Credit Suisse analysts believe better days are ahead for these cheap growth stocks

Some growth stocks that have been pummeled in this year’s sell-off could be poised for a comeback, according to Credit Suisse. Stocks have been under pressure this year as investors face uncertainty surrounding the Federal Reserve’s rate hikes and surging inflation. The sell-off has been especially hard on tech and growth companies, which rely on cheap money to grow their operations. As of Tuesday, the tech-heavy Nasdaq Composite sits nearly 25% off its highs, while the S & P 500 and Dow Jones Industrial Average have fallen 13.8% and 10.3%, respectively. “Clearly, growth is long duration and thus tends to underperform when the cost of equity rises,” wrote global strategist Andrew Garthwaite. Still, Credit Suisse thinks there are some growth names that have gone down too much. The bank highlighted a basket of growth stocks offering an attractive entry point for investors at these levels. The stocks within the group are down more than 40% from their respective peaks, boast outperform ratings from Credit Suisse analysts and have had their consensus earnings estimates upwardly revised over the last three months. Here are some of the names that made the cut: Among the picks is Nvidia , which has seen its shares fall 36% since the start of the year and nearly 46% from its 52-week high. The chipmaker reported better-than-expected results for the previous quarter but issued light guidance for the current period, as it faces an uncertain macro environment. Still, the consensus earnings estimate for Nvidia has increased by 1.7% over the past three months, Credit Suisse said. Semiconductor stocks such as Nvidia have been hit hard by supply chain disruptions, with the iShares Semiconductor ETF (SOXX) — which tracks the sector — down 21.4% since the beginning of 2022. Credit Suisse recently listed Nvidia among a slew of names that have plummeted from their peaks but have seen improving earnings per share. Electric vehicle maker Tesla also made the cut, with its earnings consensus estimate rising 18% over the past three months. Its shares are down nearly 38% from its 52-week high and about 27.2% year to date. Lululemon is another straggler on the list down 24.6% this year and 39.2% off its 52-week high. However, analysts have upped their earnings estimates on the apparel maker by 1.7%.

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