Growth stocks will continue to outperform value stocks, by and large. But valuations are high, so we’re looking for better-quality names.
The turbulent times of recent months for "mega caps" like the "Magnificent Seven" have led some investors to question whether now is the best time to buy growth stocks.
One investor says growth stocks still offer opportunities, but it’s time to be selective.
"Growth stocks will continue to outperform value stocks, by and large. But valuations are high, so we’re looking for better quality names," said Adam Coons, portfolio manager at Winthrop Capital Management.
Growth stocks are expected to grow quickly, but they do not pay dividends and are often more expensive than so-called value stocks.
For Coons, high-quality growth stocks produce "real cash flows from lower amounts of debt, have resilient earnings, a strong balance sheet and a sustainable business model over a 5-10 year horizon."
When considering which stocks to buy, Coons emphasized the importance of valuations.
Here are 3 stocks "in the spotlight" Coons is watching right now:
1. PayPal Holdings
Coons is bullish on PayPal as it is "one of the cheapest names" in digital wallets and financial technology. The stock is down about 80% from its 2021 peak and is down 3% over the past 12 months. The company recently announced that it raised expectations for its 2024 adjusted profit from flat to "mid-to-high single-digit" growth. It has also invested in its Venmo debit and credit cards, which have proven instrumental in PayPal’s "growth strategy by offering more avenues to reach its large user base."
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2. SS&C Technologies
Software-as-a-service player SS&C Technologies is another favorite of Coons, who values its market share. Given the duopolistic nature of the industry, the firm has "a huge amount of data from both an investment security and user base perspective," the portfolio manager said. Shares of the software giant are up about 14% over the past 12 months.
3. Moody’s
Also among Coons’ picks is credit rating agency Moody’s, another company whose "tremendous amount of data" he appreciates. The portfolio manager sees the company leveraging AI to use its data more effectively and ultimately monetize it more. The company’s first-quarter profit beat Wall Street estimates thanks to strong demand for its products. Moody’s shares are up about 30% over the past 12 months.
|Disclaimer
The information and considerations contained in this article should not be used as the sole and principal basis on which to make investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk appetite and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation for public savings.|
Original article published on Money.it Italy 2024-06-21 07:00:00. Original title: Le tre azioni growth da tenere in portafoglio ora
