Growth stocks remain the best-performing equities of the past decade by a wide margin. These stocks have outperformed via providing revenue and earnings growth higher than the market average at a time when interest rates remain depressed.
However, many top growth stocks had a mixed year in 2021. And 2022 is shaping up to be another perplexing year for investors.
There’s the continued rise of the omicron variant. Inflation concerns are continuing to provide concerns for investors. And expectations now are that we could see as many as four or more rate hikes this year (Ouch for those with variable loans).
Accordingly, those looking at growth stocks in 2022 may need to re-think the types of companies they want to hold. Choosing companies with sky-high revenue growth rates, but no meaningful earnings to speak of in the near-term, may be folly. Rather, companies with established cash flows, printing money at an accelerated rate — those are likely to do well.
In this regard, I’ve put together a list of seven of my top growth stocks I think will outperform the rest this year. These companies are large-cap in nature, but also provide impressive growth rates relative to their size.
Let’s dive into these seven great growth stocks that are on my January buy list:
- Apple (NASDAQ:AAPL)
- Meta Platforms (NASDAQ:FB)
- Amazon (NASDAQ:AMZN)
- NIO (NYSE:NIO)
- Nvidia (NASDAQ:NVDA)
- Sea Limited (NYSE:SE)
- Roblox Corporation (NYSE:RBLX)
Growth Stocks for January: Top Growth Stocks: Apple (AAPL)
Let’s be honest, no list of top growth stocks is complete without talking about Apple. This tech company is the largest company in the world, and the first to cross the $3 trillion market capitalization milestone. This impressive growth in recent years has been due, in part, to multiple expansion. However, in fairness, the entire market saw multiple expansion in recent years, so that’s likely an unfair categorization.
Indeed, Apple’s earnings growth has impressed even the biggest Apple bulls in recent quarters. The company’s revenue has continued to balloon. However, investors favoring AAPL stock have noted that the percentage of revenue that has come from the iPhone has actually dropped over the past three years, from 60% to almost 50% currently. For those looking for more diverse revenue streams, this shift is a very good thing.
Apple’s strong product lineup, anticipation around a potential new EV, and cash flow stability as a result of a loyal and predictable consumer base, have propelled this stock to impressive heights. Apple is a world-class growth stock with tremendous upside potential over the long-run.
Meta Platforms (FB)
Formerly Facebook, Meta Platforms (we’re going to have to get used to that) is the big dog in the social media space. However, Mark Zuckerberg’s name change is notable, and signals to investors that Facebook is looking far beyond the company’s existing core business for growth. Rather, Facebook is looking to dominate the next frontier, the metaverse.
Now, it should also be noted that Facebook’s rebrand to Meta came at an interesting time. The company was embroiled in a series of lawsuits, with negative publicity hurting FB stock materially. Nothing like shifting the discussion to something more positive.
However, this shift has been very positive for investor sentiment. Meta Platforms boasts impressive fundamentals, expected to grow its earnings at an annualized rate of 21% over the next five years. That’s some truly rock-solid growth, and a growth rate for its size that many of its mega-cap peers are going to have difficulty keeping up with.
As part of a portfolio of growth stocks, Meta Platforms fits well within any investor’s portfolio right now.
Growth Stocks for January: Amazon (AMZN)
Another absolute juggernaut in its field, Amazon is leading the way in e-commerce in the U.S. In fact, globally, Amazon is dominating the e-commerce landscape, expanding its presence to new markets and continuing to dominate this high-growth space.
However, most investors in Amazon know that this company is much more than an e-commerce superstar. Rather, Amazon has become a leader in the cloud computing space, driving impressive earnings from this business that is currently much smaller than its core e-commerce footprint.
The Seattle-based company’s cloud services are used by the world’s biggest companies, like Netflix (NASDAQ:NFLX), Facebook, and BMW (OTCMKTS:BMWYY). This led to AWS capturing one-third of the cloud business, making it the industry leader.
This dominance of AWS is what saved the company from being abandoned by shareholders in 2021. It is also the business that will make 2022 another profitable year for Amazon.
Those looking for top-tier growth stocks have to include Amazon in the discussion. While this company’s valuation remains elevated relative to its mega-cap peers, that’s for a reason. This is a quality long-term holding that I’m looking at buying on any big dips in the near future.
NIO Inc (NIO)
China’s been a difficult place to invest this past year. Despite a series of strong tailwinds for the EV sector, Chinese EV player Nio has been on quite the downtrend of late. Currently, NIO stock remains well below 50% of its 52-week high.
A company that’s a leader in the pure-play EV sector in China, Nio is one Chinese company the government has not yet cracked down on. A series of high-profile crackdowns on tech giants over the past year has certainly changed the perception of many investors toward China. This sentiment shift has hurt NIO stock, though the extent to which investors are pricing in factors that don’t ultimately relate to Nio’s business model remain to be seen.
Nio is a company that is not only seeing impressive growth domestically, but is also expanding into Europe, the world’s second-largest EV market after China. This company increased deliveries by 100% on a year-over-year basis, and currently has $7.3 billion in cash and cash equivalents on its books. As far as EV companies go, these are some pretty impressive fundamentals.
To be sure, NIO stock is not yet cheap, even at these levels. However, those banking on long-term growth have to like how Nio is positioned right now.
Growth Stocks for January: Nvidia (NVDA)
As far as top growth stocks for 2022 go, let’s look at one of the best performers of 2021. Right up there with other high-flyers is Nvidia, a chip maker that’s gaining tremendous attention for its growth profile.
Nvidia focuses on making higher-end chips aimed at higher-growth sectors. These include businesses such as gaming, data centers and crypto mining operations. The utilization of Nvidia graphics processing chips and other products has accelerated impressively, resulting in a surging stock price that’s benefited investors. Last year alone, Nvidia stock soared more than 125%. All indications are this is an amazing momentum play heading into 2022.
According to Nvidia’s recent earnings report, the company’s revenue from data center sales and gaming sales rose 55% and 42%, respectively, year-over-year. The company is also bullish about its growth in 2022, as Nvidia predicts quarterly revenue growth will increase to $7.4 billion, as of the fourth quarter of 2022.
As far as top-notch growth stocks go, Nvidia is certainly worth a look in January, particularly on any dips.
Sea Limited (SE)
Singapore-based Sea Limited is a growth stock that’s had, shall we say, a mixed year. This stock has fallen nearly 50% from the company’s peak in Q4 of last year. Accordingly, this is a growth stock that many investors seem to think is on the ropes right now.
Much of this downtrend has been attributed to the current environment, which doesn’t favor high-growth tech stocks. Rising interest rates and the macro environment are certainly unfavorable for many companies in Sea Limited’s shoes. However, other longer-term investors may like the value underpinning this stock, following this drop.
This company remains a key competitor in key sectors such as e-commerce, digital payments and gaming. Revenue growth from the companies e-commerce segment in recent quarters has been triple-digits. Accordingly, those looking for an “Amazon of Asia” certainly like how Sea Limited is positioned.
Sea Limited is a unique play on a high-growth geographic area with its own set of idiosyncratic risks and rewards. Accordingly, this stock is a more difficult one to assess. However, those taking a more diversified approach to growth may want to put this stock on the watch list for January.
Growth Stocks for January: Roblox Corporation (RBLX)
Last, but certainly not least, we have Roblox. As far as top growth stocks to consider in 2022 go, Roblox is a top stock many investors are looking at right now.
Well, Roblox is a key metaverse play that has seen incredible growth in recent years. The company reported revenue growth of 102% this past quarter, on a year-over-year basis. This came as booking rose 28% and average daily users increased by 31% over this same period.
Any company with triple-digit growth is likely to gain a lot of attention from growth investors. However, it’s notable that this company’s margins are also impressive, driving future cash flow growth expectations higher. As a key metaverse stock, many investors believe that Roblox’s influence will only grow over time. For a platform that saw its users spend more than 11 billion hours this past quarter on its gaming platform, that’s saying something.
This stock’s recent dip is worth noting, and investors looking for growth stocks to put on the watch list in January may want to take note. Personally, this is a stock I’m watching closely right now, for these reasons.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.