5 Large-Cap Growth Stocks Not Affected by Market Volatility

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Let’s face it: the past six months haven’t been great for investors. Despite plenty of gyrations, in the aggregate the market has scarcely budged since the beginning of May. Growth stocks have had a particularly rough go. But there are several large-cap growth stocks that have broken free amid this six-month slog.

Like Sisyphus, investors have nobly tried to push the boulder back up the hill after each of the three market corrections (in May, August and September) over the past six months … only to have it come rolling back down again just before reaching the top. Sector rotation has been in full swing, and investors have also been rotating out of growth stocks and into value stocks. The result has been this seemingly endless tug-of-war, one that has our growth analyst, Mike Cintolo, advising subscribers to his Cabot Growth Investor advisory to hold more than 50% in cash.

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For most investors, it’s been a frustrating and unproductive half-year. But even for growth investors, there have been a few diamonds in the rough. And I’m not talking just small-cap upstarts or obscure emerging market stocks. There are U.S.-based, large-cap growth stocks that have made major strides since the market hit the skids once the traditional “Sell in May, Go Away” period commenced.

Here are five (in descending order of market cap) that have made some of the biggest leaps while the rest of the market has been stuck in the mud (technically the S&P 500 is up 3.34% in the last six months).

5 Large-Cap Growth Stocks Bucking Market Malaise

Target (TGT)

Market Cap: $57.7 billion

Six-Month Return: +36%

You know the company. You’ve probably shopped there. And shares of America’s second-largest retailer have been a total outlier of late, zigging when the market sagged with big gaps up in May and August, right as most other stocks were backsliding. A pair of fairly decisive earnings beats have helped, as did a report of 22% earnings growth in the second quarter. Plus, the retail climate is improving, which is why shares of its chief competitor, Wal-Mart (WMT), are up 15% in the last six months.

Dollar General (DG)

Market Cap: $42.6 billion

Six-Month Return: +32.8%

Another retail stock immune to the market’s malaise, Dollar General is living off the trend toward discount brick-and-mortars in recent years. DG stock is up 163% in the last five years, 96% in the last two, and nearly 50% in the last year. In essence, it’s become an all-weather stock, with very few down periods and a 0.54 beta (meaning it’s roughly half as volatile as the market) to prove it.

The Hershey Company (HSY)

Market Cap: $32.2 billion

Six-Month Return: +31.2%

Chocolate never goes out of style! HSY has been on a tear since July 2018, rising more than 67% despite rather ordinary sales growth and uneven profit growth. As with TGT stock, a pair of earnings beats this year have helped. We’ll know soon if the company can keep it up: third-quarter earnings are due out this Thursday, Oct. 24.

Roku (ROKU)

Market Cap: $14.5 billion

Six-Month Return: +135.9%

You read those returns right—ROKU has more than doubled in the last six months! Mind you, it hasn’t exactly been a smooth ride for shares of this maker of streaming video players; the stock entered May at 65, vaulted as high as 169 in early September, then cratered to 99 by the end of September. Now it’s back on the upswing at 133, with earnings due out in two weeks (Nov. 6). I’d wait to see what happens there before diving into this volatile stock (1.62 beta).

RingCentral (RNG)

Market Cap: $13.5 billion

Six-Month Return: 54.1%

A provider of cloud-based communications solutions for businesses, RingCentral had a huge gap up, from 121 to 172, earlier this month after the company announced plans to buy out telecommunications equipment company Avaya (AVYA). The resulting Avaya Cloud Office by RingCentral, set to launch in the first quarter of 2020, should broaden RingCentral’s customer base, giving it the capacity to win more enterprise accounts. Though the stock has fallen back to 162 after topping out at 176, it could be a buying opportunity if the Nov. 4 earnings report is strong.

Bottom Line on Large-Cap Growth Stocks

My takeaways from the outperformance in these five large-cap growth stocks are twofold. First, keep a close eye on these stocks; considering what they’ve achieved in an immovable market, they could have more room to run if and when the rest of the market finally gets going. And second, use them as encouragement. Even in a market in which it seems like no one has made money for close to six months, there are almost always profitable opportunities out there. It’s a stock picker’s market, as they say. If you pick right, you can make plenty of money. And as these large-cap stocks reveal, many of the best investments are hiding in plain sight.

If you need help finding them, I highly recommend subscribing to Mike’s Cabot Growth Investor advisory, where Mike currently has three growth stocks rated “Buy” … including one of the five mentioned above.

To learn all their names, click here.

Chris Preston

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