High-growth stocks are probably not everyone’s cup of tea right now. With talks of an impending recession, everyone is looking for safer options. Hence, high-growth stocks are not attracting a lot of attention. That said, this current market is chock full of quality picks for savvy investors willing to add risk.
Although stock indexes have provided lackluster returns, it’s essential to think ahead to the next bull market, regardless of whether it’s imminent or further down the line. Focusing on the future now will allow investors to position a portfolio for success when the market inevitably improves.
The logic in investing in high-growth stocks is simple. The markets have been in an unforgiving mood for quite some time. Many investors have been significantly burned. Hence, now may be the time to pick up shares of beaten-down stocks, in preparation for the next bull market run.
Walt Disney logo on mobile phone with Cinderella's castile in background
Source: nikkimeel / Shutterstock.com
Due to the unfavorable macro backdrop, Disney (NYSE:DIS) stock tumbled 44% in 2022.
Bob Iger relinquished his position as CEO of Walt Disney in February 2020, handing over the reins to his chosen successor, Bob Chapek. Chapek had expressed his intention to continue following the path laid out by Iger, which he believed would lead to sustained returns for shareholders in the future.
However, Chapek’s tenure was plagued by challenges. These included weak earnings, political disputes, and a highly publicized legal battle with Scarlett Johansson over the release of Black Widow. By the end of November 2022, Chapek was no longer CEO, and Iger had resumed the role. Investors have clearly been excited by the move; the market response is a testament to this.
In addition, CEO Bob Iger has announced that Walt Disney is looking to hit cost savings of $5.5 billion, out of which $3 billion will be in non-sports related businesses. Although not all investors cheered the move, it is likely a necessary evil, considering the uncertain future that lies ahead.
Furthermore, another reason for the bullish pivot with this stock is the company’s parks and resorts segment. These businesses got hammered during the pandemic. However, some of the world’s most popular vacation destinations are now on fire, as consumers look to get out of their house and spend money.
The company’s long and storied history means Disney is a strong, stable performer in times of volatility. That is worth its weight in gold right now.
Apple (AAPL)
Apple (AAPL) logo brand and text sign on entrance facade store American multinational boutique corporation dealership shop. Apple Layoffs
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Unlike the broader market, Apple (NASDAQ:AAPL) stock has performed just fine this year, thus far. Shares of AAPL stock are up almost 25% since the start of 2023. This positive sentiment appears to be driven by investors’ confidence in the company’s prospects in the augmented/virtual reality market, and its plans to move its iPhone production away from China.
Apple’s iPhone segment contributed 52% of its total revenue in the fiscal year 2022, with services making up 19.8%. Hence, any measures Apple takes to increase profits in its smartphone business will positively impact its bottom line.
According to a report by Bloomberg in January, Apple intends to reduce its reliance on third-party technology companies for iPhone components. Instead, the company intends to increase its in-house production of various parts. Apple is also reportedly planning to produce a custom Wi-Fi/Bluetooth chip.
Apple has successfully transitioned its manufacturing processes to customized technology components, as seen in its Mac lineup. Using its Mac chips, Apple has improved its profit margin. This move has also enabled the company to substantially enhance its technological innovation by overseeing every component.
In addition, Apple is expanding beyond its iPhone business, by diversifying its revenue streams and entering new markets. The company plans to launch an AR/VR headset later this year, leveraging its powerful brand in this burgeoning market.
According to Statista, the AR & VR market is expected to reach $31.12 billion in revenue in 2023, with an estimated CAGR of 13.72%, resulting in a projected market size of $52.05 billion in 2027.
Amazon (AMZN)
Amazon logistics center in Szczecin, Poland.
Source: Mike Mareen / Shutterstock.com
Talking up Amazon (NASDAQ:AMZN) doesn’t seem necessary. The e-commerce giant is a bonafide member of the FAANG club, a collection of five of the best-performing American tech stocks. Accordingly, whether it comes to e-commerce, streaming, or cloud computing, Amazon is a dominant player.
However, that is why it might seem strange that AMZN stock is down almost 20% over the last six months. Much of it this decline appears to be tied to a slip in performance recently.
Broader macroeconomic fears resulted in the company’s e-commerce segment reporting a $10.6 billion operating loss during fiscal 2022. This was despite total year-over-year revenue growth of 9.4% to $513.98 billion.
However, Amazon Web Services, the company’s cloud computing arm, is doing very well. As of the fourth quarter of last year, Amazon remains the king of this market. It controls 32% of the overall market, with Microsoft (NASDAQ:MSFT) Azure and Alphabet’s (NASDAQ:GOOG) Google Cloud taking second and third place, respectively. It is a fast-growing market, and Amazon’s dominant position in the field means investors can rest easy for several years.
Rarely among high-growth stocks will you find a company as strong as Amazon. The company’s declining stock price appears to reflect an overreaction to various high-level macro factors. Thus, this is a quality stock long-term growth investors can pick up at a discount right now.
On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.
