Wall Street is getting ready to welcome the fourth quarter, which will see companies report earnings. Meanwhile, many economists are warning the odds of a recession are increasing. Against this backdrop, investors are searching for the most aggressive growth stocks to buy amid the volatility.
According to Golden Eagle Strategies, $100 invested in aggressive growth funds would have grown to about $170,100 from 1958 to 2021. However, “the same $100 investment in the S&P 500 would have grown to approximately $55,700.”
Understandably, investors are attracted to the long-term superiority of returns. Meanwhile, the current bear market has created many attractive growth stock opportunities. For instance, the S&P 500 Growth Index has fallen more than 29% since January, while the S&P 500 is down around 23%.
That said, these three of the most aggressive growth stocks to research further in October:
| JCI | Johnson Controls International | $50.01 |
| MKSI | MKS Instruments | $84.46 |
| VSH | Vishay Intertechnology | $17.92 |
Johnson Controls International (JCI)
52-week range: $45.52 – $81.77
Johnson Controls International (NYSE:JCI) focuses on creating healthy and sustainable buildings. It manufactures and services heating, ventilating, and air conditioning (HVAC) equipment, industrial refrigeration systems, as well as fire and security solutions. Its market capitalization (cap) stands at around $34.2 billion.
In early August, JCI reported solid Q3 top-line growth, driven mainly by strong pricing. Overall, the demand remained robust, with total field orders up 11% year over year organically.
Meanwhile, the backlog hit a record at $11.1 billion. JCI investors were pleased to see this robust barometer of future revenue growth.
Recently, JCI has partnered with Microsoft (NASDAQ:MSFT) Beijing Campus to cut carbon emissions using the OpenBlue platform, an AI-enhanced remote equipment monitoring system.
Management is also collaborating with 3Degrees, which helps corporations achieve net-zero targets. In other words, emerging environmental trends, as well as new decarbonization regulations and incentives, should create further tailwinds for Johnson Controls.
JCI stock has declined almost 38% year to date and supports a dividend yield of 2.8%. Shares have an attractive valuation at 14.06 times forward earnings and 1.43 times sales.
Wall Street’s 12-month median price forecast for JCI stock at $62.50. InvestorPlace.com readers could regard a decline below $50 as a better entry point.
MKS Instruments (MKSI)
52-week range: $82.08 – $181.03
The next growth stock on our list is the manufacturing enabler MKS Instruments (NASDAQ:MKSI). It provides instruments and process control solutions primarily for semiconductor manufacturers as well as advanced electronics markets. The company’s market cap is around $5.5 billion.
Despite current macroeconomic headwinds, MKSI posted strong Q2 results in late July. Record revenues and high profitability were driven by solid demand across industrial, life and health sciences, and defense markets. Adjusted earnings per share (“EPS”) of $2.59 was above the high-end guidance.
Also, the company has a strong balance sheet with steady cash growth and $1.1 billion in cash and short-term investments. MKSI shareholders are pleased with the stability in liquidity levels as management can look for both organic and inorganic growth opportunities to create long-term value.
In mid-August, MKS Instruments closed the acquisition of Atotech, which focuses on process chemicals, software, and equipment for printed circuit boards (PCBs) and surface finishing. The acquisition will likely boost the company’s revenue in the advanced electronics market.
MKSI stock has lost over half of its value since the beginning of this year. Shares are trading at 1.57 times sales. Analysts’ 12-month median price forecast for the stock stands at $145. We’d look to purchase MKS Instruments around $80.
Vishay Intertechnology (VSH)
52-week range: $16.73 – $22.71
Vishay Intertechnology (NYSE:VSH) is a global supplier of discrete semiconductors and passive components. Its products are used in virtually all electronic devices and equipment across many sectors, including automotive, computing, healthcare, industrial and telecommunications. The company’s market cap stands at around $5.6 billion.
In early August, VSH reported Q2 adjusted earnings of 82 cents per diluted share, up 34.4% from the year before. The strong performance was driven by the strong performance of resistors, inductors and diodes.
VSH shareholders have been concerned about the pandemic-induced shutdown of two facilities in China. Yet Vishay operates with orders and backlogs at historically high levels.
The World Semiconductor Trade Statistics (WSTS) anticipates the growth in the semiconductor market to continue in the coming years—albeit at a slower pace. It is expected to grow by 13.9% YOY in 2022 and 4.6% in 2023, down from 26.2% in 2021.
Therefore, despite potential short-term volatility, Vishay Intertechnology should continue to grow the top line. With $847 million in cash, the company has plenty of capital to boost growth.
So far this year, VSH stock is down more than 17%, and the current price level supports a 2.2% dividend yield. Shares look cheap, trading at 6.08x forward earnings and 0.78x sales.
Finally, the 12-month median forecast stands at $21. Potential investors could regard the $17 level as an opportune entry point into Vishay Intertechnology shares.
On the date of publication, Tezcan Gecgil, Ph.D., 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.