Citi, a prominent financial institution, has recently released a list of 20 large-cap growth stocks that are poised to offer opportunities in the event of a market pullback. According to Citi analyst Scott Chronert, their recommendation since early summer has been to hold onto growth stocks and take advantage of any market declines. Furthermore, Citi has shown a preference for cyclicals during this period.
Chronert explains that despite the strong surge in cyclical stocks during June and July, and with an upwardly revised S&P 500 target of 4600, the current message is to consider buying on pullbacks more broadly. This strategic shift is based on their observation that the Russell 1000 Growth Index has recently experienced a sell-off of over 6% from its mid-July high. Interestingly, two-thirds of the stocks within this index have declined by 10% or more, and one-third have dropped by over 20%. Consequently, Chronert believes that this situation creates intriguing opportunities for stock selection in both the intermediate and long term.
Although Chronert acknowledges the potential risk of economic softening and even a recession in the future, he argues that growth stocks have shown remarkable resilience during periods of broader economic weakening. This perspective aligns with Citi’s consistent consideration of the theme for several years.
Overall, Citi’s list of large-cap growth stocks offers investors a valuable resource in navigating the current market conditions and locating potential opportunities in times of volatility.
Related: Preorders for the iPhone 15 have begun, indicating strong initial demand.
A List of Tech Stocks with Buy Ratings by Citi
In light of recent market trends, leading analyst firm Citi has curated a tech-heavy selection of twenty stocks that have garnered a buy rating from the company. These stocks not only exhibit impressive growth potential, with at least 75% of their market cap allocated to growth according to Russell, but have also experienced a decline of 10% or more from their year-to-date highs since March 31. Additionally, these stocks boast consensus estimates of free cash flow per share that surpass the levels seen on March 31.
Among the noteworthy names on the list are tech giants Apple Inc. (AAPL) and NVIDIA Corp. (NVDA), as well as Pinterest Inc. (PINS), Lam Research Corp. (LRCX), Teradata Corp. (TDC), Datadog Inc. (DDOG), MongoDB Inc. (MDB), HubSpot Inc. (HUBS), and KLA Corp. (KLAC). Citi also includes Lockheed Martin Corp. (LMT), DraftKings Inc. (DKNG), Las Vegas Sands Corp. (LVS), Chipotle Mexican Grill Inc. (CMG), Netflix Inc. (NFLX), TKO Group Holdings Inc. (TKO), Rockwell Automation Inc. (ROK), Paycom Software Inc. (PAYC), as well as healthcare stocks Bruker Corp. (BRKR), Insulet Corp. (PODD), and Intuitive Surgical Inc. (ISRG).
Notably, shares of Apple have experienced a 5% decline over the past three months, despite the recent launch of the highly anticipated iPhone 15. Chip maker NVIDIA, however, has seen a modest increase of 3.7% during the same timespan. Other stocks such as Lockheed Martin (-8.8%), DraftKings (+9.5%), Las Vegas Sands (-21.9%), Chipotle (-8.9%), and Netflix (+7.9%) have also experienced varied performance in recent months.