Rising interest rates have been weighing on growth stocks this year. And with a recession on the horizon, the outlook for 2023 doesn’t look that encouraging.
While others are looking to bonds and dividends for quick returns, I’m thinking further ahead. I think this could be a once-in-a-lifetime opportunity to buy stocks that will help me build long-term wealth.
Alphabet
Top of my list is Alphabet. The stock is down around 36% over the last 12 months, but the underlying business looks to me like it’s in great shape.
Google accounts for around 83% of the search engine market. I think that this dominant position means it will continue to command its share of marketing budgets going forward.
Despite rising costs and a slowdown in advertising spending weighing on profitability, the stock still trades at a price-to-earnings (P/E) ratio under 20. At these prices, I think it’s a bargain.
Rightmove
Rightmove shares have fallen by around 25% over the last year and I think the FTSE 100 stock is a bargain at today’s prices. Management seems to agree, having seized the opportunity to repurchase shares.
Like Google, Rightmove has a dominant position in its industry. Its share of the UK online property market is around 84%, making it an essential advertising space for estate agents.
A slowing UK property market is likely to provide a headwind in the short term. But I expect the company’s sound balance sheet and low costs to help it emerge unscathed.
Guidewire Software
Shares in insurance software company Guidewire Software have been hit exceptionally hard this year. The stock is 44% lower than it was 12 months ago.
The company provides software to the insurance industry and has the largest market share by some margin. Furthermore, Guidewire has never lost a customer to a competitor.
Guidewire isn’t yet profitable, but I don’t think the company is in any imminent danger. And with sales growing strongly, I think that accumulating shares throughout 2023 could pay off in the future.
Games Workshop
Shares in Games Workshop are down around 24% over the last 12 months. But the headwinds facing the FTSE 250 company look to me like they will be temporary.
The company’s competitive position is protected by its intellectual property rights. And despite higher revenues being offset by rising costs this year, I think the business remains in a strong position.
In my view, Games Workshop shares are likely to be more sensitive to the economic environment than others. But that just means I’m looking to use a pessimistic outlook as a buying opportunity.
NextEra Energy
Last on my list is NextEra Energy. The stock is only down around 6% over the last year, but that’s enough to catch my attention with a company this strong.
As an early investor in renewable energy, the company owns some of the best sites for wind and solar energy generation. This gives it an advantage that is virtually impossible for competitors to replicate.
A regulated utilities business might seem like a strange choice for a list of top growth stocks. But I’m looking to buy shares in NextEra while the rest of the market is focusing on oil and gas.
