Value stocks have taken a back seat to growth stocks in recent years, with investors willing to forgive high earnings multiples if companies are consistently reporting double-digit revenue and earnings growth. Growth stock investors believe these stocks will eventually grow into and exceed their current market valuations as long as the companies can keep their long-term expansion on track. Bank of America has compiled its Growth 10 list, a group of S&P 500 components with exceptionally high expected growth numbers and “buy” ratings from the analyst team. Here are seven of the growth stocks that make the list.
Amazon.com (ticker: AMZN)
In the past 10 years, Amazon stock is up 3,870 percent, yet its earnings multiple has spent most of its time either in negative territory or triple digits. However, with earnings per share projected to grow at a 44.3 percent rate over the next five years, growth investors are hoping there’s plenty more upside ahead. Analyst Justin Post says Amazon has its toes in countless long-term growth markets, including cloud computing, e-commerce and online advertising. Bank of America has a “buy” rating and $2,000 price target for AMZN stock.
Facebook has faced a wave of negative headlines in the past year related to dissemination of news and handling of customer data. Even Facebook’s EPS growth has slowed from 57 percent in the fourth quarter of 2017 to just 11 percent in the most recent quarter. However, Post says there is a light at the end of the tunnel for Facebook. Facebook is gaining market share in a digital advertising market that will grow by 20 percent in the next three years. Bank of America has a “buy” rating and $190 price target for FB stock.
Google parent company Alphabet is marred in the same antitrust and data usage regulatory uncertainty that has impacted Facebook, but it remains the largest player in the high-growth market of digital advertising. In addition, Post says Google has potentially massive growth opportunities in autonomous vehicles (Waymo), cloud services (Google Cloud) and streaming video (YouTube). Alphabet has generated three consecutive quarters of EPS growth of at least 28 percent. Post says Alphabet shares are even valued modestly given its growth outlook. Bank of America has…
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