- Institutional investors are frantically repricing stocks. That is creating an opportunity for these large-cap growth stocks.
- Advanced Auto Parts (AAP): We’ll still be squeezing some miles out of our current rides for a little longer
- Advanced Micro Devices (AMD): You can trust the analysts or your intuition on this oversold semiconductor stock
- Roku (ROKU): A logical choice for investors seeking exposure in the continued growth of the streaming sector
- Shopify (SHOP): The stock looks like a buy if you believe that consumers may be looking for relief from inflation and a slowing economy
- Chipotle Mexican Grill (CMG): The pioneer of fast casual dining continues to expand and beat expectations
- John Deere (DE): The company has three immediate catalysts to fuel growth in 2022
- Enphase Energy (ENPH): One of the leading solar stocks is ready to move higher after posting strong earnings
There are disadvantages to getting older (like the ache in my knee after my run today). But one advantage of aging is a longer time horizon when trying to get perspective on the stock market.
Some investors are getting their first exposure to what some analysts are calling a secular bear market. So I understand that it may be difficult to focus on large-cap growth stocks or any kind of growth stock. But if you’ve got a longer time horizon and some cash on the sidelines, you need to consider at least where, if not when, to jump back into the market.
Institutional investors are frantically repricing stocks in anticipation of two rate increases of at least 50 basis points. And growth stocks, which were already under pressure, are dropping even further. That is creating an opportunity for aggressive investors who are willing to look at the longer term narrative for these large-cap growth stocks.
|AAP||Advanced Auto Parts, Inc.||$209.32|
|AMD||Advanced Micro Devices, Inc.||$89.64|
|CMG||Chipotle Mexican Grill, Inc.||$1,500.82|
|DE||Deere & Company||$384.82|
Large-Cap Growth Stocks: Advanced Auto Parts (AAP)
One company’s supply chain crisis is another company’s tailwind. Automakers continue to have a difficult time keeping up with the demand for new cars. That means that millions of consumers are deciding to hold on to, and maintain, their current vehicles.
This has been a boon for auto parts companies. And one of the best of that bunch is the first of our large-cap growth stocks: Advanced Auto Parts (NYSE:AAP).
An investor who bought the stock at its pandemic low on March 20, 2020 would be sitting on a 200% gain. But let’s look at a different comparison. If you bought the stock on Dec. 27, 2019, you would have a 42% gain. And here’s one more. Investors who bought the dip in AAP stock on the dip created by the Russian invasion of Ukraine are sitting on a 14% gain.
And with a median price of $269.34 which is a gain of nearly 20% from the stock’s current price. And investors get a nice dividend which currently has an attractive yield of 2.7%.
Advanced Micro Devices (AMD)
In market sell-offs institutional investors frequently sell first and ask questions later. That often means that entire sectors are priced lower, which creates opportunities for opportunistic investors. That’s the set-up I see for Advanced Micro Devices (NASDAQ:AMD).
AMD stock is down almost 50% from its 52-week high set in November 2021. The broad sentiment for semiconductor stocks is turning bearish on thoughts that the sector may be topping out. Whether or not that’s the case, investors can still appreciate the market share gains that AMD enjoys over rivals like Intel (NASDAQ:INTC). And Advanced Micro Devices supplies computer chips for some of the most compelling tech sectors.
One such sector is data centers. That’s one reason that Raymond James recently upgraded AMD stock to a “strong buy” with a $160 price target. That would put the stock nearly back to its 52-week high and the consensus price target suggests the stock may go even higher.
Even before the pandemic, Roku (NASDAQ:ROKU) was seen as a strong growth stock. But after the Netflix (NASDAQ:NFLX) earnings report, many investors are questioning their exposure to streaming stocks. However, that concern is not likely to extend to ROKU stock even though you can buy the stock at a steep discount.
Here’s why Roku makes this list of large-cap growth stocks. The streaming business is about the lock and the key. Roku provides both, but it primarily provides the key with its signature operating system being the platform that streaming giants want to be on. But unlike streaming services, Roku is not solely reliant on digital advertising for its revenue.
However, the downside of having physical products to sell is that Roku is not immune from supply chain difficulties. And the company does believe that is a situation that will persist through 2022. But the company continues to grow its active base of viewers, ad revenue and market share. All of which should continue to show up on the company’s balance sheet.
Large-Cap Growth Stocks: Shopify (SHOP)
Of all the large-cap growth stocks on this list, Shopify (NYSE:SHOP) is the one that I’ll admit to being the least comfortable with. There are two narratives taking place. One is that, similar to Netflix, Shopify pulled much of its demand forward. Now that consumers have more options for spending their time, they may choose to invest in activities other than e-commerce.
The competing narrative is that many individuals started businesses during the pandemic. In some cases, these side hustles have now become secondary, or even primary, income streams. And it’s been in this small and medium-sized businesses are the lifeblood the cloud-based e-commerce platform.
This leaves a range of outcomes possible. And that admittedly gives me pause. Nevertheless, I believe that consumers have discovered the merits of e-commerce. And unlike streaming services, the demand for goods and services will remain relatively constant. Plus, if the economy weakens as some suspect, then consumers may be turning back to e-commerce to conserve gas and also to combat inflation.
Chipotle Mexican Grill (CMG)
Like many growth stocks, analysts are starting to re-evaluate Chipotle Mexican Grill (NYSE:CMG). And it wasn’t going to take much for analysts to look sideways at a stock that many investors consider to be expensive even for a growth stock.
In fact, in late April, at least four analysts lowered their price targets for the fast-casual chain. However, in every case the new price target is still significantly higher than the current CMG stock price. And not all the news is bad. Citigroup raised its price target for the stock.
This love/hate relationship is nothing new for Chipotle. However, skeptics have been burned in the past. The company has beaten the odds on more than one occasion. The company delivered a strong earnings report when it reported earnings in February. But more importantly, the company reiterated its plans to continue to expand its footprint by 250 locations in this year alone.
Deere & Company (DE)
Another of our large-cap growth stocks is in the industrial sector. Deere & Company (NYSE:DE) is known for its signature green and yellow equipment. And the company’s fleet of tractors, backhoe loaders, excavators, and other industrial equipment will likely be in high demand for several reasons.
First, infrastructure funding needs to be spent. Second, farmers will be attempting to capitalize on rising crop prices. And third, demand for new home construction remains strong.
For all the reasons to love Deere stock, it has not been immune from the repricing that is taking place. And right now, investors can get DE stock at a compelling discount from where it was just a week ago. It may be that investors are trying to get in position for the company’s earnings which will take place in May. Deere beat on the top and bottom lines in February. If it delivers a repeat performance, the price target and the stock price is likely to rise.
Large-Cap Growth Stocks: Enphase Energy (ENPH)
In a terrible week for the broader market, the post-earnings gain of over 7% for Enphase Energy (NASDAQ:ENPH) stands out. The company is one of the leading names in the solar sector. But it’s not a panel manufacturer. Rather the company uses inverter technology to ensure that homes can bank the solar energy from solar panels and make it available for use at night or on cloudy days.
In addition to beating on both earnings and revenue, the company spoke at length about its expansion in Europe. This is being accelerated by the Russian invasion of Ukraine as homes and businesses now believe that the use of renewable energy solution is imperative to becoming energy independent.
Since this narrative will likely extend over several years, the company will have a long runway for growth.
On the date of publication, Chris Markoch 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.