Bearish momentum of the markets seems to be on the backfoot as the US Fed had hinted that battle against inflation is somewhat sorted and rate-hike spree should see the conclusion soon. Market bears were louder throughout the course of 2023 even though there was a strong rally due to AI boom and strong sentiments of consumers. Recession which was expected by several experts didn’t arrive and many analysts expect 2024 will see optimism, if not fresh new highs. Therefore, with 2023 nearing completion, this is the apt time to make investment in best high growth large cap stocks.
Undoubtedly, the US has been categorised as one of the most resilient economies globally. This was even illustrated when its economy went up by ~5.4% since COVID-19 pandemic resulted in the economic standstill around the globe. In comparison, several economies such as France, the UK, Germany, Japan, Italy, and Canada–in order words: G7 countries – have seen growth by ~1.4% during this span of time. Growth numbers appear to be more impressive for the US given the inflationary concerns since late 2021 and global slowdown because of wars in Ukraine and Israel. However, best high growth large cap stocks remained resilient and limited their fall as a result of their strong balance sheets and capacity weather the storm.
As per non-profit Organization for Economic Cooperation and Development (OECD), the US real GDP should see an increase of ~1.6% in 2023 and ~1% in 2024, despite the expected moderation in growth in private consumption and investment.
With this in mind, we will now discuss the best high growth large cap stocks for investment.
1. Coupang, Inc.
The company is an e-commerce company, which sells apparel, electronics, footwear, food products, furniture, etc.
It has released its 3Q23 key financial and operational results, with net revenues coming at $6.2 billion, exhibiting a rise of 21% year-over-year on reported basis and 18% year-over-year on FX-neutral basis. Revenue growth rate would have been an expected ~635 bps higher as compared to ~18% growth without any accounting change in FLC revenue, which the company recorded on net basis starting in 2Q23.
Gross profit of the company saw an increase of 27% year-over-year to $1.6 billion and its net income came in at $91 million with margin of 1.5%, exhibiting an improvement of $1 million as compared to last year. Adjusted EBITDA for 3Q23 came at $239 million with margin of 3.9%, an improvement of 10 bps in comparison to last year. Operating cash flow for the TTM was $2.6 billion, resulting a rise of $2.8 billion year-over-year.
Unrelenting focus on customer experience and operational performance led to record results again in 3Q23. Revenue and active customers growth ramped up for 3rd consecutive quarter. Developing Offerings also made more than ~40% revenue growth in this quarter. In Taiwan, the company expanded Rocket Delivery and supported ~12,000 small business export their products to fresh new markets.
Eagle Bay Advisors LLC bought a new stake in the company during 2nd quarter which was valued at ~$26,000. Altshuler Shaham Ltd bought new position in Coupang during 4Q valued at ~$36,000.
2. Synopsys, Inc.
The company provides electronic design automation software, intellectual property, and software integrity products.
The company saw record quarterly revenue of $1.599 billion, exhibiting a rise of ~25% year-over-year, with record fiscal-year revenue of $5.843 billion, up by ~15% year-over-year. It saw quarterly GAAP earnings per diluted share coming at $2.26 and non-GAAP earnings per diluted share of $3.17, that exceeded high end of the company’s guidance. Fiscal-year GAAP earnings per diluted share came $7.92 and non-GAAP earnings per diluted share was $11.19, exceeding high end of guidance.
Revenue for FY23 came at $5.843 billion, a rise of ~15% from $5.082 billion in fiscal year 2022. Revenue for 4Q was $1.599 billion.
Growth momentum continued in 2023 as the company significantly expanded its AI-driven design differentiation, semiconductor IP portfolio, together with its multi-die system solutions. It strengthened its customers’ differentiation with the help of unique and deep collaborations.
Despite global macro-economic pressures, the year gone by saw a record revenue and profitability for the company as silicon R&D and design-starts remained robust. The company kicked off 2024 with strong forward momentum as a result of resilient business model, technology trends – critical in AI – which create rising tide for its business.
Stifel Nicolaus initiated the coverage of the company’s shares, giving it a “buy” rating and a price objective of $550.00 per share in a report dated November 27th. Another brokerage firm, Needham & Company LLC, increased its price objective on the company’s shares from $500.00 to $660.00 and provided a “Buy” rating on November 30th. Wells Fargo & Company increased the price target from $620.00 to $630.00 and it gave an “overweight” rating on December 13th.
3. Arista Networks, Inc.
Arista Networks is the software and hardware provider for networking solutions sector.
In 3Q, it saw revenue of $1.509 billion, exhibiting a rise of 3.5% as compared to 2Q23, and a rise of 28.3% from 3Q22. GAAP gross margin of the company came in at 62.4% as compared to GAAP gross margin of 60.6% in 2Q23 and 60.3% in 3Q22.
The company demonstrated strong discipline, and it continues to work to normalize supply chain metrics while posting incremental improvements to its 2023 outlook, that now calls for year-over-year revenue rise in excess of 33%.
For 4Q23, the company expects revenue in the range of $1.500 billion – $1.550 billion and non-GAAP gross margin of ~63%.
Conclusion
Above are some of the best high growth large cap stocks for investment which investors should invest in given the current economic environment. Investors who are eager to book profit from the boom in the United States should consider investing in the best high growth large cap stocks which are expected to deliver strong returns and can also beat the overall market indexes in the long-term.
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