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 year 2020 is one that upended most forecasts shortly after the year took off.
The COVID-19 pandemic spread to all parts of the world, leaving virtually no business or country untouched.
The U. S. economy contracted from the drastic measures put in place in the second quarter of 2020 to stop or slow down the spread of the disease. The unemployment rate soared to 14.7% in April.
The U. S. implemented several fiscal measures in response to the pandemic, including the $2.3 trillion (~11% of GDP) CARES Act providing direct payments to households. The Federal Reserve slashed interest rates and announced open-ended asset purchase programs.
Although the number of COVID-19 cases has topped 13 million and resulted in over 270,000 deaths in the U. S. alone, the year is closing on an encouraging note.
Hopes of a COVID-19 vaccine are up. Vaccines from Pfizer (PFE) & BioNTech (BNTX), Moderna (MRNA), and AstraZeneca (AZN) have shown promising results in late-stage trials.
Pfizer (PFE) & BioNTech have sought emergency use authorization for their vaccine from the U. S. Food & Drug Administration. Moderna plans to follow suit shortly.
Political uncertainty has eased with the completion of the presidential elections. On November 23, the General Services Administration officially acknowledged Democrat Biden as the President-elect and initiated the transition process. Meanwhile, Trump continues his fight to overturn the election results.
As for stocks, stimulus measures, hopes of a vaccine, and improving political clarity have helped stocks stage a remarkable recovery after bottoming in late March.
The S&P 500 is at an all-time closing high of 3,638.35, up 65% from its March 23 bottom.
High Growth Sectors for 2021
Here is what FactSet data show as of November 20:
Analysts currently forecast earnings of S&P 500 companies to grow by 21.9% in 2021.
Earnings in the second and third quarter of 2021 are forecasted to rebound 44.0% and 21.9%, respectively, from the COVID-19 impacted second and third 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, consumer discretionary, and industrials are expected to show year-over-year earnings growth of over 50%.
Earnings in defensive sectors such as consumer staples, utilities, and real estate are expected to grow 5-7%.
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 17.4 and 15.6, 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 21.9% 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
• Walt Disney (DIS): 148%
• Charter Communications (CHTR): 48%
• Netflix (NFLX): 44%
2. Best Growth Stocks to Buy Now in Consumer Discretionary Sector
• Booking Holdings (BKNG): 3155%
• TJX Companies (TJX): 518%
• Amazon (AMZN): 30%
3. Best Growth Stocks to Buy Now in Consumer Staples Sector
• Sysco* (SYY): 66%
4. Best Growth Stocks to Buy Now in Energy Sector
• Chevron* (CVX): 2049%
• ExxonMobil* (XOM): 430%
• ConocoPhillips* (COP): 177%
5. Best Growth Stocks to Buy Now in Financials Sector
• Wells Fargo (WFC): 484%
• American Express (AXP): 101%
• Citigroup* (C): 38%
6. Best Growth Stocks to Buy Now in Health Care Sector
• Medtronic* (MDT): 39%
• Intuitive Surgical (ISRG): 38%
• Abbott Laboratories* (ABT): 24%
7. Best Growth Stocks to Buy Now Stocks in Industrials Sector
• General Electric (GE): 596%
• Boeing (BA): 117%
• Caterpillar* (CAT): 36%
8. Best Growth Stocks to Buy Now in Information Technology Sector
• Micron Technology (MU): 100%
• Advanced Micro Devices (AMD): 48%
• Mastercard (MA): 30%
9. Best Growth Stocks to Buy Now in Materials Sector
• Freeport-McMoRan (FCX): 266%
• Dow* (DOW): 93%
• Newmont Goldcorp* (NEM): 72%
10. Best Growth Stocks to Buy Now in Real Estate Sector
• Equinix (EQIX): 63%
• Crown Castle International* (CCI): 31%
• American Tower (AMT): 30%
11. Best Growth Stocks to Buy Now in Utilities Sector
AlphaProfit’s Recommendations of Best Growth Stocks to Buy Now
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