High-quality growth stocks are must-owns, Trivariate Research says

Mounting geopolitical tensions and a tight presidential election may intensify market volatility in coming weeks, but high-quality growth stocks may prove a useful way for investors to hedge against any future uncertainty, according to Trivariate Research. October is a historically volatile month for stocks , and this week alone has seen the market seesaw. Following the gains in Monday’s trading session — which saw the Dow Jones Industrial Average close above 43,000 for the first time and the S & P 500 also end at a fresh record — all three major averages retreated to end in the red on Tuesday. The indexes then finished back up again on Wednesday, with the Dow Industrials reaching yet another all-time high. This comes as earnings season is underway, with 79% of the 50 or so S & P names that have already reported beating analysts’ consensus estimates. “It now seems the market has come full circle,” Trivariate Research founder and CEO Adam Parker wrote in a recent research note to clients. “It is much easier to buy and hold growth stocks, and it requires less arrogance in predicting the unknown than it used to. Being a growth investor is easier than being a value investor today.” In light of this, Parker, the former chief U.S. equity strategist at Morgan Stanley, unveiled a list of high-quality large-cap growth names that are generally less volatile than the rest of the market, having betas between 0.8 and 1.2, as of Oct. 11. Below are some of the names on Trivariate’s list. Of the health-care stocks in the screen, Eli Lilly has seen huge gains, surging more than 57% this year. Month to date, shares have also risen more than 3%. Earlier this month, the maker of the Zepbound anti-obesity treatment pledged spending $4.5 billion to build a center aimed at discovering new manufacturing methods for more efficient production. Eli Lilly this week said it is investing $364 million to explore whether obesity drugs could combat joblessness in the U.K. Wall Street is largely bullish. Of the 28 analysts covering Eli Lilly, 23 have a strong buy or buy rating. The remaining five are neutral. Analysts’ consensus price target of $1,010 implies upside of more than 10% from Wednesday’s close. Among consumer discretionary companies, Flutter Entertainment turned up on Trivariate’s screen. The FanDuel owner has similarly had a positive year, with shares jumping more than 27% in 2024. Flutter jumped late last month after the online sports betting company authorized a $5 billion share buyback , and forecast total revenue of about $21 billion in 2027. FLUT YTD mountain FLUT, year-to-date Adobe has not seen the same performance, with the stock sliding nearly 16% this year and more than 11% over the past month alone. Shares plunged more than 8% one day after the software company posted weaker-than-expected earnings along with lower revenue guidance for the current quarter. The Street remains largely bullish, with 31 of 40 analysts covering Adobe rating it the equivalent of a buy, with an average price target of $624, implying 24% upside ahead from Wednesday’s close. Wholesale retailer Costco and hotel giant Hilton are two other growth names Parker listed. Both stocks have outperformed the broader market year to date, advancing more than 34% and 30%, respectively.