Circumstances have not panned out favorably for growth stocks this year, let’s be honest. For instance, while the benchmark S&P 500 is down more than 12% since the beginning of 2022, the tech-centric Nasdaq shed 20% in the same frame. Colloquially, a 20% loss represents a bear market cycle. Nevertheless, more than a few companies feature potential upside catalysts that warrant additional investigation.
Primarily, tech-driven growth stocks benefit from favorable legislation. For instance, President Joe Biden recently signed an executive order putting into motion the CHIPS and Science Act of 2022. The new bill could potentially address supply chain vulnerabilities, a headwind that dogged the semiconductor space. Considering that seemingly everything runs on computer chips these days, certain public firms are poised to benefit.
Other catalysts for growth stocks involve economics and associated human behaviors. Whether linking to current social dynamics and challenges or geopolitical flashpoints, innovative firms have changed the underlying landscapes. While carrying cynicism to varying degrees, these underpinnings could spell significant upside opportunities.
Below are some of the more compelling ideas for growth stocks with huge catalysts ahead.
Applied Materials (AMAT)
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Although the announcement of the CHIPS Act should bolster semiconductor equipment manufacturer Applied Materials (NASDAQ:AMAT), the wider narrative remains challenging. As stated earlier, the Nasdaq index is down 20% for the year, essentially correction territory. However, the new legislation will take some time to produce tangible results. If you’re willing to let AMAT marinate, it could produce profitable results.
Namely, with the CHIPS Act earmarking billions for domestic semiconductor production, Applied Materials stands ready to deliver critical components. Better yet, because chips facilitate various applications and integrate with many products, AMAT represents the infrastructure play to infrastructure providers. In other words, the company is selling tickets to the big game rather than attempting to pick winners and losers.
Fundamentally, AMAT presents a very attractive profile for investors of growth stocks. According to Gurufocus, Applied Materials is “modestly undervalued.” One of the standouts is that on a longer-term basis, the company features excellent growth and profitability metrics. As well, Gurufocus rates the balance sheet strongly.
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Likely, when I bring up the name Coursera (NYSE:COUR), you’re going to look at its market performance. Frankly, I’ll just state the situation doesn’t look great. On a year-to-date (YTD) basis, COUR stock shed 53% of market value. Over the trailing year, it’s down 68%. Needless to say, the underlying company didn’t enjoy the greatest lift following its initial public offering in April last year.
That said, Coursera intrigues because while the CHIPS Act draws attention to semiconductor-related growth stocks, the real story involves labor. Put another way, people must be ready to work the new facilities the federal government will help build. Further, with the legislation aimed at improving American competitiveness in the innovation sphere, people must learn the skills of tomorrow.
While COUR involves some forward-thinking vision, the issuing company offers multiple innovation-related programs and certifications. Better yet, with Coursera, the education that it facilitates represents targeted solutions. Students learn the relevant skills they signed up for without the elective fluff. Therefore, keep COUR stock on your radar despite the volatility risks.
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Not particularly well known outside defense contractor circles, AeroVironment (NASDAQ:AVAV) has suddenly entered the limelight. The company specializes in unmanned aircraft solutions, particularly the Switchblade. It is a one-way attack drone, which essentially crashes into an identified target while keeping users at a distance from the firefight.
Ukrainian resistance forces have been using the Switchblade – and other weapons systems – to great effect. Naturally, this success inspired other countries to incorporate the drone into their arsenal. Of course, this is now a known catalyst. Moving forward, continued military action in Ukraine should cynically bolster AVAV as one of the growth stocks to consider.
With Russia showing no signs of deescalating the conflict, the fighting will likely continue in the coming months. As well, Ukraine could regroup and launch a counteroffensive to regain occupied territories. Therefore, AVAV stock is still very much relevant.
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Amid the coronavirus outbreak and other factors, 2020 was especially contentious in the U.S. The events sparked a summer of unrest as many ugly undercurrents surged to the forefront.
This year, we don’t have the same level of tension that we used to. That’s the good news. The bad news is crime appears to be on the rise, which cynically bodes well for home automation and monitoring services provider Alarm (NASDAQ:ALRM).
It’s not just about the headline-grabbing events such as mass violence that worry everyday Americans. Crimes of desperation – particularly burglaries and other property-related crimes – have increased this year relative to last year.
Therefore, just as a matter of common-sense protection, Alarm could see increased demand. It’s one of the growth stocks to consider for the new normal.
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One of the most intriguing tech-related growth stocks to buy for speculators, VirTra (NASDAQ:VTSI) provides occupational simulation platforms. Specifically, it develops an immersive virtual environment for police officers and defense-related operators to hone their skills. Further, it allows supervising authorities to monitor the training protocols, identifying areas of needed improvement.
Obviously, high-profile cases in the past triggered the necessity for superior and effective police training. No matter one’s personal opinion about the law enforcement landscape, it’s safe to say tensions soared in recent years.
Additionally, according to the Wall Street Journal, law enforcement agencies struggle to hire and retain officers. While VirTra doesn’t represent a holistic panacea, it may provide a substantive solution. At the very least, the company should help prepare officers for the new dynamics of protecting their communities.
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To no one’s surprise, upper management teams across America expressed dissatisfaction with the continued work-from-home integration. However, as Fortune pointed out, “everyone’s over remote work except for the workers themselves.” It’s a great point and self-explanatory. However, the shifting economic trajectory implies circumstances might change.
Cynically, this dynamic may bode very well for Fiverr (NYSE:FVRR), a marketplace for freelancers. The company brings together businesses that need short-term obligations filled and independent contractors willing to provide such services. Depending on how much remote employees want to push this conflict between workers and management, FVRR may deserve a spot on your radar of growth stocks to buy.
As real-estate billionaire Stephen Ross noted, “You have to do what it takes to keep your job and to earn a living.” For some, that means going back to the office and being on their boss’s good side to protect their job. Still, many will likely refuse to accept their employer’s terms, which means a bigger addressable market for Fiverr.
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An audio streaming and media services provider, Spotify (NYSE:SPOT) stood atop the world early last year. However, this year, circumstances are much different. Shares have slipped 55% YTD as consumers gravitated away from their home and to the outside world. In addition, the company hasn’t helped its brand reputation, embroiling itself in various controversies.
Still, one catalyst that could help SPOT stock become one of the top speculative growth stocks to buy is the return to normal. I’m talking about a full return to normal, not the piecemeal stuff that we’ve seen so far. And that involves – as mentioned earlier – a return to the office.
Specifically, I’m eyeballing initiatives like Spotify’s Car Thing, which is the company’s hardware device designed for your drive. According to the U.S. Federal Highway Administration, vehicle miles traveled have been largely fading since February 2022. However, it’s very possible we could see a resurgence as some worker bees give up work-from-home.
That should help lift SPOT stock, though I’m sure not many cubicle warriors would be fundamentally happy about it.
On the date of publication, Josh Enomoto 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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.