year after being down more than 20%.
Long-term Treasury bonds, that often bucked the decline in stocks during the past decade, have done worse.
The iShares 20+ Year Treasury Bond ETF (TLT) is down a whopping 23.5%.
Although commodity-oriented sectors such as energy have worked this year, their recent decline has been gut-wrenching.
For example, the Vanguard Energy ETF (VDE) has lost 22.8% since June 7. These losses have reduced this ETF’s year-to-date gains to 30.6%.
The relentless rise in inflation roiled stocks and bonds for most of the year.
The Federal Reserve is trying to catch up after being slow to recognize inflation.
The central bank has raised the benchmark federal funds rate three times this year, with each increase higher than the previous one.
Following increases of 0.25%, 0.5%, and 0.75% in March, May, and June, the federal funds rate now stands at 1.75%.
Investors are increasingly concerned about the Fed’s ability to tame inflation with steep interest rate increases without starting a recession.
Fed Chairman Powell acknowledged this risk in his testimony to Congress last week, noting a recession is a “possibility.”
High Growth Sectors for 2022
Here’s how analysts have changed their earnings estimates in response to the above milieu, according to FactSet data as of June 17:
Currently, analysts forecast the S&P 500 companies to grow their earnings by 10.4% in 2022.
That’s up from 9.2% at the start of 2022.
Analysts have significantly raised earnings estimates for the energy and materials sectors, while lowering them for the consumer discretionary sector the most.
As shown below, analysts expect earnings to grow year-over-year in 10 out of the 11 sectors.
Analysts expect year-over-year earnings growth to exceed 17% in sectors sensitive to economic activity, such as materials, industrial, and energy.
They expect modest 1-3% earnings growth in communication services, consumer discretionary, and consumer staples.
Earnings in the financial sector are expected to contract by 11%.
Stock valuation metrics are in-line with historical norms after rising during the pandemic. The forward 12-month P/E ratio, a commonly used metric to value stocks, now stands at 15.8, below its 5-year and 10-year averages of 18.6 and 15.9, respectively.
The right stocks can deliver outsized rewards, even in this challenging 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 10.4% 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
• Walt Disney (DIS): 75%
• Charter Communications (CHTR): 26%
• T-Mobile US (TMUS): 13%
2. Best Growth Stocks to Buy Now in Consumer Discretionary Sector
• Booking Holdings (BKNG): 117%
• Marriot International (MAR): 87%
• Tesla (TSLA): 79%
3. Best Growth Stocks to Buy Now in Consumer Staples Sector
• Archer-Daniels-Midland* (ADM): 19%
• Costco Wholesale (COST): 18%
• Hershey (HSY): 12%
4. Best Growth Stocks to Buy Now in Energy Sector
• Valero Energy* (VLO): 459%
• Marathon Petroleum* (MPC): 412%
• Occidental Petroleum (CVX): 316%
5. Best Growth Stocks to Buy Now in Financials Sector
• Progressive (PGR): 34%
• Chubb Ltd (CB): 21%
• Charles Schwab (SCHW): 20%
6. Best Growth Stocks to Buy Now in Health Care Sector
• Pfizer* (PFE): 53%
• Merck* (MRK): 22%
• Humana (HUM): 19%
7. Best Growth Stocks to Buy Now in Industrials Sector
• Boeing (BA): 92%
• General Electric (GE): 34%
• Emerson Electric* (EMR): 23%
8. Best Growth Stocks to Buy Now in Information Technology Sector
• Advanced Micro Devices (AMD): 58%
• Micron Technology (MU): 56%
• Qualcomm* (QCOM): 47%
9. Best Growth Stocks to Buy Now in Materials Sector
• Freeport-McMoRan (FCX): 24%
• Sherwin-Williams (SHW): 16%
• Air Products and Chemicals* (APD): 14%
10. Best Growth Stocks to Buy Now in Real Estate Sector
• Crown Castle International* (CCI): 56%
• Equinix (EQIX): 29%
• Public Storage* (PSA): 12%
11. Best Growth Stocks to Buy Now in Utilities Sector
• NextEra Energy* (NEE): 11%
AlphaProfit’s Recommendations of Best Growth Stocks to Buy Now
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