Top 10 Growth Stocks by Market Capitalization

Masterworks
April 29, 2022

This content is provided for informational purposes only and is not intended to be investment advice; nor should it form the basis of an investing decision.  

Investors use several strategies to see returns in the stock market. Investors willing to take on higher risk for the potential of more reward are likely to invest in growth stocks. In 2022 so far, growth stocks have taken a major hit with even mega-cap tech companies seeing some tumbles, while more speculative and unprofitable companies saw immense growth. The Nasdaq 100 Index, which includes some of the country’s tech giants, dropped 20% from 2021-year-end to April 27, 2022. Alphabet fell over 20%, Amazon over 17%, and Apple over 11% in the same period. At the same time, small-cap companies Peabody Energy Corporation (BTU), Nabors Industries (NBR), and Helmerich and Payne Inc (HP) have gained 163.16%, 96.41%, and 81.69% respectively over the same period. 

What are Growth Stocks?

A growth stock is equity of a company that is expected to increase its profits or revenues at a faster-than-average pace. “Growth” simply means that the company has substantial room for capital appreciation. They are typically associated with companies that reinvest their earnings back into the business to fuel future growth instead of paying out dividends. Although the main goal of growth companies is to grow and not produce income, dividend growth stocks exist. . 

Growth stocks typically trade at a high price-to-earnings (P/E) ratio. This means they may not have earnings at the present moment but are expected in the future. Growth stocks can be found in small-, mid-, and large-cap sectors and can only retain the status of a “growth stock” until analysts feel that they have achieved their potential. 

Not all growth stocks are created equal. Some may have higher risks and offer less upside potential than others.

Understanding Growth Stocks

Growth stocks have a track record of outperforming the general market. In addition, many growth companies are in industries with high barriers to entry and substantial competitive advantages. This makes them less susceptible to new entrants and disruptive technologies.

Many of these companies are part of retirement portfolios, such as 401(k)s and IRAs, as they offer the potential for long-term growth. Growth stocks can be more volatile than other types of stocks. They may also be less liquid, making it difficult to buy or sell them without incurring large spreads. 

Over short time frames, the performance of growth stocks depends in large part on the point in the business cycle the market happens to be in. Growth stocks tend to outperform during bull markets or periods of economic expansion, while value stocks tend to excel during bear markets and economic recessions. 

Top 10 Large-Cap Growth Stocks as of April 2022:


1. Apple Inc. (AAPL)

Sector IndustryMarket CapForward P/E RatioDividend?
TechnologyTechnology Hardware, Storage and Peripherals$2.626 trillion26.17xYes; 0.55% yield
Note: All data utilized is as of April 29, 2022

Apple is considered an excellent growth stock because it consistently reinvests its profits back into the business to fuel future growth. The company has a solid edge in the smartphone market and is less susceptible to new entrants. Apple’s financial stability and valuation make it an attractive growth stock for investors.

The historical EPS growth rate for Apple is 20.5%,. According to Apple’s 1Q2022 earnings release. The company’s EPS is anticipated to grow 9.8% this year, beating the industry average, which calls for EPS growth of 0.6%. 

Year-over-year cash flow growth for AAPL is 54.8%, while the industry average is 35.6%. The company’s annualized cash flow growth rate has been 13.5% from 2017-2022 versus the industry average of 12.6% over the same period. 

2. Microsoft Corp. (MSFT)

SectorIndustryMarket CapForward P/E RatioDividends?
TechnologySoftware$2.132 trillion30.27xYes; 0.83% yield

Microsoft is a major technology company and has been one of the best performers in the stock market for at least a decade, returning 984% since April 2012 vs 260% for the S&P 500. According to MSFT’s 2Q22 earnings release, recent growth is due to its cloud-computing business, which is now its most significant source of revenue. It also has a position in gaming with its Xbox business and is continuing to invest in research and development.

3. Alphabet Inc. (GOOGL)

SectorIndustryMarket CapForward P/E RatioDividends?
Communication ServicesInternet Content & Information$1.53 trillion20.59xNo

Alphabet, which is Google’s parent company, is another top growth stock. The corporation has a strong position in the search engine sector and is expanding into new areas such as YouTube and cloud computing. Alphabet’s valuation makes it a more risky investment than some of the other stocks on this list, but its long-term growth potential is hard to ignore.

4. Amazon.com Inc. (AMZN)

SectorIndustryMarket CapForward P/E RatioDividends?
Consumer CyclicalInternet Retail$1.28 trillion52.53xNo

Amazon changed the world of e-commerce because it offers convenience and a wide selection of products. Amazon has also been investing in other areas, such as cloud computing, artificial intelligence, and logistics. It also employs a substantial part of the workforce, with more than one million current workers worldwide as of early 2022. 

5. Tesla Inc. (TSLA)

SectorIndustryMarket CapForward P/E RatioDividends?
Consumer CyclicalAuto Manufacturers$938.62 billion73.90xNo

When we think of anything electric, it’s hard not to think of Tesla. The company’s mission is to accelerate the world’s transition to sustainable energy. Tesla creates high-performance electric automobiles and electric vehicle powertrain components, which it designs, manufactures, and sells. Tesla also offers energy storage products and solar panels. TSLA’s share price has climbed over 13,000% since April 2012, more than 5x S&P 500 growth over the same period. 

6. Meta Platforms Inc. (FB) 

SectorIndustryMarket CapForward P/E RatioDividends?
Communication ServicesInternet Content & Information$559.5 billion17.45xNo

Meta Platforms, formerly Facebook, has seen some dips since its rebrand, but still has ample room to grow. Advertising businesses can be strong growth companies that have staying power. Facebook is the world’s most popular social networking site, with almost 3 billion monthly active users as of 2021 year-end. According to analysts at JP Morgan, the advertising side of the business has room to grow internationally and both WhatsApp and Instagram remain under-monetized.

Meta has made significant investment in VR and AR to create a metaverse that is accessible via a variety of devices. The company has already announced plans to invest $10 billion in expanding its brand beyond traditional social media platforms. FB was a pioneer in the early social media days and is on track to remain a pioneer of the metaverse frontier.  

7.  Johnson & Johnson (JNJ) 

SectorIndustryMarket CapForward P/E RatioDividends?
HealthcareDrug Manufacturers$476.88 billion17.68xYes; 2.46% yield

Johnson & Johnson researches and develops, manufactures, and sells a wide variety of products in the healthcare field worldwide. It operates in three segments: Consumer Health, Pharmaceutical, and Medical Devices. The consumer health segment has a strong market share and brand presence, owning brands like Aveeno, Clean & Clear, Neutrogena, Listerine, Tylenol, Band-Aid, Neosporin, and more. The pharmaceutical segment is also diverse, gaining popularity in 2021 after the approval of the single-shot COVID-19 vaccine. The company markets its products to general public, and retail outlets and distributors, as well as distributes directly to wholesalers, hospitals, and healthcare professionals for prescription use.

8. NIVIDIA Corp. (NVDA)

SectorIndustryMarket CapForward P/E RatioDividends?
TechnologySemiconductors$482.32 billion34.13xYes; 0.08% yield

NVIDIA is a growth stock because of its leading position in the gaming market with its GeForce line of graphics processing units (GPUs). Artificial intelligence (AI), which is likely to be a big growth industry in the coming years, has also been a focus for the organization. 

9. Visa Inc. (V)

SectorIndustryMarket CapForward P/E RatioDividends?
Financial ServicesCredit Services$464.69 billion30.23xYes; 0.68% yield

Visa is the largest payments network in the world, enabling 3.7 billion global credit cards and processing 164.7 billion transactions in 2021 (+17% year-over-year). Visa is much more than just a credit card processor – they work with hundreds of partners to power all sorts of transactions such as contactless payments and buy now, pay later plans. V recently acquired Currencycloud, a platform for simplifying cross-border payments. 

Visa saw a revenue decline at the beginning of COVID-19, along with most of the market. But V continued to post profits even through the declines and by mid-2022, has already rebounded. Visa’s performance historically mirrors the general state of the economy. 

10. Mastercard Inc. (MA)

SectorIndustryMarket CapForward P/E RatioDividends?
Financial ServicesCredit Services$360.49 billion35.27xYes; 0.53% yield

Mastercard is a very well-known brand with a fairly simple business model. MA has been one of the great growth stories on Wall Street for over a decade, and analysts have consistently undervalued the company. The company’s growth rate, margins, and balance sheet all signal MA as a continued growth stock, despite the company’s recent run-up and large market cap. 

Mastercard held up well during the pandemic, even with travel and spending still down overall. New growth initiatives are in the pipeline for MA, including partnerships with Equifax (EFX) and ZIP, a new business-to-business platform called the CPC Sandbox test platform, and the company’s continued efforts to build out the Ethoca platform. Management expects growth rates to be at the top of forecasted ranges. Unlike other growth stocks, Mastercard benefits from dips in the market due to the strength of their balance sheet. Despite having a $336 billion market cap, this company has just $14 billion in debt and levered free cash flow per year is $8 billion.

Wrapping Up… 

There are many different types of growth stocks, but these ten large-cap names are some of the best. Of course, each stock has different risks and rewards, so it’s essential to do your research before investing. 


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