Inflation and interest rates are rising, and the economy is looking rather poorly. That means the stock market is suffering too, right? Here are three growth shares that are bucking the trend.
As for the first one, I think even Warren Buffett might approve. The billionaire investor has, after all, just bought more Occidental Petroleum stock for his Berkshire Hathaway investing company.
Money in oil
Yes, I’m talking about oil. And, specifically, BP (LSE: BP). The BP share price has climbed 22.5% so far in 2022, and it’s up 24% over the past 12 months. The FTSE 100, incidentally, has gained 1.7% over 12 months.
The outlook for BP is a far cry from its sorry state in the depths of 2020. The pandemic sent it into a slump. And then, after BP announced its Net Zero thing, investors gave it a further kicking. But since their low that year, BP shares have more than doubled.
It’s easy to say the BP share price is up only because of oil prices. That oil prices are high due to the war in Ukraine. And that once that’s over, BP will go back to being the fossil fuel pariah it deserves to be. And that may well happen.
Against that, though, is Warren Buffett. If he’s still investing in oil, he must see a profitable long-term future for the industry.
Pharma growth
GSK (LSE: GSK), previously GlaxoSmithKline, seems to have perpetually been one of those growth shares set to deliver… tomorrow. It’s drugs pipeline ran a bit thin, while some blockbuster drug patents were expiring.
And the drug development cycle is very long and costly. It takes years to turn R&D into a marketable product.
But is GSK finally hitting a new earnings growth phase to go with its new name? Well, the share price is up 10.5% so far in 2022, and up 25% over the past 12 months.
And after a few years of earnings picking up and falling back again, analysts appear optimistic. They have three years of growth penciled in, starting this year. We’ve seen a few false starts from GSK, though, and investors might fear this could be another one.
Contrarian bank
A bank? In a year when UK favourites Lloyds and Barclays are sliding? Yes, but I’m talking about Investec (LSE: INVP), which is a bit different.
Investec is a constituent of the FTSE 250, where growth shares are more typically found. It provides financial and investment services to high-value customers in South Africa and the UK. That does seem to be paying off, with earnings nearly doubling in the year to March. The company paid a 5% dividend, more than twice covered by earnings.
The Investec share price has risen 50% over the past 12 months in response. I think that’s a remarkable performance for a company in the financial sector this year, no matter what its specific business.
My trouble is I have no clear view of the outlook. Earnings have been erratic before, and the shares have been very volatile in the past few years. More research is needed.