vAlthough macro uncertainty continues to loom over the stock market, don’t view this as a sign to sit on the sidelines. If you are investing for the long haul, scores of strong opportunities are out there, including growth stocks to buy.
Yes, with the rise in interest rates since last year, it’s been a challenging time for growth. Yet, while lower-quality growth stocks may continue to be affected by rising rates, and other, more company-specific challenges, this isn’t the case with the high-quality names in this category.
Whether due to the strength of their respective managements, and/or because of factors such as secular growth trends, these stocks can not merely survive, but thrive, in this changing economic environment.
So, what are some of the best growth stocks to buy today? Consider these seven. Each one is poised to be a long-term winner and currently earns either an A or B rating in Portfolio Grader.
Constellation Energy (CEG)
Spun off from Exelon (NASDAQ:EXC) a year ago, Constellation Energy (NASDAQ:CEG) is technically classified as a utilities stock. However, it differs from regulated utilities such as its former corporate parent.
Rather, Constellation generates electricity for sale in the competitive retail energy market. This business model is of course riskier than the traditional utilities business, yet with this risk comes greater opportunity for growth. That’s the story here with CEG stock. Earnings per share (or EPS) are expected to grow by 46.7% this year, and 21.6% next year.
On a longer timeframe, Constellation is well-positioned to benefit from improving sentiment for nuclear power. An increasing number of policymakers around the world are looking to nuclear power as the key to transition away from fossil fuels. Trading at a reasonable 28.9 times forward earnings, CEG earns an A rating in Portfolio Grader.
CoStar Group (CSGP)
Washington, D.C.-based CoStar Group (NASDAQ:CSGP) is a diversified real estate services company.
Best known for its public-facing platforms such as ApartmentFinder.com, LoopNet and BizBuySell, the company also provides information and analysis services to the commercial real estate industry.
Sure, given the current situation with commercial real estate, I admit it may seem odd to consider CSGP stock one of the best growth stocks to buy. After all, isn’t commercial real estate facing numerous headwinds right now? Yes, but given its subscription-based revenue model, and the strong need for its services, CoStar could stay resilient, despite the near-term weakness in the industry.
Long-term, with its deep economic moat and other advantages, the company has a strong chance of continuing to grow at an above-average pace. This will enable B-rated CSGP to sustain its high valuation (51.6 times earnings) and climb up to higher prices.
Halliburton (HAL)
Given the strong rise in energy prices over the past year, it’s not surprising that Halliburton (NYSE:HAL) stock has performed well over this timeframe.
Shares in the oilfield equipment and services firm are up by more than 20% in the past twelve months.
But don’t consider HAL stock to be a “one and done” situation. If you’ve yet to enter a position in this strong growth opportunity, it’s not too late to do so. As seen in the company’s latest earnings results, there is strong demand for its products/services, which makes sense given that fossil fuel prices are still at elevated levels.
As these trends continue, expect Halliburton to stay on an upward trajectory. In addition to solid appreciation potential, there’s ample dividend growth potential with this B-rated energy stock. The company recently raised its quarterly payout by 33%, giving HAL a forward dividend yield of 1.64%.
Eli Lilly (LLY)
In recent weeks, enthusiasm for Eli Lilly (NYSE:LLY) has waned. A top performer among pharma stocks during 2022, investors have shifted toward a more cautious stance with the stock lately.
Yet, as I put it recently, instead of following the crowd out of LLY stock, the best move is to ignore the worrywarts, and take advantage of this pullback. For one, investors have likely overreacted to the latest sales numbers for Mounjaro, arguably the company’s most promising new drug.
Between the fact that Eli Lilly is still ramping up production, and the strong chance this type 2 diabetes treatment also receives regulatory approval for use as an obesity treatment, Mounjaro still has a shot at becoming a “mega-blockbuster” drug, generating tens of billions in annual sales. Along with other growth catalysts, and there’s plenty that could shift sentiment back to bullish for this A-rated pharma stock.
MercadoLibre (MELI)
Over the past decade, MercadoLibre (NASDAQ:MELI) has been one of the top growth stocks to buy and hold. Shares in the Uruguay-based company, a dominant player in the Latin American e-commerce market, are up more than thirteen-fold during this time.
That said, MELI stock was hit by last year’s market downturn. While rallying more recently, shares remain down around 44% below their all-time closing high. I can understand why you may think MELI’s glory days are long behind it. However, while future gains may come in more gradually, I wouldn’t write off MercadoLibre just yet.
As seen in its most recently released quarterly results, MercadoLibre continues to report above-average levels of revenue and earnings growth.
Long-term forecasts call for earnings to rise nearly four times estimated 2022 earnings by 2025. Once economic and market conditions normalize, this B-rated stock will be on its way to higher prices.
T-Mobile US (TMUS)
Among wireless carriers in the United States, T-Mobile US (NASDAQ:TMUS) ranks third in terms of market share. However, among telecom stocks, TMUS has been one of the better-performing names in the space.
TMUS stock is up by double-digits over the past year. This company’s main rivals have delivered a much less stellar performance during this time. Yet even as T-Mobile contends with issues such as a data breach, and as one sell-side analyst (MoffettNathanson’s Craig Moffett) warns of “growth deceleration,” don’t assume it’s all middling returns from here for this B-rated telecom stock.
Growth may slow in the coming year, but T-Mobile is guiding for between 5 million and 5.5 million subscriber additions this year. That’s not all. The company also anticipates billions in additional cost-savings stemming from its 2020 merger with Sprint. Both these factors leave TMUS well-positioned to materially increase earnings in the next few years.
United Rentals (URI)
United Rentals (NYSE:URI) may at first seem like just a value stock, with a low valuation that signals the market’s low confidence in its future results. Given the current economic slowdown, you may assume that this equipment rental company is facing more challenging times ahead.
However, take a closer look at URI stock, and it’s clear that isn’t the case. Rather than being a value stock, at risk of becoming a “value trap,” URI is instead one of the top growth stocks to buy. As demand for its services remains robust, earnings are expected to grow at a steady pace between now and 2025.
This continued earnings growth could keep URI stock (B-rated in Portfolio Grader) in growth mode for years to come. In addition, the company’s recent initiation of a dividend (1.51% forward yield), plus planned share repurchases, will help boost total returns.
— Louis Navellier and the Investor Place Research Staff
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Source: Investor Place