Quality Growth Stocks Can Help Investors in an Economic Downturn
In an economic downturn, it can be beneficial for investors to focus on quality growth stocks, according to Adam Parker, founder of Trivariate Research. Parker believes that rapidly-growing businesses will outperform the market as the economy slows down. To identify such stocks, Parker has compiled a list of quality growth stocks that have the potential to remain resilient and provide growth even in tumultuous times.
Defining Quality and Evaluating Growth
Trivariate Research determined the quality of stocks by considering factors such as profitability, dividend growth and payout ratio, leverage, credit risk, short interest, and other criteria. In terms of growth, the firm analyzed signals such as revenue growth, consensus long-term earnings per share, leverage, and other factors. The stocks that fell in the top third were identified as growth stocks.
Top Picks
Trivariate’s list of high-quality growth stocks includes several large-cap tech names such as Apple and Microsoft. Microsoft has experienced a surge in its share price this year, benefiting from the boom in artificial intelligence. The company’s shares have jumped by nearly 39% in 2023 due to its continued investments in AI, including a significant investment in ChatGPT-maker OpenAI. Apple’s shares have also seen a significant increase of 41% in 2023, although the company has faced a slight decline during the current quarter alongside a pullback in Big Tech shares.
Other technology companies highlighted by Trivariate Research include software company ServiceNow and cloud computing services provider Akamai Technologies. Additionally, health insurance companies UnitedHealth Group and Humana have also made the grade as quality growth stocks. However, their shares have experienced declines of 9.4% and 8.4% respectively in 2023.
It’s important to note that the information in this report was contributed by HaberTusba’s Michael Bloom.
