- Multiple stock-market experts are predicting that value stocks will perform well in 2021 after a prolonged period of underperformance.
- But the show isn’t over for growth: with the path ahead for the economic recovery seemingly clear, some growth stocks will see the economic momentum needed to fuel their earnings upward.
- JPMorgan shares their top 43 growth stock picks heading into the new year.
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Despite the economic carnage caused by the worldwide COVID-19 outbreak, US stock indices have soared to all-time highs.
That’s mostly thanks to mega-cap tech firms, which have seen astonishing appreciation as work, school, and shopping have moved largely online.
Now that vaccine rollouts have begun, the stay-at-home environment that boosted these growth stocks will start to change.
Still, JPMorgan equity strategists — and their peers at other firms — expect the broader market to rise in 2021. The bank anticipates an up to 19% rally in the S&P 500 that’s led mostly by cyclical and value stocks.
But this doesn’t mean stocks with rapid earnings growth will all suffer; for one, there are many whose valuations haven’t skyrocketed like the tech firms at the top of the market.
If the path ahead for the economic recovery becomes clearer, some growth stocks — in addition to recovery plays — will see the momentum needed to fuel their path upward.
“The equity market is facing one of the best backdrops for sustained gains in years,” Dubravko Lakos-Bujas, JPMorgan’s chief US equity strategist, said in a recent note. “After a prolonged period of elevated risks (global trade war, COVID-19 pandemic, US election uncertainty, etc.), the outlook is significantly clearing up, especially with news of a highly effective COVID-19 vaccine.
“Corporate earnings and labor market recovery continue to come in ahead of expectations,” Dubravko continued.
He listed additional factors that have created a conducive environment for stocks.
“USD continues to normalize, acting as an earnings tailwind for US multinationals. S&P 500 cash balance is at a record high, which should be a catalyst for buybacks and M&A in 2021,” he added. “Lastly, equity positioning remains at below-average levels with ample room for mechanical re-leveraging as volatility continues to subside.”
Ahead of the new year, JPMorgan compiled a list of 43 high-conviction growth stocks to buy for 2021. These stocks should be positioned equally to value stocks in a portfolio, the bank says.
The recommended growth stocks are listed below in alphabetical order.
43 growth stocks to buy for 2021
Americold Realty Trust (COLD)
Ascendis Pharma (ASND)
BioMarin Pharmaceuticals (BMRN)
Dell Technologies (DELL)
Dominion Energy Inc (D)
Eli Lilly & Company (LLY)
First Republic (FRC)
Globe Life Inc (GL)
Hostess Brands, Inc (TWNK)
Mondelēz International, Inc. (MDLZ)
New York Times Company (NYT)
Norfolk Southern (NSC)
NVIDIA Corporation (NVDA)
Outfront Media Inc (OUT)
Robert Half International (RHI)
Sarepta Therapeutics (SRPT)
Signature Bank (SBNY)
Sunrun Inc. (RUN)
SVB Financial Group (SIVB)
Targa Resources Corp. (TRGP)
TG Therapeutics (TGTX)
Thermo Fisher Scientific (TMO)
T-Mobile US Inc. (TMUS)
Ulta Beauty Inc (ULTA)
Varonis Systems (VRNS)
Verisk Analytics (VRSK)
Vivint Smart Home (VVNT)
Wynn Resorts (WYNN)
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