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.
A lot has changed in the past 12 months.
A year ago, the coronavirus put its indelible stamp on the world.
Economic activity plunged from measures mandated to stem the spread.
Now, COVID vaccines are available.
Over 32% of the U. S. adult population has received the vaccine.
Near-zero interest rates and several trillion dollars of fiscal stimulus have helped to limit the pandemic’s impact on the U. S. economy.
Although S&P 500 companies saw their profits decline 11% in 2020, the outcome is substantially better than the 21% decline analysts forecasted nearly half-way into 2020.
U. S. companies grew profits year-over-year in the fourth quarter of 2020, entering a profit growth phase a quarter earlier than expected.
U. S. stocks are up sharply. The S&P 500 is up 76% from its March 23, 2020 low, setting several all-time highs along the way.
In some ways, the market has come around the business cycle.
Fears of inflation have replaced fears of recession.
The Federal Reserve expects the U. S. economy to grow at an annualized rate of 6.5% this year, its highest growth since 1984.
The Fed also expects inflation to rise as high as 2.4% in 2021, exceeding the central bank’s 2.0% target.
High Growth Sectors for 2021
Here is what FactSet data show as of March 21:
Analysts currently forecast earnings of S&P 500 companies to grow by 24.9% in 2021.
Earnings in the first, second, and third-quarter of 2021 are forecasted to rebound 22.6%, 51.2%, and 17.8% respectively, from the corresponding COVID-19 impacted quarters of 2020.
As shown below, analysts now expect earnings to grow year-over-year in all of the 11 sectors.
Sectors sensitive to economic activity such as energy, industrials, and consumer discretionary are expected to show year-over-year earnings growth of over 48%.
Earnings in defensive sectors such as consumer staples, real estate, and utilities are expected to grow 2-6%.
Stock valuation metrics are not low even after accounting for the expected strong growth in earnings. The forward 12-month P/E ratio, a commonly used metric to value stocks, now stands at 21.7, above its 5-year and 10-year average of 17.8 and 15.9, respectively.
The right stocks can deliver outsized rewards even in this apparently 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 24.9% growth expected for the S&P 500 index.
Companies with a market capitalization of over $33 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 2% in dividends are noted with an asterisk (*).
1. Best Growth Stocks to Buy Now in Communication Services Sector
• Twitter (TWTR): 205%
• Netflix (NFLX): 63%
• Charter Communications (CHTR): 30%
2. Best Growth Stocks to Buy Now in Consumer Discretionary Sector
• Booking Holdings (BKNG): 699%
• Nike (NKE): 90%
• Tesla (TSLA): 84%
3. Best Growth Stocks to Buy Now in Consumer Staples Sector
• Estee Lauder Companies (EL): 43%
4. Best Growth Stocks to Buy Now in Energy Sector
• Chevron* (CVX): 2762%
• ExxonMobil* (XOM): 950%
• ConocoPhillips* (COP): 332%
5. Best Growth Stocks to Buy Now in Financials Sector
• Wells Fargo (WFC): 537%
• Capital One Financial (COF): 145%
• American Express (AXP): 73%
6. Best Growth Stocks to Buy Now in Health Care Sector
• Boston Scientific (BSX): 60%
• Pfizer* (PFE): 49%
• Abbott Laboratories (ABT): 38%
7. Best Growth Stocks to Buy Now Stocks in Industrials Sector
• General Electric (GE): 2400%
• Boeing (BA): 97%
• Deere (DE): 81%
8. Best Growth Stocks to Buy Now in Information Technology Sector
• Qualcomm (QCOM): 74%
• Micron Technology (MU): 67%
• Apple (AAPL): 36%
9. Best Growth Stocks to Buy Now in Materials Sector
• Freeport-McMoRan (FCX): 335%
• Dow* (DOW): 129%
• LyondellBasell Industries NV* (LYB): 94%
10. Best Growth Stocks to Buy Now in Real Estate Sector
• Equinix (EQIX): 84%
• Crown Castle International* (CCI): 58%
• American Tower* (AMT): 42%
11. Best Growth Stocks to Buy Now in Utilities Sector
AlphaProfit’s Recommendations of Best Growth Stocks to Buy Now
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