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.
Stocks are up in 2023 after a dismal 2022.
The S&P 500 (SPY) is up 14.1% for the year, recouping part of its 2022 losses.
Large-cap growth stocks have led the rally this year.
NVIDIA (NVDA), Meta Platforms (META), and Tesla (TSLA) are up triple digits, while Amazon.com (AMZN), Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOG, GOOGL) are each up over 35%.
Excitement about the potential of artificial intelligence (AI) has helped the above stocks gain in the face of interest rate and recession worries that plagued them last year.
The Federal Reserve increased the federal funds interest rate after every monetary policy meeting through May, raising the benchmark to the 5.00–5.25% range from the 4.25–4.50% range at the start of 2023.
The Fed paused after ten straight interest rate increases in mid-June. The central bank’s interest rate policy committee left the federal funds rate unchanged after meeting on June 13 and 14. The Fed also left room for two more interest rate hikes in 2023.
Widely watched economic indicators, such as the shape of the yield curve, suggest that the economy is heading toward a recession.
The yield curve is steeply inverted, with the 2-year Treasury note yielding nearly 1.0% more than the 10-year Treasury note.
High Growth Sectors for 2023
Here’s how analysts have changed their earnings estimates in response to the above milieu, according to FactSet data as of June 23:
Analysts forecast the S&P 500 companies to grow their earnings by 1.1% in 2023.
That’s down from 5.3% at the start of 2023.
Analysts have lowered their earnings estimates for nine of the eleven sectors, with communication services and utilities being the exceptions.
As shown below, analysts expect eight out of the eleven sectors to show growth in earnings.
Analysts expect companies in the consumer discretionary sector to deliver the highest earnings growth. They forecast aggregate earnings for the consumer discretionary sector to grow by 28.6%.
Other sectors expected to outpace the S&P 500’s 1.1% growth include communication services, industrials, financials, utilities, and consumer staples.
Analysts expect earnings in the energy sector to contract the most this year, i.e., by 27.1%.
Stock valuation metrics are above historical norms. The forward 12-month P/E ratio, a commonly used metric to value stocks, now stands at 18.8, compared to its 5-year and 10-year averages of 18.6 and 17.4, 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
Analysts predict 1.1% and 11.7% EPS growth for the S&P 500 in 2023 and 2024.
Their EPS forecasts indicate that a selected group of large U.S. companies could outpace the earnings growth of the S&P 500 in both 2023 and 2024.
Here is a list of these companies with a market capitalization of at least $43 billion.
We have narrowed the list to the three largest companies by market capitalization in sectors with multiple high-growth companies.
The list below shows the EPS growth expected for the selected company in 2023.
An asterisk (*) indicates that the stock yields more than the S&P 500’s yield of 1.7%.
1. Best Growth Stocks to Buy Now in Communication Services Sector
• Meta Platforms (META): 36%
• Alphabet (GOOGL): 17%
• Netflix (NFLX): 12%
2. Best Growth Stocks to Buy Now in Consumer Discretionary Sector
• Amazon.com (AMZN): 684%
• Booking Holdings (BKNG): 37%
• Starbucks* (SBUX): 16%
3. Best Growth Stocks to Buy Now in Consumer Staples Sector
• Monster Beverage (MNST): 38%
• Target* (TGT): 37%
• Kimberly-Clark* (KMB): 10%
4. Best Growth Stocks to Buy Now in Energy Sector
• Schlumberger* (SLB): 38%
5. Best Growth Stocks to Buy Now in Financials Sector
• Mastercard (MA): 15%
• Visa (V): 15%
• Morgan Stanley* (MS): 5%
6. Best Growth Stocks to Buy Now in Health Care Sector
• UnitedHealth Group (UNH): 12%
• Eli Lilly and Co. (LLY): 10%
• Thermo Fisher Scientific (TMO): 2%
7. Best Growth Stocks to Buy Now in Industrials Sector
• Boeing (BA): 87%
• Waste Management* (WM): 8%
• Raytheon Technologies* (RTX): 5%
8. Best Growth Stocks to Buy Now in Information Technology Sector
• NVIDIA Corp (NVDA): 133%
• Oracle (ORCL): 9%
• Microsoft (MSFT): 5%
9. Best Growth Stocks to Buy Now in Materials Sector
• Ecolab (ECL): 11%
10. Best Growth Stocks to Buy Now in Real Estate Sector
• Equinix* (EQIX): 17%
• American Tower* (AMT): 5%
11. Best Growth Stocks to Buy Now in Utilities Sector
AlphaProfit’s Recommendations of Best Growth Stocks to Buy Now
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