With the tug of war between growth and value that's been going on in the market for quite some time now, this week's edition of U.S. News Invested seems particularly timely. One day growth is up and value down, the next day it's the reverse. Perhaps the best strategy is to have both but even if you believe that the real profits are in one vs the other, the following list provides what their editors consider the best picks in both. Enjoy the weekend.
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Although growth stocks have dominated much of the last decade, you wouldn't know that from the early days of 2022. Some of the most richly valued stocks in the market have been the hardest hit in the wider stock market sell-off, and "boring" value stocks like AT&T Inc. (ticker: T), Berkshire Hathaway Inc. (BRK.B, BRK.A) and Coca-Cola Co. (KO) have all handily outperformed the market.
That said, plenty of value and growth stocks alike are trading at discounts, and investors can take their pick of some great companies in each category – which area you opt to focus on will largely depend on your risk tolerance. Here are four picks from each category:
1. Growth stock: Unity Software Inc. (U). It's rare to see the sort of dominance that Unity wields in its industry. Unity makes software that developers use to create all sorts of 3D content, with its most popular use in video game development, where more than 70% of mobile games are made with its software. The company is still growing quickly, with analysts expecting more than 30% revenue growth in 2022. The recent shift of tech's focus toward the emerging world of the metaverse should also be bullish for U stock, especially if the company seizes on the opportunity to dominate the nascent field – something Unity CEO John Riccitiello has explicitly stated as a company goal.
2. Value stock: FedEx Corp. (FDX). Everyone's familiar with logistics and shipping giant FedEx, but that doesn't mean FDX stock is getting the love it deserves. After trading sideways for the last year, FedEx is now an all-out value stock, going for just 14.5 times earnings, or a nearly half-off discount to the S&P 500's price-earnings ratio of 28.6. Considering that analysts expect earnings growth of nearly 18% annually for the next five years, that's a steal. There are fairly high barriers to entry in the capital-intensive logistics business, and even if Amazon.com Inc. (AMZN) continues to grow, there's plenty of business to go around for FedEx, which also pays a 1.2% dividend.
4 best growth, 4 best value stocks to buy: - Growth stock: Unity Software Inc. (U)
- Value stock: FedEx Corp. (FDX)
- Growth stock: Latch Inc. (LTCH)
- Value stock: Wells Fargo & Co. (WFC)
- Growth stock: Meta Platforms Inc. (FB)
- Value stock: AutoZone Inc. (AZO)
- Growth stock: SoFi Technologies Inc. (SOFI)
- Value stock: Steel Dynamics Inc. (STLD)
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It's a pity that I can't buy stocks.
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