This year has been nothing if not volatile. Worries of a looming recession – if we’re not already in one – continue to spark fear. Additionally, the Fed recently instituted its ninth consecutive rate increase. This 25 basis point (0.25%) interest rate hike adds pressure to a financial system already troubled by various banking concerns. Yet, despite all the trouble, markets are up year-to-date, with the S&P 500 up a modest 0.8%. Several growth stocks have proven particularly resilient, providing especially strong returns.
There’s some irony there. Higher rates tend to negatively impact growth stocks overall. Last year, this was certainly true, as growth stocks lost significant value. Nevertheless, outliers are continuing to buck conventional wisdom. Let’s look at some of the more prominent names in that conversation.
VerifyMe (NASDAQ:VRME) is an interesting company with respect to its growth potential and relative upside compared to its peers. The Florida firm provides identification and authorizations solutions for verifying people, products, and transactions.
Indeed, it’s a given that security is an increasing concern today. Cyber security threats are arguably more important today than they’ve ever been.
This is highlighted well by VerifyMe’s recent earnings. The company thus far has fared quite well in 2023, seeing its earnings surge to $1.57 per share from $1.15 per share during the same quarter last year. That 36% growth rate makes the company something of an outlier, and certainly interesting to investors.
Back in January, VerifyMe released preliminary Q4 earnings data that anticipated 87% revenue growth on a sequential basis. The company expects $9.7 million in Q4 revenues compared to the $5.2 million it recorded in Q3. The company didn’t give much more in terms of information other than to say that it expects to have $3.3 million in cash on hand as well.
Meta Platforms (META)
There’s a lot happening with Meta Platforms (NASDAQ:META) so far this year. This stock is on the rebound, with shares of META stock appreciating 65% on a year-to-date basis. This follows a 2022 that saw shares tank, falling 65% from $332 all the way to $120.
There’s a reason why META stock is on the rebound. The company’s resurgence began in early February, when the company telegraphed an improvement in underlying business conditions and rising revenues. Then, the company reported $32.2 billion in revenues as well as a number of cost-cutting measures. These numbers came in better than analysts were expecting, and cost-cuts were music to many investors’ ears.
Indeed, the fact that Meta’s management team is pushing for greater efficiency is a big deal to many investors. Rounds of layoffs have signaled the company will do what they say they’re going to do. Despite the human toll these layoffs provide, there’s clear upside for investors with this name.
Meta Platforms is also leveraging AI tools to increase the effectiveness of its ad targeting efforts. As a result, user engagement has increased, and the overall feeling is one of a giant ship finally turning in the right direction after a period of turbulence. Profits in Q4 reached $4.7 billion, which snapped a series of three sequential quarters in which profits fell.
Apple (NASDAQ:AAPL) is another big tech firm that has seen its stock perform well this year. The iPhone, iMac, and iPad maker has done well, despite questions about weakening demand heading into 2023.
Consumers aren’t buying Apple products at the rates they did in late-2021. In the fourth quarter of 2022, Apple saw iPhone sales decline from $71.6 billion to $65.8 billion, and overall sales fell 5.5%, to $117.15 billion.
There were a few bright spots despite the overall downturn. The company’s iPad sales jumped nearly 30% to $9.4 billion, and services revenues reached an all-time high of $20.76 billion.
Additionally, despite the weaker numbers than what investors have become used to in recent years, Apple remains Apple. Demand may be down for iPhones, sure. But it’s naive to think that consumers are going to abandon Apple products long-term. That might explain why share prices have improved in 2023 even as overall conditions remain difficult to predict. I think demand for iPhones will rebound, and AAPL shares should benefit from that broad notion.
Depending on how you look at it, Alphabet (NASDAQ:GOOG) stock is crushing it in 2023. The company’s stock price has swung up and down from the start of 2023 (at $90 per share), currently trading for around $102. Again, big tech is proving that it won’t be held lower forever. Even as the Fed continues to raise rates, FAANG stocks continue to rise. If growth stocks and rising interest rates correlate negatively, big tech seems to be providing a strong rebuttal.
I’d argue that Alphabet investors ought to simply be grateful for what the company offers investors as market reality sets in. The company’s revenue grew by 10% in 2022, reaching $282.84 billion. Investors can’t expect the 57% revenue growth in 2021 to continue indefinitely for Alphabet/Google. That said, double-digit growth is double-digit growth.
Google ad revenues face a new reality in which spending has changed. The free money era of the last decade is over. Companies can’t be spendthrift as they were, meaning lower revenue growth moving forward. Google grew substantially in 2022, and investors should be happy with that.
Adobe (NASDAQ:ADBE) remains a ubiquitous player in most creative industries. The company’s Illustrator and Photoshop tools have become required learning for professionals globally, for good reason.
On top of that, Adobe has leveraged the growth of various other software niches in the tech sector, including PDF signature tools with Acrobat, which have driven substantial growth for the company in recent years. Accordingly, it should be no surprise to investors that Adobe has put up some of the best metrics of its peers during the tech contraction over the last year.
Adobe’s first quarter included top-line growth of 9.22% and gross profits that grew by a similar amount. Net income contracted slightly, but it’s easy to explain this underperformance away due to inflation.
The company continues to proceed with its planned acquisition of Figma, amid regulatory scrutiny. This tool will expand Adobe’s creative asset portfolio, and should be accretive to investors. All in all, ADBE stock represents a growth story, and one which I think could continue for some time, especially once this Figma deal is finalized.
UnitedHealth Group (UNH)
UnitedHealth Group (NYSE:UNH) stock isn’t crushing the market this year. In fact, it’s down so far. But UnitedHealth Group comes with a lot of positives, and investors should expect UNH stock to provide decent returns in 2023.
For one, the company provided meaningful growth in 2022, with revenues coming in at $324.16 billion, up 12.7% year-over-year. Current estimates provide for a similar growth rate in 2023. In fact, analysts see the company reporting around $359.7 billion in sales by the end of 2023.
UNH stock includes a rock-solid dividend that hasn’t been reduced since 1990. Its yield is quite low, but the company has grown its distribution 17.4% over the past 5 years.
In short, UNH shares aren’t crushing the market thus far like some of their tech counterparts. But the growth narrative behind UnitedHealth’s business is clear. Accordingly, with healthcare stocks being more stable than tech in general, this is a great way for investors to gain upside exposure in a defensive manner in this market.
Rounding out this list of growth stocks to buy is Fiverr (NYSE:FVRR), a stock that’s been on fire to start 2023. Indeed, FVRR stock has risen from under $28 to above $33 per share in 2023. This performance exceeds that of the overall market.
The Israel-based platform allows gig workers and employees to buy and sell services on a contractual basis. The firm’s growth numbers aren’t staggering, but I can see tailwinds that favor the company this year.
First, those growth figures. Fiverr’s revenues grew by 4.2% in Q4 and 13.3% in 2022 on a year-over-year basis, respectively.
My guess, for what it’s worth, is that Fiverr could move much closer to its $49.70 target price. The idea is that the gig economy is likely to grow as layoffs rise. Displaced workers are likely to flock to Fiverr’s platform to make up for lost full-time jobs. The result is higher fees paid to Fiverr as overall volume rises.
We’ll have to see if this hypothesis plays out. But considering how FVRR stock has moved thus far this year, it’s clear many in the market seem to be aligned with this view.
On the date of publication, Alex Sirois did not have (either 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.