- Some technology stocks continue to command sky-high prices based on their projected growth.
- Morgan Stanley compiled a list of companies with a recent history of sterling growth.
- Strategist Adam Virgadamo says they should sustain that performance for the next few years.
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Almost everybody on Wall Street agrees that growth stocks are very expensive, but they’re still expensive because nobody wants to miss the boat.
Even with a rotation toward value and some selling due to concerns about long-term interest rates, investors are still clamoring for larger tech companies that they think will outgrow their peers for years to come.
But Adam Virgadamo, a US equity strategist and head of US thematic investing at Morgan Stanley Research, says it would be wise to invest carefully and to pair investments in growth stocks with some less-flashy bets on secular growth.
“High valuations in secular growth mean be selective — pair high-conviction growers vs other growth, or keep a long term ‘shopping list’ post corrections,” he wrote in a note to clients.
Virgadamo and his team applied a stringent set of criteria to find companies that have consistently delivered impressive growth — specifically, those that have posted revenue growth for at least 12 consecutive quarters and are expected to keep putting up strong growth numbers in 2022 and 2023.
They added some analyst expertise to the mix by only selecting stocks that Morgan Stanley rates “Buy” or “Hold,” or stocks that analysts believe have attractive earnings and revenue growth rates relative to their industries.
The result is the list of 25 high-growth companies below. The stocks are ranked from lowest to highest based on how much compound annual growth Morgan Stanley expects them to report through 2023.