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7 High Growth Stocks to Buy Despite Rising Interest Rates

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For investors in high-growth stocks, the past few weeks have certainly not been great. The U.S. inflation rate hit its highest level in four decades. In December itself, the inflation rate rose to 7%. It is expected that from March 2022, the Federal Reserve system will raise interest rates three or more times to curb rising prices.

For growth stocks, that’s really not a good thing.

Rising interest rates by definition increase the discount rate used to value stocks. For companies with a greater proportion of their earnings coming from years out in the future, discounting those earnings back to present day provides a much smaller value using a higher discount rate. Accordingly, growth stocks are often the most sensitive to rising rates.

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Of course, investors looking at this situation can do so in one of two ways. Investors can choose to simply rotate out of growth stocks, into more defensive sectors. Or, investors can look at high-growth stocks that may be undervalued via this short-term narrative and load up.

For those closer to the latter end of the spectrum, here are seven top high growth stocks to consider right now. These companies each have compelling reasons to hold or add at these levels.

Let’s dive in.

  • Nvidia (NASDAQ: NVDA)

  • Amazon (NASDAQ: AMZN)

  • Disney (NYSE: DIS)

  • ​​Advanced Micro Devices (NASDAQ: AMD)

  • Upstart (NASDAQ: UPST)

  • ​​Alphabet (NASDAQ: GOOG)

  • PayPal (NASDAQ: PYPL)

Top High Growth Stocks: Nvidia (NVDA)

Scorching Hot, Overvalued Nvda Stock Still Looks Like a Buy
Scorching Hot, Overvalued Nvda Stock Still Looks Like a Buy

Source: Sundry Photography / Shutterstock.com

When looking for long-term growth stocks to hold, searching for quality is a good starting point. For investors in Nvidia, it’s hard to argue that this semiconductor manufacturer is anything but top-notch.

Shares of NVDA stock have been on an absolute tear in recent years, surging to what many believe was a far too aggressive valuation. However, investors who have wanted to buy Nvidia on the way up now have a meaningful pullback to do so on. The question many have is whether this stock is simply cheap enough at these levels.

Currently, Nvidia is a company with a market capitalization of $580 billion, trading at around 70-times earnings. For most companies, that’s far from cheap. However, for Nvidia, this sort of valuation multiple hasn’t been seen in some time.

That’s because the growth that’s expected in the semiconductor space remains high. There’s a chip shortage right now, and burgeoning demand for chips from key growth sectors such as AI, gaming, the metaverse, and of course crypto. These red-hot sectors are continuing to see adoption, despite the falling share prices of many companies operating in these sectors.