Growth stocks have been unpopular with investors in 2022 and it’s not hard to see why. Galloping inflation, supply chain woes, a frustratingly persistent pandemic and the awful invasion of Ukraine have knocked sentiment in even the most profitable, high-quality companies with solid outlooks.
I think some of these heavy fallers already look like they might be ‘no-brainer’ buys for my portfolio.
Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!
Halma
FTSE 100 health & safety tech firm Halma (LSE: HLMA) continues to appeal. Having lost 31% in 2022 so far, it leaves the share near its 52-week low. For a company whose products and services are deemed “essential“, thanks to increasing environmental and health legislation, that smacks of an opportunity to me.
Back in March, the company said it expects to deliver “substantial revenue growth” when full-year results are announced in June. Adjusted pre-tax profit is also likely to be in line with analyst predictions.
Halma looks in great financial shape too. This should permit further acquisitions to help drive yet more growth, not to mention keep the run of 42 consecutive years of dividend growth going.
Of course, no investment case isn’t without a niggle or two. With Halma, it’s the valuation. A P/E of 34 is far from cheap (although it’s far better than it once was). Nevertheless, I’d be happy to start buying today.
Watches of Switzerland
Also on my list of potential ‘no-brainer’ buys is luxury timepiece seller Watches of Switzerland (LSE: WOSG). At the time of writing, WOSG’s valuation has tumbled 35% in 2022.
This isn’t completely illogical. After multi-bagging in value between 2020 and 2022, some profit-taking was always on the cards here. It might be argued that the dramatic rise in the cost of living and the subsequent hit to discretionary spending made selling a logical move.
Nevertheless, I reckon WOSG’s target group is unlikely to be feeling the pinch as much as others. What’s more, the company has already said trading has been “in line with expectations” in Q4. Another update is due tomorrow.
As such, I suspect more serious falls are unlikely, albeit not impossible. A forecast P/E of 18 already looks great value for a company whose share price should recover its positive momentum in time.
Polar Capital Technology Trust
The last stock for today is actually a fund rather than an individual company — Polar Capital Technology Trust (LSE: PCT).
Like the others mentioned, PCT’s value has crashed in the year to date. Personally, I see this fall as another chance to begin building a position in the FTSE 250 member that holds some of the biggest and best tech stocks in the world before sentiment changes for the better.
Naturally, no one knows when a recovery will kick in. Things could get even worse if interest rates rise at a faster clip than expected. However, the diversification offered by this investment trust helps mitigate this to some extent. A total of 104 company stocks are held in the portfolio.
Unless I think the likes of Microsoft, Apple and Alphabet are incapable of thriving again, I’m simply being given a chance to snap them up on sale. The only downside here is the inevitable management fees that come with investing in an actively managed fund.
