2021 was a good year for the stock markets. The S&P 500 had a banner year, gaining 26.9% to end the calendar year on a high. The Dow Jones Industrial Average (DJIA) also did well with 18%. Nasdaq Composite was up 21%, driven by strong gains from big tech stocks like Amazon and Facebook.
However, with the Fed signaling higher interest rates, big-tech stocks are unlikely to lead the growth stocks list in 2023. Instead, it’s financials that are likely to take the lead in gains for the year. Several banking stocks have already got positive analyst upgrades early in the year.
If you are looking for a mix of growth and stability, here are the 10 growth stocks that you should take a keen interest in when buying shares in 2023.
10 Growth Stocks Investors Should Consider Buying In 2023
The stock market is unpredictable, but also a perfect place to grow your wealth. Its unpredictability is best seen in market behaviour since 2020, when the COVID-19 pandemic started. While economies have struggled to recover since the pandemic hit, the stock markets have been making new record highs.
However, that's not to say that stocks don't carry risks. If you take a closer look at the stock markets, the volatility is pretty high. While some stocks have outperformed the market by a huge margin, others have taken a major hit over the last two years.
Due to such risks, most investors have moved into safer bets like index funds and blue-chip/value stocks. If long-term performance is anything to go by, this approach to investing makes a lot of sense. Over 5 years up to 2020, the annual return of the S&P value index was around 11%. That's a fair return on investment and a relatively low level of risk.
However, it is a relatively low return when compared to the S&P 500 Growth Index, which in the 5-years up to 2020, gave an annualized ROI of 18.95%. We can decipher from these numbers that stability is good, but growth stocks are a better bet for higher financial returns.
That said, growth stocks are not without challenges. As we saw in 2021 and will continue to see for years ahead, there's still a chance your investment could lose money because interest rates may go up or valuations drop drastically when you least expect.
Such challenges notwithstanding, if you do your research, you can make money from growth stocks in pretty much any environment. You don't have to worry, though, as we have analyzed for you the 10 best growth stocks to buy in 2023.
Without further ado, let's dive into each of these growth stocks. Ready?
Top 10 Growth Stocks To Buy For 2023:
- Citigroup (C)
- Wells Fargo (WFC)
- KeyCorp (KEY)
- Huntington Bancshares (HBAN)
- Regions Financial (RF)
- Lloyds Banking Group (LYG)
- Micron Technology (MU)
- Pfizer (PFE)
- Sunpower Corporation (SPWR)
- Comcast (CMCSA)
1. Citigroup (C)
Citi group (C) has held its value even as most stocks turned red at the turn of the New Year. This has a lot to do with the bank's upcoming quarterly results, which most analysts believe will beat expectations.
However, over and above Citi's upcoming earnings, there is good reason to believe that the bank is a top 10 growth stock to buy in 2023. For starters, Citi's forward P/E of 7.89 is much lower than the industry's 13.13. This means Citi is massively undervalued when compared to other players in the banking industry.
There is also the fact the bank is fully prepared to deal with any issues around COVID-19 that could potentially dent productivity. Reuters recently reported that Citigroup had asked its employees to work from home in January 2023. This is in response to the fast spread of Omicron. This proactive approach in dealing with the pandemic makes Citi a stock worth keeping an eye on throughout 2023.
Citigroup has also recently received positive analyst ratings, an indicator that they are confident in its potential to perform well this year. On average, analysts have given Citi a rating of 2.2, which makes it a buy. The most recent analyst review for Citigroup was in April 2021, when Argus research maintained that Citi was a buy. CITI is currently trading at $66, and the consensus estimate for 2023 is $81.
With interest rates set to go up, banks, including Citigroup, could see an increase in revenues generated from treasury bonds. This means better earnings throughout the year, further reinforcing analysts' outlook for the bank.
2. Wells Fargo (WFC)
Wells Fargo (WFC) is in the green at the moment, and this has a lot to do with its upcoming announcement of Q4 results. There is an expectation that Wells Fargo will beat analyst expectations, a factor that is driving up investor interest in the stock.
Over and above the upcoming Q4 results, analysts have a positive outlook for the stock in 2023. The average consensus rating for Wells Fargo is 2.2, which is a buy. Several analysts have also raised their expectations for Wells Fargo.
The latest to lift their outlook for Wells Fargo is Barclays, which upgraded it to Overweight.
Barclays noted that Wells Fargo stands to gain from higher interest rates. Barclays also noted that Wells Fargo had made significant investments in internal control systems ever since its retail banking sales scandal was exposed. For this reason, Barclays expects Wells Fargo to gain by at least 30% in 2023.
With such strong projections, Wells Fargo easily makes it to the list of top 10 growth stocks to buy in 2023. While analyst projections may be wrong at times, a high-interest rate environment stands to benefit most banks.
As such, the odds of a Wells Fargo rally this year are pretty high.
3. KeyCorp (KEY)
KeyCorp (KEY) is a huge financial player in America. It operates as the holding company for KeyBank National Association, which provides banking products and services through two segments, namely: Consumer Bank that caters to mostly home-based customers, and Commercial banking that deals with businesses who need larger volumes of loans than what typical consumers can get through their personal accounts.
KeyCorp's main reason for making it to this list is an increasingly hawkish Federal Reserve. Interest rates are set to go up, and that means banks are set to earn high incomes from their holdings in treasury bills.
Besides the broader banking industry set to perform well this year, KeyCorp has several internal fundamentals likely to boost its odds in 2023 and beyond.
For starters, KeyCorp is looking to streamline its workforce in a bid to drive innovation and growth. As part of its new strategy, KeyCorp aims to increase pay for workers to retain the best. Considering that hiring and retaining the best brains is an important aspect of any corporation's growth, KeyCorp's move on labor is reason enough to include it among the top 10 growth stocks to buy in 2023.
KeyCorp is also making big moves towards leveraging technology for growth. It is doing this by deepening its relationship with nCINO, a cloud banking services provider. Under the latest aspects of the relationship, it is now easier than ever for client relationship managers to see a customer's financial information and address any customer issues faster. This is likely to improve KeyCorp's customer retention rates, and that's a plus.
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4. Huntington Bancshares (HBAN)
Huntington Bancshares (HBAN) is a major bank holding company that operates in seven Midwestern states. It has $123 billion of assets and 839 branches, including 11 private client group offices and over one thousand ATMs.
Like other banks, Huntington Bancshares is set to benefit from increased interest rates in the United States. This could give Bancshares a boost in net income not just in 2023 but for the next couple of years.
However, beyond the potential boost from an interest rates hike in 2023, Huntington Bancshares is set to release its Q4 2021 results in the coming weeks. The fact that HBAN shares are gaining indicates that investors expect Q4 results to beat expectations.
The boost positive earnings results could give to HBAN could play out in the stock's price action for many months to come. Already, the technical indicators are looking strongly bullish.
Huntington Bancshares has been consolidating above 17.01 for some time now, but the stock is still within a buying range. The Relative Strength Index is also painting a picture of growth for HBAN. The stock of Huntington Bancshares just got a big upgrade, with their Relative Strength (R.S.) rating going from 74 to 81. This is an important milestone for the company and its investors because it tells us that investors are optimistic
It is also noteworthy that Huntington Bancshares is on an expansion path, and that's good for value growth. In November 2021, Huntington Bancshares announced that they were looking into regional expansion of their corporate banking business.
With all these factors at play, it is not surprising that HBAN has an analyst consensus rating of 2.4, which is a buy. While nothing is ever certain in the stock markets, HBAN is undoubtedly one of the best growth stocks to buy in 2023.
5. Regions Financial (RF)
Regions Financial Corporation (RF) is a company that offers banking and related services. They have three different segments: corporate bank for businesses; consumer edition focused on consumers' needs with less emphasis on making large loans or investments than other banks do, and wealth management focusing exclusively upon high net-worth individuals (HNWI).
Regions Financial Corporation started 2023 on a high note after it got a ratings upgrade from two major analysts. In late December 2021, Odeon Capital gave Regions Financial Corporation an upgrade from hold to buy. Then on January 1, 2023, Barclays upgraded Regions Financial Corporation from Underweight to Equal-Weight.
Besides these upgrades, there is a lot to look forward to for Regions Financial Corporation in 2023. For starters, the bank is currently on an expansion path. Regions Financial Corporation completed the acquisition of Clearsight Advisors on December 31, 2021.
While announcing the acquisition, Regions Financial Corporation stated that the acquisition of Clearsight helps Regions Bank diversify revenues, and follows their recent purchase of Sabal Capital Partners, LLC. This move will allow them to offer even more solutions in addition to what is already available. That's a reason to be bullish on Regions Financial (RF) as a top growth stock to buy in 2023.
Besides, like all other banks, Regions Financial is likely to get a boost from an interest rates hike in the U.S. Interest rates going up would cement Regions Financial potential as a growth stock to buy this year.
6. Lloyds Banking Group (LYG)
Lloyds Banking (LYG) is a leading U.K. bank that provides banking and other financial services internationally. The company operates through three segments: Retail; Commercial Banking; Insurance & Wealth Management.
Lloyds started 2023 on a positive note after it got upgrades from major analyst firms all through 2021. The latest upgrades were in December 2021, when it got upgrades from Goldman Sachs and Deutsche Bank. Goldman Sachs upgraded Lloyds from sell to neutral, while Deutsche Bank upgraded Lloyd's stock from hold to buy.
There is a good reason why Lloyds is getting these rating upgrades. For starters, higher interest rates in the U.S. and elsewhere means that banks are set to earn more from their investments in treasury bills and bonds.
Lloyds also looks set to benefit from a booming real estate market in the U.K. In November 2021, Lloyds saw its stock rally after strong demand for Mortgages in the U.K. doubled its profits. With the U.K. home market still strong, there is a good chance that mortgage lenders like Lloyds will remain strong for most of 2023.
With this confluence of positive analyst sentiment, high-interest rates, and a booming U.K. property market, Lloyds is, without a doubt a top growth stock to buy in 2023.
7. Micron Technology (MU)
The semiconductor market has been on a growth path for a while now. Shortages occasioned by the trade war, and the increased demand from cryptocurrencies are driving up prices.
Micron Technology (MU) is one of the industry players that have been positioning themselves well to take advantage of the improved market dynamics.
Micron is on an expansion path, and reports indicate that it could invest more than $150 billion over the next 10-years. The company could possibly set up operations in Central Texas and is considering expanding its fabrication plant there with an investment that would create thousands of jobs and drive revenues.
Micron stock has also been performing pretty well, and over the last three months, has been on a consistent uptrend. It is now close to making a record it last hit 20-years ago.
Analysts are pretty optimistic about Micron too, and this has a lot to do with industry growth prospects. According to an analyst from Evercore ISI, memory price declines are almost hitting the bottom. The analyst added that within half one of 2023, prices could rally as P.C. constraints drop. Essentially, the analyst gave the memory market a thumbs up in 2023.
Most analysts are also pretty upbeat on Micron Technology and are giving it a buy rating for 2023. The most recent analysts' take on Micron Technology are by JP Morgan, Goldman Sachs, and Credit Suisse. They all maintained positive ratings, with Credit Suisse lifting its outlook to 'outperform.'
When considering all these factors, it is not hard to see why Micron Technology is one of the best growth stocks to buy for 2023.
8. Pfizer (PFE)
Pfizer (PFE) has been enjoying positive press for the past year. This has to do with its COVID-19 vaccine that has proven to be quite effective against the COVID-19 virus.
Aside from COVID-19, Pfizer is working on an mRNA shingles vaccine. The vaccine is a collaboration with BioNTech, and clinical trials will commence in April. As part of the deal, Pfizer will make an upfront payment of $225 million to BioNTech. The deal also includes a future share in profits.
This is a big deal and will positively impact Pfizer's revenues in the long run. Pfizer already had a stellar year in 2021, and closed the year higher by 56%. With the Shingles vaccine deal, Pfizer could deliver stronger results to investors in 2023.
Pfizer has also received several positive analyst ratings recently. In December 2021, UBS upgraded Pfizer from Neutral to Buy. Several other major analysts maintained positive ratings for Pfizer. For instance, SVB Leerink maintained that it expects Pfizer to outperform the market in 2023. The most recent upgrade was by B of A Securities, which moved it from Neutral to Buy.
With the fundamentals solid, and analyst sentiments positive, Pfizer is easily one of the best growth stocks to buy in 2023.
9. Sunpower Corporation (SPWR)
The solar industry has been on a steady growth path for years, and it's not surprising why. With many people moving away from fossil fuels to cleaner forms of energy like solar, demand has gone up.
Sunpower Corporation (SPWR) is one of the companies with a significant presence in the solar market. By extension, this makes it a high potential growth stock to buy in 2023.
For this reason, analysts are upgrading the outlook for Sunpower despite a sluggish performance in the latter part of 2021. For instance, analysts from Raymond James upgraded Sunpower from Market Perform to Outperform.
Besides a positive macro-environment, Sunpower has made a lot of developments that could propel its value in 2023 and beyond.
For instance, SunPower Financial recently announced that it wants to make renewable energy within the reach of more homeowners in the U.S. The aim is to increase access with expanded eligibility and a 0% interest APR product. This is a big deal, and will likely play into SunPower revenues in 2023 and beyond. By extension, it could help drive up Sunpower's stock value all through the year.
A combination of positive analyst ratings and potential for market growth easily makes Sunpower a top growth stock to buy in 2023.
10. Comcast (CMCSA)
Comcast dipped more than the broader market in the most recent market dip. However, when you consider its fundamentals, Comcast has the potential to deliver solid returns in 2023.
For starters, Comcast recently announced that it was focusing more on its broadband business, currently a high-growth market. Demand for Comcast broadband services is so strong that the company recently announced the launch of xFi broadband gateway.
The new gateway is designed with three Wi-Fi bands, whose goal is to cut on interference and push up bandwidth by up to 3X. Through this device, Comcast aims to comfortably support the growing number of consumers. That's a big deal in terms of driving up customer loyalty and drawing in more clients for long-term growth.
With broadband on a growth trajectory, analysts are taking a more positive outlook for Comcast and other industry players.
According to Zack's cable television industry analysis, the Cable Television industry is benefiting from the increase in demand for high-speed broadband. The strong growth of Wi-Fi devices and wireless Internet has been a key factor behind this, as people stay-at-home more for fear of the coronavirus. This has triggered the adoption for broadband services such as those offered by Comcast.
With no clear end in sight to the pandemic, working from home is likely to remain big all through 2023. This, by extension, makes Comcast a top growth stock to buy for 2023, as demand for its services is expected to stay strong.
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