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Which Stock Has The Most Potential To Grow in 2022

05 May 2023

What are Growth Stocks?

Growth stocks are those that are anticipated to expand at a quicker pace than the industry average in the given nation. Rapid growth indicates that the firm's sales and earnings are likely to grow faster than the industry median owing to a wide range of factors such as:

  • The firm has new goods and services that are catching up in the market quicker than competitors, providing the company with a competitive edge.
  • The firm works in an industry that is expanding at a higher-than-average growth rate driven by greater penetration or adoption rate among its users.
  • The corporation implements new technology, which is not only more productive but also more efficient than previous technology, thus providing the organization with an advantage over rivals and is driven by growing adoption.

Value Stocks Vs Growth Stocks

A very prevalent discussion is of comparing value stocks vs growth stocks since they display entirely distinct traits while being analyzed. As discussed previously, a growth stock is defined by greater price multiples and valuations and smaller dividend distributions while demonstrating a stronger and more erratic momentum in the market. Value stocks, on the other hand, trade at a lower price multiple, often even lower than the sector average, while producing constant and steady cash flows and paying dividends to investors regularly, providing consistent cash returns for owners.

Growth Stocks In 2022

The following stocks have the most potential to grow in 2022:

Bharat Rasayan:

The firm has generated outstanding financial performance over the years while producing a significant Net Profit increase of 26.9% CAGR over the previous five years. The firm has produced a solid ROE of 24% as of Q3FY21 as well. It has also increased its operating profit margins from 6% in 2010 to 20% in 2022, thanks to cost reduction and improved operational efficiency. Given the company's robust growth, the stock trades at a pretty attractive value of 26.2 P/E.

Deepak Nitrite:

In terms of financials, the firm has a strong track record of providing above-average results. Over the last five years, the company's net profit increased at an 87.1% CAGR. The firm also generated a great ROE of 37.5%, suggesting a solid return for the company's stockholders. Despite the significant improvement in returns, the business presently trades at a P/E ratio of 23.3, which places it favorably compared to rivals.

Bajaj Finance:

In terms of its finances, the Bajaj Finance had a return on equity (ROE) of 17% for the year and a compound annual growth rate (CAGR) of 30% in net earnings over the course of the previous five years. In addition, the company has achieved a significant increase in the AUM, with a CAGR of 37% as of 2022 on a consolidated basis as a measure of the increase. Furthermore, it has maintained the book's quality with an industry-leading low net NPA of 0.69% for FY22, which suggests that the loan book continues to be in good condition.

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