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 are having a remarkable year.
The S&P 500 enjoyed a seven-month winning streak from February through August in 2021.
The benchmark has set 54 new record highs this year while cruising to a 20% gain.
It is not as if investors had no reason to worry. Investors have fretted over rising inflation, the resurgence in COVID cases, and a whole host of other concerns.
The above worries have, however, not deterred investors. They have bought on the dips, limiting the S&P 500’s highest pullback in 2021 to a modest 4.2%.
Investors have focused on the positives, such as record-breaking positive earnings surprises and the Federal Reserve’s unwavering support to the economy via near-zero interest rates and $120 billion in monthly bond purchases.
Things are changing as 2021 gives way to 2022.
In 2021, U. S companies benefited from easy earnings growth comparisons since 2020 earnings were abnormally low due to the pandemic impact. The monetary and fiscal stimulus provided in response to COVID also helped companies drive robust earnings growth.
Earnings comparisons in 2022 become tougher as 2021’s barn-burning numbers now become the basis for measuring growth.
Earnings growth for the S&P 500 members in 2022 is likely to be substantially slower than the 42.6% expected in 2021.
As for interest rate policy, the Federal Reserve has indicated it is almost ready to remove stimulus initiated in response to the pandemic.
In all likelihood, the central bank will pare monthly bond purchases gradually in the first half of 2022, eliminating them in the second half.
High Growth Sectors for 2022
Here is what FactSet data show as of September 24:
Analysts currently forecast the earnings of S&P 500 companies to grow by 9.5% in 2022.
As shown below, analysts now expect earnings to grow year-over-year in nine of the 11 sectors.
Analysts expect year-over-year earnings growth to exceed 24% in sectors sensitive to economic activity, such as consumer discretionary, energy, and industrial.
They expect modest 5-7% 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 20.8, above its 5-year and 10-year average of 18.3 and 16.4, 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 9.5% 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): 106%
• T-Mobile US (TMUS): 43%
• Netflix (NFLX): 23%
2. Best Growth Stocks to Buy Now in Consumer Discretionary Sector
• Booking Holdings (BKNG): 142%
• Tesla (TSLA): 34%
• Amazon.com (AMZN): 26%
3. Best Growth Stocks to Buy Now in Consumer Staples Sector
• Estee Lauder Companies (EL): 14%
• Philip Morris International* (PM): 10%
• Costco Wholesale Corp (COST): 10%
4. Best Growth Stocks to Buy Now in Energy Sector
• Chevron* (CVX): 16%
• ExxonMobil* (XOM): 15%
• ConocoPhillips* (COP): 13%
5. Best Growth Stocks to Buy Now in Financials Sector
• Progressive (PGR): 25%
• BlackRock (BLK): 13%
• Charles Schwab (SCHW): 11%
6. Best Growth Stocks to Buy Now in Health Care Sector
• Dexcom (DXCM): 43%
• Merck* (MRK): 16%
• UnitedHealth Group (UNH): 15%
7. Best Growth Stocks to Buy Now in Industrials Sector
• Boeing (BA): 1386%
• General Electric (GE): 103%
• Raytheon Technologies* (RTX): 24%
8. Best Growth Stocks to Buy Now in Information Technology Sector
• Mastercard (MA): 31%
• Visa (V): 25%
• PayPal Holdings (PYPL): 24%
9. Best Growth Stocks to Buy Now in Materials Sector
• Ecolab (ECL): 24%
• Air Products and Chemicals* (APD): 18%
• Sherwin-Williams (SHW): 15%
10. Best Growth Stocks to Buy Now in Real Estate Sector
• Equinix (EQIX): 41%
• Crown Castle International* (CCI): 25%
11. Best Growth Stocks to Buy Now in Utilities Sector
• Exelon* (EXC): 16%
AlphaProfit’s Recommendations of Best Growth Stocks to Buy Now
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