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 14.3% for the year after being down as much as 24.0%.
Long-term Treasury bonds, which often bucked the decline in stocks during the past decade, have fared worse.
The iShares 20+ Year Treasury Bond ETF (TLT) is down twice as much, or 29.3%.
Commodity-oriented sectors such as energy are among the few investments that have worked this year.
For example, the Vanguard Energy ETF (VDE) is up 70.9%.
The relentless rise in inflation has roiled stocks and bonds in 2022.
The Federal Reserve is trying to catch up after being slow to recognize inflation.
The central bank has raised the federal funds rate in 0.75% increments four times since June, following increases of 0.25%, 0.5%, and 0.75% in March, May, and June.
The target level for the federal funds rate is now 3.75-4.00%.
Market participants expect the Fed to raise the federal funds rate by 0.5% to the 4.25-4.50% range when the central bank’s interest rate policy committee meets on December 13 and 14.
Investors are increasingly concerned that the Fed’s approach to taming inflation with steep interest rate increases will lead to a recession.
The Treasury yield curve has inverted, as is often the case before recessions.
In July, the yield on the 2-year Treasury note rose above that on the 10-year Treasury security, inverting the yield curve.
Since then, the 2-year Treasury yield has surged further as the Fed has raised its benchmark interest rate.
As of November 25, the 2-year Treasury yields 0.74% more than the 10-year Treasury. This 0.74% difference makes the yield curve the most inverted in nearly 40 years.
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 November 18:
Analysts now forecast the S&P 500 companies to grow their earnings by 5.7% in 2023.
That’s down from their earnings growth forecasts of 8.2% and 9.4% on September 30 and June 30, respectively.
Analysts have lowered their earnings estimates for all sectors except financial since September 30.
They have substantially lowered their earnings forecasts for communication services, information technology, and consumer discretionary companies.
As shown below, analysts expect earnings to grow year-over-year in 8 of the 11 sectors.
Analysts expect year-over-year earnings to grow the most in domestically oriented sectors, such as consumer discretionary and financial.
They expect the information technology sector’s earnings growth to lag behind the S&P 500’s.
Analysts expect earnings in sectors reliant on global growth, such as energy and materials, to contract.
Stocks are not a bargain, despite falling this year. The forward 12-month P/E ratio, a commonly used metric to value stocks, now stands at 17.2, compared to its 5-year and 10-year averages of 18.5 and 17.1, respectively.
High-growth sectors are a logical place to look for the best growth stocks to buy now.
The right stocks can deliver outsized rewards, even in this challenging market.
Companies with rapidly growing earnings also offer the advantage of initiating or increasing 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 5.7% growth expected for the S&P 500 index.
The list includes companies with a market capitalization of over $41 billion.
The list displays three companies in sectors where several firms show above-average growth.
The asterisk (*) denotes that the stock yields over 2% in dividends.
1. Best Growth Stocks to Buy Now in Communication Services Sector
• T-Mobile US (TMUS): 234%
• Walt Disney (DIS): 29%
• Alphabet (GOOGL): 11%
2. Best Growth Stocks to Buy Now in Consumer Discretionary Sector
• Amazon.com (AMZN): 1964%
• Tesla (TSLA): 37%
• Nike (NKE): 27%
3. Best Growth Stocks to Buy Now in Consumer Staples Sector
• Estee Lauder (EL): 33%
• Costco Wholesale (COST): 11%
• Walmart (WMT): 8%
4. Best Growth Stocks to Buy Now in Energy Sector
• Schlumberger NV (SLB): 39%
• Hess Corp (HES): 24%
• EOG Resources* (EOG): 8%
5. Best Growth Stocks to Buy Now in Financials Sector
• Wells Fargo* (WFC): 37%
• Charles Schwab (SCHW): 24%
• Bank of America* (BAC): 16%
6. Best Growth Stocks to Buy Now in Health Care Sector
• Eli Lilly (LLY): 18%
• Intuitive Surgical (ISRG): 16%
• UnitedHealth Group (UNH): 13%
7. Best Growth Stocks to Buy Now in Industrials Sector
• Boeing (BA): 126%
• General Electric (GE): 72%
• Lockheed Martin* (LMT): 25%
8. Best Growth Stocks to Buy Now in Information Technology Sector
• NVIDIA Corp (NVDA): 33%
• Microsoft (MSFT): 17%
• Visa (V): 16%
9. Best Growth Stocks to Buy Now in Materials Sector
• Corteva (CTVA): 21%
• Sherwin-Williams (SHW): 17%
• Linde PLC (LIN): 7%
10. Best Growth Stocks to Buy Now in Real Estate Sector
• Equinix (EQIX): 13%
11. Best Growth Stocks to Buy Now in Utilities Sector
• NextEra Energy* (NEE): 7%
• Duke Energy* (DUK): 7%
AlphaProfit’s Recommendations of Best Growth Stocks to Buy Now
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