Where can investors look for growth in 2022?
With economists around the world dialing back economic forecasts for 2022 and beyond, it may become increasingly difficult for investors to find reliable growth stocks to buy. So far, there have been no clear signs that the Federal Reserve‘s aggressive tightening measures are bringing down inflation in a meaningful way. Amid growing fears surrounding rising interest rates and the possibility of a U.S. recession, value stocks have outperformed growth stocks this year. Bank of America recently updated its Growth 10 list of top growth stocks for long-term investors to buy. Here are the firm’s top growth stock picks.
Amazon.com Inc. (ticker: AMZN)
E-commerce and cloud services giant Amazon has been one of the best-performing growth stocks of all time. Unfortunately, Amazon shares are down 36% this year through June 28 as revenue growth slowed to 7.3% in the first quarter. Analyst Justin Post says Amazon still has legs on its long-term growth story, and he anticipates that the company’s recent investments in expanding its logistics will pay off in coming years as Amazon grows into its new capacity. Post says Amazon will capture 5% of global e-commerce deliveries by 2026. Bank of America has a “buy” rating and a $3,770 price target for AMZN stock, which underwent a 20-for-1 split earlier in June. The target equates to $188.50 post-split. AMZN closed at $107.40 on June 28.
Meta Platforms Inc. (META)
Meta Platforms is a market leader in social media and online advertising and is the owner of Facebook, Instagram and other platforms. Meta shares are down more by more than half year to date after Facebook reported its first-ever drop in daily active users in February and followed up with a disappointing first-quarter earnings report in April. Meta recently announced that it is reducing hiring and cutting investments in its Reality Labs metaverse division. Post says Meta’s advertising business generates recession-resistant earnings compared to other growth stocks. Bank of America has a “buy” rating and a $262 price target for META stock, which closed at $160.68 on June 28.
Alphabet is one of the world’s largest online search and advertising companies and is the parent company of Google and YouTube. Post says investors can expect search growth to slow in 2022, while hiring and operating expenses are due to rise. However, he says Alphabet’s artificial intelligence and machine learning technology provides unique advantages for the company across its product offerings. In addition, Alphabet’s business is tremendously profitable, providing a large degree of financial flexibility, especially for a growth stock. Post projects 15.8% revenue growth in 2022. Bank of America has a “buy” rating and a $2,940 price target for GOOGL stock, which closed at $2,240.15 on June 28.
Fleetcor Technologies Inc. (FLT)
Fleetcor Technologies specializes in fuel cards and workforce payment products and services that help businesses manage and pay expenses. In the first quarter, Fleetcor reported an earnings beat and raised its full-year earnings guidance. Analyst Mihir Bhatia says Fleetcor’s business has positive momentum as volumes recover and margins expand. In addition, Bhatia says the stock is attractively valued, trading near the low end of its five-year forward earnings multiple range. Bhatia projects 18.2% revenue growth and 11.4% net income growth for Fleetcor in 2022. Bank of America has a “buy” rating and a $310 price target for FLT stock, which closed at $211.40 on June 28.
Halliburton Co. (HAL)
Just a couple of years ago, it might have seemed crazy to include an oilfield services stock like Halliburton on a list of best growth stocks. However, the global energy market dynamic has shifted dramatically as a combination of supply shortages and rebounding global demand has driven oil and natural gas prices to their highest levels in years. Analyst Chase Mulvehill says Halliburton and other oilfield services stocks will benefit from a renewed sense of urgency for exploration and production companies to drill new wells. Bank of America has a “buy” rating and a $47 price target for HAL stock, which closed at $33.19 on June 28.
Monster Beverage Corp. (MNST)
Monster Beverage is a market leader in energy drinks. Analyst Peter Galbo says inflation has weighed on Monster’s margins, but the company’s planned 6% price increases should help offset cost pressures. Galbo projects 21.5% revenue growth for Monster in 2022, a far superior growth rate to many of its beverage competitors. Monster has a track record of performing well during economic downturns, growing sales and profits by nearly 10% during the 2009 financial crisis. Galbo says the company also has a pristine balance sheet. Bank of America has a “buy” rating and a $115 price target for MNST stock, which closed at $90.81 on June 28.
Match Group Inc. (MTCH)
Match operates several leading online dating platforms, including Match.com, OKCupid, Tinder and Plenty of Fish. In May, the company announced that former Zynga President Bernard Kim will replace Shar Dubey as CEO. Analyst Nat Schindler says the management shuffle creates uncertainty for investors, but demand for online dating represents a long-term growth opportunity in a massive and underappreciated global market. Schindler says Match is extremely profitable, generates a large amount of cash flow and has a virtual monopoly of the core online dating business. Bank of America has a “buy” rating and a $168 price target for MTCH stock, which closed at $71.81 on June 28.
TransDigm Group Inc. (TDG)
TransDigm designs and produces aircraft parts for manufacturers and commercial and military aircraft operators. Analyst Ronald Epstein says he anticipates a strong recovery in the post-pandemic aerospace market, including commercial aftermarket revenue growth of 30% in fiscal 2023 and 20% in fiscal 2024. In addition, he says higher sales volumes will boost margins. Epstein says TransDigm’s management team is exceptional and its strong balance sheet creates opportunities for strategic acquisitions. He projects 15.7% revenue growth in 2022 and 15.9% growth in 2023. Bank of America has a “buy” rating and a $720 price target for TDG stock, which closed at $532.60 on June 28.
T-Mobile US Inc. (TMUS)
T-Mobile is one of the three largest U.S. wireless service providers. Analyst David Barden says T-Mobile’s first-quarter earnings beat and guidance hike are signs that the company’s business is firing on all cylinders. Barden says T-Mobile is successfully executing its strategy of gaining market share in smaller, rural markets, where it expects to expand from 30% to 50% of households by the end of 2022. T-Mobile also aims to expand its business market share to 20% by 2025 as it invests in improving its network. Bank of America has a “buy” rating and a $155 price target for TMUS stock, which closed at $133.03 on June 28.
United Rentals Inc. (URI)
United Rentals is the largest equipment rental company in the world. Analyst Ross Gilardi says United is the market leader in equipment rental and should benefit from a recovery in capital spending, an acceleration of rental rates, and a pickup in federal infrastructure spending in 2022 and beyond. Gilardi says United’s balance sheet is healthy, providing opportunity for aggressive share buybacks and potential acquisitions. He projects 17.8% revenue growth and 39% net income growth in 2022, particularly impressive growth numbers in such an inflationary environment. Bank of America has a “buy” rating and a $425 price target for URI stock, which closed at $247.99 on June 28.
The best growth stocks to buy for 2022:
— Amazon.com Inc. (AMZN)
— Meta Platforms Inc. (META)
— Alphabet Inc. (GOOG, GOOGL)
— Fleetcor Technologies Inc. (FLT)
— Halliburton Co. (HAL)
— Monster Beverage Corp. (MNST)
— Match Group Inc. (MTCH)
— TransDigm Group Inc. (TDG)
— T-Mobile US Inc. (TMUS)
— United Rentals Inc. (URI)
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10 Best Growth Stocks to Buy for 2022 originally appeared on usnews.com
Update 06/29/22: This story was published at an earlier date and has been updated with new information.
