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.
The COVID-19 pandemic has left virtually no business or country untouched in 2020.
The worldwide count of confirmed COVID-19 cases has exceeded 9.25 million as of June 24. The disease has claimed over 480,000 lives.
In the U. S., the number of cases has topped 2.4 million and resulted in over 123,000 deaths.
The case and mortality count from the pandemic continue to rise.
The U. S. economy is in recession due to the drastic measures put in place to stop or slow down the spread of the disease.
The unemployment rate quickly soared to 14.7% in April from 3.5% in February before pulling back a tad to 13.3% in May.
The U. S. has implemented several fiscal measures in response. They include the $2.3 trillion (~11% of GDP) CARES Act providing direct payments to households and the $500 billion Paycheck Protection Program.
The Federal Reserve has also taken several extraordinary measures to keep credit flowing and financial markets functioning.
The central bank has slashed interest rates, announced open-ended asset purchase programs, and cushioned U. S. money markets from international pressures. It is supporting borrowers big and small. These actions have collectively expanded the Fed’s balance sheet to $7.1 trillion from $4.1 trillion at the end of 2019.
As for stocks, COVID-19 knocked the S&P 500 off its February 19 record high and wiped out almost 32% or roughly $9 trillion by late March. The stimulus measures have helped stocks stage a remarkable comeback since then.
The S&P 500 is up nearly 37% from its March bottom in the face of analysts chopping their 2020 corporate earnings forecasts.
High Growth Sectors for 2020
Here is what FactSet data show as of June 19:
Analysts currently forecast earnings of S&P 500 companies to decline by 21.6% in 2020.
That is sharply lower than the modest 3.4% decline they forecasted on March 31, 2020.
The second quarter is expected to reflect the brunt of COVID-19, with earnings falling 43.8% year-over-year.
The year-over-year earnings comparisons are expected to improve in the third and fourth quarters, albeit still being negative.
As shown below, analysts now expect earnings to fall year-over-year in 8 of the 11 sectors.
Earnings are expected to stay above the flatline in the utilities, information technology, and healthcare sectors.
The earnings decline in energy, consumer discretionary, industrials, and financials is expected to exceed the earnings decline for the S&P 500 index.
The combination of falling earnings expectations and rising stock prices has lifted stock valuation metrics.
The forward 12-month P/E ratio, a commonly used metric to value stocks, now stands at 21.9. This current forward P/E reading exceeds its 5-year and 10-year average by 30% and 44%, respectively.
Even in what appears to be a richly priced market with profits in freefall, the right stocks can deliver outsized rewards.
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 21.6% decline expected for the S&P 500 index.
Companies with a market capitalization of over $32 billion are included in this list.
The list is pruned to three companies in sectors where several companies show above-average growth.
Stocks yielding over 3% are noted with an asterisk (*).
1. Best Growth Stocks to Buy Now in Communication Services Sector
• Netflix (NFLX): 56%
• Charter Communications (CHTR): 54%
• Facebook (FB): 13%
2. Best Growth Stocks to Buy Now in Consumer Discretionary Sector
• Dollar General (DG): 30%
• eBay (EBAY): 21%
• Lowe’s (LOW): 16%
3. Best Growth Stocks to Buy Now in Consumer Staples Sector
• Procter & Gamble (PG): 9%
• Costco Wholesale (COST): 3%
• Walmart (WMT): 1%
4. Best Growth Stocks to Buy Now in Energy Sector
• Kinder Morgan* (KMI): -19%
5. Best Growth Stocks to Buy Now in Financials Sector
• Progressive Corp. (PGR): 19%
• CME Group (CME): 11%
• S&P Global (SPGI): 6%
6. Best Growth Stocks to Buy Now in Health Care Sector
• Vertex Pharmaceuticals (VRTX): 67%
• Bristol-Myers Squibb* (BMY): 32%
• AbbVie* (ABBV): 15%
7. Best Growth Stocks to Buy Now Stocks in Industrials Sector
• L3Harris Technologies (LHX): 12%
• Lockheed Martin (LMT): 10%
• Northrop Grumman (NOC): 4%
8. Best Growth Stocks to Buy Now in Information Technology Sector
• Advanced Micro Devices (AMD): 61%
• NVDIA (NVDA): 40%
• Autodesk (ADSK): 35%
9. Best Growth Stocks to Buy Now in Materials Sector
• Newmont Goldcorp (NEM): 59%
• Air Products & Chemicals (APD): 3%
• Linde PLC (LIN): 2%
10. Best Growth Stocks to Buy Now in Real Estate Sector
• Crown Castle International (CCI): 20%
• Equinix (EQIX): 9%
11. Best Growth Stocks to Buy Now in Utilities Sector
• NextEra Energy (NEE): 9%
• Sempra Energy* (SRE): 8%
• Xcel Energy (XEL): 5%
AlphaProfit’s Recommendations of Best Growth Stocks to Buy Now
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