2022 was an ugly year for growth stocks. And it’s going to get worse for many of them. In this report, we rank 100 top growth stocks based on the financial metrics we consider most important in the current market environment. We have a special focus on Amazon, comparing it to peers on these same financial metrics, but also diving into its specific business fundamentals, including competitive advantages, risks and valuation. We conclude with our strong opinion on Amazon and investing in select growth stocks in the current market environment.
2023 Outlook: 10 Investments Worth Considering
2022 was a very different year for investors. The stock and bond markets were both down significantly, and as monetary policies shifted from dovish towards hawkish—and fiscal pandemic stimulus evaporated—investors were left with the giant sucking sound of high inflation. And making matters worse, central bankers pushed the economy towards recession by dramatically hiking interest rates in an effort to stifle the high inflation problem they helped create. Further still, the dramatic shift in markets may just be starting. In this report, we review what looks to be the beginning of a new market paradigm and review 10 top investment ideas that investors may want to consider going forward.
Top 10 Big-Dividend Healthcare Stocks
Healthcare is a diverse sector. And recent performance has been wide ranging (see data below). This is creating select, highly-attractive big-dividend opportunities ranging from individual pharmaceutical stocks, to healthcare-focused CEFs and even “healthcare” REITs, to name just a few. In this report, we rank our top 10 big-dividend healthcare opportunities, starting with number 10 and counting down to our top ideas.
A Top Healthcare Industry Stock Worth Considering
Given the challenging macroeconomic backdrop (high inflation, recession looming), if you had to list the top characteristics you’d like to see in a stock market investment right now, it might include things like: high profit margins, no debt, tons of cash and a sticky client base that is economically non-cyclical. The healthcare stock we review in this report has all of those things, plus a very high revenue growth rate, a large total addressable market opportunity, a wide economic moat and basically no competition. Plus the shares have sold off significantly this year, thereby creating a more attractive entry point. This is NOT a dividend stock, but rather a very attractive long-term growth stock. Your future self may thank you profusely if you pick up a few shares now.
Accenture (ACN) Earnings Note
This technology and business-operations consulting company released strong quarterly results on Friday (they beat earnings and revenue estimates, increased the dividend again), yet the shares sold off. Despite all the positives (high margins, above industry growth, strong dividend growth, impressive workforce, valuable client relationships) the market was focused on slowing macroeconomic estimates. The market cycle is real, but this business will survive and continue to thrive. It will outpace the market over the next decade, and now is an attractive contrarian time to consider buying shares. We are currently long.
Adobe (ADBE) Earnings Note
This highly-profitable “creative” software company announced record revenue and operating income on Thursday (the shares are up significantly Friday in a declining market), and it’s well-positioned to keep driving profitable growth for the decade ahead. Its products benefit from strong moats (high switching costs), increasing subscription revenue and lots of cash flow to fund growth and buy back shares. This is a business that is positioned to weather the economic cycle well, and it trades at very reasonable valuation multiples, especially considering profit margins and revenue growth guidance both remain robust.
Attractive Healthcare Stock: 3.5% Yield Aristocrat, Significant Upside
The current yield on this healthcare dividend aristocrat is near all-time highs as frustrated investors lose patience with the slower-than-expected pace of the post-pandemic recovery. And despite risks (which we will cover), the business remains healthy (profitable with tons of cash flow) and growth will return. If you are an income-focused contrarian investor (that likes long-term price appreciation), this impressive dividend grower is absolutely worth considering. We are long.
100 Big-Yield CEFs: Ranking Our Top 5
13.4% Yield CEF: Despite Big Premium, Steady Monthly Income Is Compelling
If you are an income-focused investor, you’re likely familiar with Closed-End Funds (“CEFs”) because they can offer big steady dividend income. However, they also present unique risks and opportunities because they often trade at significant premiums and discounts to the net asset value (“NAV”) of their underlying holdings. The monthly-pay CEF we review in this report is very large and hugely popular, and its large price premium (as compared to NAV) isn’t as unattractive as some investors think. In this report, we review the fund and then conclude with our opinion on investing.
Tempting 17.4% Yield BDC: 20% Discount to Book, But Know the Risks
The tempting Business Development Company (“BDC”) we review in this report offers a 17.4% dividend yield (the shares are down 38% this year) and it trades at a 20% discount to its book value. However, it faces significant risks including industry-wide BDC headwinds (yes—rising rates help net interest margins, but also increase portfolio-company default risks, especially with the economy heading towards recession) and company-specific challenges (the business strategy is somewhat unique). In this report, we review the business, the risks, the dividend and the valuation, and then conclude with our opinion on investing.
PIMCO CEFs: Special Year-End Distributions
To the delight of many income investors, PIMCO announced Monday that a handful of its big-yield bond funds will be offering special year-end distributions. Here is the press release from PIMCO. And you can read our analysis on these PIMCO funds here here and here.
2023 Risks and Opportunities: It Can Still Get Worse
As 2022 winds down (it’s been an ugly year so far), things can still get worse in 2023. In this report, we review overall market valuations, macro risks (e.g. monetary policy and recession) and the growing risks related to specific investment styes (e.g. growth versus value, small versus large cap, and various sector opportunities). We also share a handful of specific investment opportunities and then conclude with a few critical takeaways for investors.