Preview
In 2022, thematic growth stocks have fallen out of favor with investors concerned about rising interest rates and profit margins. However, closer inspection reveals that these concerns might be overdone. Not only do most of themes continue to grow revenue faster than inflation, but, during economic downturns, growth eventually becomes defensive. Amid uncertainty, focusing on growth alone may introduce vulnerability, but growth themes that experienced meaningful price compression in 2022 may provide an offset owning to cheaper valuations.
The topics covered:
- While buying now may feel like running into a burning building, market conditions could be offering a good entry point into themes that are well below peak valuations with strong fundamentals.
- Numerous innovation-based themes grew their toplines faster than inflation over the past 12 months, and we view many of their catalysts as structural and longer-term in nature.
- Lithium & Battery Tech, Cybersecurity, U.S. Infrastructure Development, and Climate Change-related themes, could offer a mix of growth and stability given valuations well off their peak and rapid sales forec