Undercover Gems: Growth Stocks to Watch in a Volatile Market
Amid the recent turbulence in the stock market, savvy investors are seeking out growth stocks that offer solid prospects despite current challenges. While valuations may be stretched, there are still opportunities to uncover under-the-radar gems that meet rigorous quality standards.
According to Adam Coons, portfolio manager at Winthrop Capital Management, “Growth stocks have the inherent potential to continue outperforming value stocks in the long run. However, valuations have extended, which mandates a focus on identifying higher-quality investments.”
Coons emphasizes the importance of examining valuations and investing in companies that generate “real free cash flow from minimal debt, possess robust earnings, a solid balance sheet, and a sustainable business model over the next 5-10 years.”
Digging Deeper into Coons’ Picks
Coons has identified three promising growth stocks that meet these criteria and are worthy of closer examination:
1. PayPal Holdings: A Digital Payment Powerhouse
PayPal, a leading player in the digital wallet space, has faced a significant drop in its stock value, making it an attractive investment opportunity. With its comprehensive ecosystem of financial products and focus on creating customer loyalty, PayPal remains a formidable force.
Coons highlights the company’s recent revisions to its growth expectations, showcasing its confidence in the future. Additionally, PayPal’s strategic investments in Venmo and its innovative debit and credit cards are contributing to its overall growth strategy.
2. SS & C Technologies: A Data Titan
SS & C Technologies, a software-as-a-service provider in the financial industry, has solidified its position in the market. With its extensive data, including investment security and user base information, the company is well-poised to capitalize on the growing need for data intelligence.
Coons anticipates that SS & C Technologies will play a pivotal role as one of the primary sources of big data in the future. The company’s strong market position and data-driven approach make it an attractive investment opportunity.
3. Moody’s: A Data-Driven Credit Rating Authority
Moody’s, a leading credit ratings agency, possesses a vast and valuable data trove that extends beyond its traditional business. Coons believes that the company is poised to leverage artificial intelligence to enhance its data usage and monetization capabilities.
Moody’s recent financial performance, which exceeded Wall Street’s expectations, demonstrates the strength of its business model. Coons is confident in the company’s long-term prospects given its data-driven approach and potential to monetize its vast information assets.
As the market navigates the current volatility, savvy investors are seeking out growth stocks that offer both quality and undervaluation. PayPal Holdings, SS & C Technologies, and Moody’s meet these criteria, making them potential game-changers in their respective industries and attractive investments for those seeking outperformance in the years to come.
Data sourced from: cnbc.com
