The 9 Best Growth Stocks to Buy Right Now
A sharp selloff in growth stocks creates opportunity for keen investors. Here are nine top-rated picks to consider.
Investors abandoned growth stocks in 2022 due to higher interest rates and a threat of a recession. However, the appetite for these riskier stocks has resurfaced in 2023 amid expectations that the anticipated economic slowdown might not be as bad as Wall Street expected.
The hiking of interest rates "undertaken by the Fed since March of last year, and the quantitative tightening that began in June, do not appear to be having the anticipated macroeconomic effect," says Steven Ricchiuto, U.S. chief economist at Mizuho Securities. "In fact, a soft landing is quickly replacing the 2023 recession forecast as the base case scenario. This more constructive macro outlook and the general belief the Fed is searching for any excuse to reverse the direction of monetary policy has helped promote the 'risk on' trade that has dominated since the beginning of the year."
Growth stocks badly lagged value stocks in 2022. But investors in 2023 have a renewed interest in riskier assets. Year-to-date, the S&P 500 Growth Index is up 6.6%.
Plus, the turmoil growth stocks saw last year has many trading at a bargain compared to where they were in January 2022, leaving investors the opportunity to find bargains among some of the higher-quality names.
With that in mind, here are nine of the best growth stocks to buy now. Each of the names featured here boasts one or more of the following: solid growth prospects, attractive valuation and an impressive balance sheet. And each has received top billings from Wall Street's pros.
Data is as of Feb. 10. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Analyst ratings courtesy of S&P Global Market Intelligence, unless otherwise noted. Stocks are listed by analysts' consensus recommendation, from lowest to highest.
- Market value: $1.9 billion
- Dividend yield: N/A
- Analysts' ratings: 7 Strong Buy, 3 Buy, 4 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.79 (Buy)
CarGurus (CARG, $16.33) operates online automotive marketplaces in the U.S., Canada and the United Kingdom.
At the end of September, CARG – which brings car and truck buyers together with automotive dealerships – had more than 36 million global average monthly unique visitors and nearly 31,300 global paying dealers.
The company's asset-light business model is very profitable. It has achieved this by linking wholesale and retail transactions under one single platform and, in the process, improving dealer margins.
In Q3 2022, CarGurus' revenue jumped 91% to $426.5 million. However, its non-GAAP operating income in the quarter was $29.4 million, 53% lower than a year earlier. As of Sept. 30, the company's quarterly average revenue per subscribing dealer (QARSD) in the U.S. was $5,800. That was 4% higher than in Q3 2021. In international markets, Q1 2022 QARSD was $1,507, 1% less than the year earlier.
Investors didn't back the stock in 2022, with CARG finishing the year down more than 58%. And the company's weaker-than-expected Q3 2022 report in early November didn't help the stock's performance on the charts.
However, analysts seemed to take the company's results and weak Q4 2022 forecast in stride – with many still saying CARG is one of the best growth stocks around. Indeed, shares are up nearly 17% so far in 2023.
"We anticipate CARG leveraging its industry-leading traffic metrics over the long term to create a compelling end-to-end digital solution for independent brick and mortar car dealerships," says Needham analyst Chris Pierce (Buy). "CARG would be uniquely positioned as an asset-light operator, operating a take rate model, versus an inventory heavy model."
CarGurus finished the third quarter with no long-term debt and cash and cash equivalents of $404 million.
That's what you call asset light.
- Market value: $10.5 billion
- Dividend yield: N/A
- Analysts' ratings: 8 Strong Buy, 4 Buy, 2 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.57 (Buy)
The history of Darling Ingredients (DAR, $65.67) dates back to 1882 when the Darling family got into business with Swift meat packing interests. Today, it collects and processes animal by-products into usable and specialty ingredients. It also converts used cooking oil and animal fats into feed ingredients.
Raymond James analyst Justin Jenkins gives DAR a Strong Buy rating with a $100 target price, implying expected upside of more than 52% from current levels. "Darling Ingredients remains one of our favorite stocks. The company represents a compelling economic and ESG story that combines a strong legacy business with a growth platform in renewable fuel themes," Jenkins says.
DAR reported third-quarter results on Nov. 8. Its sales were $1.7 billion, 41.7% higher than Q3 2021. Its net income was $191 million, 44.2% higher than a year earlier.
"Strong worldwide demand for fats and proteins will continue to be a tailwind for our global ingredients business," stated CEO Randall Stuewe in the company's Q3 2022 press release. "Diamond Green Diesel III is expected to come on-line within the next week, six months ahead of schedule. This, once again, showcases our strength and expertise to satisfy demand for decarbonization solutions in a meaningful way."
Diamond Green Diesel (DGD) is a joint venture between Darling and Valero Energy (VLO). It is the largest renewable diesel fuel producer in North America and the second-largest in the world.
The DGD plant is located next to Valero Energy's St. Charles refinery in Louisiana. It currently produces 290 million gallons annually. It is in the process of getting a new plant operational in Texas that will increase the annual production of renewable diesel to 1.2 billion gallons.
While Darling's fuel segment – primarily its joint venture with Valero – only accounted for 7% of its revenue in Q3 2022, it accounted for 35% of the company's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization). Once the new renewable diesel plant runs at full capacity, the unit becomes even more critical to DAR's overall business model.
"DAR's legacy business lines (feed/food) provide advantages for the growing Renewable Diesel business, driving meaningful and underappreciated integration value, while also representing robust businesses in their own right," Jenkins says.
- Market value: $18.9 billion
- Dividend yield: N/A
- Analysts' ratings: 10 Strong Buy, 2 Buy, 3 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.53 (Buy)
Icon (ICLR, $232.27) helps drug companies and other healthcare businesses accelerate the development and commercialization of their products and services. Based in Ireland, it is what is described as a contract research organization, or CRO.
ICLR was founded in 1990 with five employees. It has now grown to more than 41,000 people worldwide, organically and through a series of 32 acquisitions over its 41-year history.
Icon finished 2022 down more than 37%, but it has rallied almost 20% so far in 2023. And it remains one of the best growth stocks to buy from an operational standpoint. It reported Q3 2022 results on Nov. 2 that were excellent.
Taking a closer look at the numbers, Icon's sales were $1.94 billion in Q3 2022, 7.4% higher than a year earlier, excluding currency. As of Sept. 30, ICLR had a backlog of $20.2 billion, 9.0% higher than in Q3 2021 and 1.3% above Q2 2022. On the bottom line, its adjusted earnings per share were $3.00, 17.6% more than the year-ago period.
Additionally, ICLR had net business wins of $2.35 billion in the third quarter and a book-to-bill ratio of 1.21. Icon is growing its new business annually by approximately 21%.
For all of 2022, Icon expects its adjusted earnings per share to be $11.75 at the midpoint of its guidance, 22% higher than in 2021. Its revenue forecast is $7.75 billion at the midpoint, an increase of 41.5% over last year.
As for the markets in which Icon competes, the company's 2022 Investor Day presentation suggests that the CRO market is expected to grow 6.5% annually between 2020 and 2025 to reach $60.9 billion.
In addition, the amount of outsourced clinical spending as a percentage of the total development spend by healthcare companies is expected to grow from 51% in 2021 to 56% in 2025. At the same time, the total development spend is projected to increase at an annual rate of 4% over the next four years to nearly $180 billion.
The demand for Icon's services remains high, and that's why it is one of the best growth stocks to buy now.
- Market value: $93.1 billion
- Dividend yield: N/A
- Analysts' ratings: 24 Strong Buy, 10 Buy, 3 Hold, 1 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.50 (Strong Buy)
ServiceNow (NOW, $458.36) helps customers' digital transformations by providing its cloud-based Now Platform to efficiently route its digital workflow. NOW connects a company's people, systems and processes in a single unified platform.
In October 2019, ServiceNow appointed Bill McDermott as CEO, replacing John Donahoe, who moved to Nike (NKE). McDermott came to ServiceNow from SAP (SAP), where he served as CEO or co-CEO over a nine-year stretch. During McDermott's tenure, he tripled the software company's market value to $140 billion.
Recently, McDermott pointed out that the digital transformation market is expected to be $11 trillion annually by 2024. That's a big chunk of business to be going after.
In the fourth quarter of 2022, ServiceNow grew its subscription revenues by 27%, excluding currency, to $1.86 billion. It finished the quarter with current remaining performance obligations (cRPO) of $6.94 billion, 25% higher than a year earlier.
It also added more than 100 customers with annual contracts of $1 million or greater over the three-month period, 22% higher than in Q4 2021. It now has 1,637 customers who spend more than $1 million annually. Additionally, ServiceNow increased the number of customers spending more than $5 million and $10 million annually by 100%.
NOW expects fiscal 2023 subscription revenue of at least $8.44 billion, 22.5% higher than in 2022. Its guidance is also targeting 84% gross profit and 26% annual operating income margins. Plus, the company is free cash flow positive.
"ServiceNow delivered a strong finish to its 2022 fiscal year and offered guidance for both revenue and operating margin that were above our expectations," says Oppenheimer analyst Brian Schwartz, who has an Outperform (Buy) rating on the stock. "The company is benefiting from increasing vendor consolidation activity and wisely sustaining its investments trajectory while other software companies are pulling back on spend. This should sustain strong growth and share gains."
And with NOW down more than 21% year-over-year, investors can scoop up one of the best growth stocks to buy now at a big discount.
- Market value: $119.8 billion
- Dividend yield: 1.0%
- Analysts' ratings: 12 Strong Buy, 8 Buy, 1 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.48 (Strong Buy)
S&P Global (SPGI, $363.86) is a leading provider of financial information, ratings, data and actionable insights to investors worldwide.
The stock didn't have a great 2022, finishing the year down more than 29%. But off the price charts, S&P Global had a good run.
SPGI reported full-year 2022 results in mid-February. Its revenues jumped 35% to $11.2 billion. Net income rose 7% to $3.25 billion. Adjusted earnings, however, decreased 4% year-over-year to $11.19 per share.
As for its fourth-quarter results, SPGI saw revenue rise 41% to $2.94 billion. The financial services firm has six operating segments: market intelligence (35% of Q4 2022 revenue), ratings (24%), commodity insights (15%), S&P Dow Jones indices (12%), S&P Global mobility (12%) and S&P Global engineering solutions (3%).
Except for its ratings and engineering solutions businesses, which saw revenues decline by 29% and 3%, respectively, in the fourth quarter, the rest of its operating segments experienced revenue growth for the three-month period: market intelligence (83%), commodity insights (70%), mobility (10%) and indices (14%).
The company did not provide fiscal 2023 guidance due to "the inherent uncertainty around the timing of the divestiture of Engineering Solutions." The intent to sell was announced in late 2022, and SPGI said in January it will sell the business to KKR & Co. (KKR) for $975 million in cash.
"S&P Global has put the finishing touches on a multiyear restructuring and is now focused on its faster-growing financial businesses, including the lucrative and not-very-competitive business of rating bonds as well as passive investments based on its S&P indices," says Argus Research analyst John Eade (Buy). "The company has a transparent management team and consistently 'underpromises and overdelivers' on financial results."
For investors sizing up the best growth stocks to buy now, SPGI is certainly worth a closer look.
- Market value: $7.4 billion
- Dividend yield: N/A
- Analysts' ratings: 8 Strong Buy, 3 Buy, 1 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.42 (Strong Buy)
MasTec (MTZ, $94.64) is a mid-cap infrastructure construction company with customers in the utilities, communications and government industries. It is certified as a minority-controlled company by the National Minority Suppliers Development Council (NMSDC), which means it qualifies as a minority contractor for projects across the U.S. It employs roughly 22,000 people.
Over the past five years, MasTec grew its revenues and adjusted EBITDA by 17% and 20%, respectively, compounded annually.
"The majority of MTZ's end markets (telecom, electric T&D, renewable energy, and civil infrastructure) have strong recession-resilient tailwinds with solid sources of funding for critical infrastructure needs," says B. Riley analyst Alex Rygiel (Buy). "The company is also well positioned to be a meaningful beneficiary of the N.A. energy transition while attracting greater investor interest for its ESG characteristics."
The company reported excellent Q3 2022 results on Nov. 4, including a 4.5% increase in revenue to $2.51 billion. If you exclude the oil and gas segment, which experienced a 56.2% decrease in revenue in the quarter, MTZ's top line jumped 38% over Q3 2021, with significant gains seen in both its power delivery (+88%) and communications (+33%) segments.
MasTec finished the third quarter with a record 18-month backlog of $11.2 billion, $2.7 billion higher than in Q3 2021 and $222 million higher than Q2 2022.
MTZ shares jumped by 17% on the news.
Going forward, MTZ will look to keep growing its top- and bottom-lines – and could get a boost from its recent $1.1 billion cash-and-stock acquisition of Infrastructure and Energy Alternatives. It closed the deal on Oct. 7, after the end of the third quarter. MasTec paid a 34% premium to IEA's July 22 closing price. Adding IEA increases the company's value to customers in its clean energy and infrastructure segments.
- Market value: $6.8 billion
- Dividend yield: N/A
- Analysts' ratings: 12 Strong Buy, 5 Buy, 1 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.39 (Strong Buy)
Planet Fitness (PLNT, $81.29) reported record memberships in its Q3 2022 results in early November. It finished the third quarter with more than 16.6 million members, 10.7% higher in Q3 2021.
Jefferies analyst Randall Konik (Buy) thinks that part of the fitness chain's growth could come at the expense of Peloton Interactive (PTON).
Peloton's Q3 decline in members marks the first "since its inception, and proves the consumer has grown tired of working out in their basement," Konik says. "In contrast, our data work suggests gyms are strong and getting stronger, and we see PLNT taking massive share long-term."
Planet Fitness had 2,353 owned and franchised locations in the U.S., Canada, Panama, Mexico and Australia as of Sept. 30. The company feels it could open as many as 4,000 locations in the U.S. alone, providing it with a much larger addressable market than Peloton.
At its first-ever Investor Day held in mid-November, PLNT laid out its plans for future growth. These include annual revenue increases in the low-to-mid teens and annual adjusted earnings-per-share growth in the low-to-mid-20% range.
"We've been looking forward to [the company's] third-quarter earnings/Investor Day as a 1-2 positive-punch and, although recognizing the recent outperformance from the dual-catalysts, we continue to believe PLNT's size/scale afford it a competitive advantage, via its (expanding) store footprint and marketing muscle," BMO Capital Markets analyst Simeon Siegel stated in a letter to clients. The analyst reiterated an Outperform (Buy) rating on the growth stock based on "our belief that PLNT remains a long-term share taker with unit growth/comp runway ahead."
What's more, in these inflationary times, Planet Fitness's $10-a-month membership is attractive to a segment of the population that doesn't want to be burdened with an expensive membership.
According to CNN Business, approximately 60% of the chain's members typically go to the gym just five or six times a month. Siegel believes the $10 per-month membership is the sweet spot for attracting and keeping members.
- Market value: $33.2 billion
- Dividend yield: 4.5%
- Analysts' ratings: 15 Strong Buy, 5 Buy, 1 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.33 (Strong Buy)
VICI Properties (VICI, $34.48) is a real estate investment trust (REIT) that owns a portfolio of 43 gaming facilities, including Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas. Its facilities cover more than 122 million square feet, have 58,700 hotel rooms, and more than 450 restaurants, bars, nightclubs and sportsbooks.
One of Wall Street's best REITs reported Q3 2022 results at the end of October that included a 100.0% increase in revenue to $751.5 million, while its AFFO (adjusted funds from operations, a key REIT metric) jumped 82.8% to $470.7 million.
VICI also recently announced that it is expanding its relationship with Toronto-based Cabot Collection, a developer of luxury residential, resort and golf destinations in Canada, the U.S. and the Caribbean.
Cabot's U.S. property management affiliate, CDN Management, will manage all four VICI Properties' golf courses. The management contract is for 20 years with two five-year renewals.
Jefferies analyst David Katz (Buy) thinks VICI is "one of the safest plays today," citing "inherent stability in the business model, continued prospects for growth, dividend yield, and strong cash flow generation." Additionally, the " current rate environment positions VICI's proposition attractively to gaming and experiential leisure companies."
And with a dividend yield of 4.7%, VICI is also one of the best growth stocks for income investors.
- Market value: $5.9 billion
- Dividend yield: 8.0%
- Analysts' ratings: 7 Strong Buy, 2 Buy, 0 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.22 (Strong Buy)
Chord Energy (CHRD, $151.30) is a Houston-based independent oil and gas producer with a leading position in the Williston Basin. The company became Chord on July 1, 2022, after Whiting Petroleum and Oasis Petroleum merged. Whiting shareholders owned 53% of Chord post-merger, with Oasis shareholders owning the rest.
On Nov. 2, Chord announced Q3 2022 results that included total revenues of $1.19 billion, 50.7% higher than Q2 2022, with adjusted net income of $310.4 million, 96.7% higher than in the second quarter.
"Chord Energy had strong operating performance in the third quarter which supported significant free cash flow and our peer-leading return of capital framework," said Danny Brown, CEO of Chord Energy, in the company's press release. "This performance combined with Chord's pristine balance sheet allows us to return to shareholders approximately $277 million, or 85% of adjusted free cash flow generated during the quarter."
Both its revenue and earnings were significantly higher than analyst estimates for the quarter.
The company owns 972,000 net acres in the Williston Basin. It produced 172,481 barrels of oil equivalent per day (Boe/d) in the third quarter, up from 64,079 in Q2 2022. It expects to produce 172,500 Boe/d in the fourth quarter at the midpoint of its guidance.
With the November 2022 dividend payment, Chord paid a base-plus-variable cash dividend of $3.67 a share. On an annualized basis, it yields 8.9%. That makes it one of the best dividend stocks on this list.
Also, during the third quarter, it sold 16 million Crestwood Equity Partners LP (CEQP) shares for pre-tax proceeds of $428.2 million. It continues to hold 5 million shares in the master limited partnership that owns midstream assets in several oil-producing regions of the country, including the Williston Basin.
As top growth stocks go, the merger of Whiting and Oasis into Chord Energy created a mid-cap energy dynamo and a force to be reckoned with in 2023 and beyond.
Will has written professionally for investment and finance publications in both the U.S. and Canada since 2004. A native of Toronto, Canada, his sole objective is to help people become better and more informed investors. Fascinated by how companies make money, he's a keen student of business history. Married and now living in Halifax, Nova Scotia, he's also got an interest in equity and debt crowdfunding.
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