We recently published a list of 12 High Growth Large Cap Stocks to Buy Now. In this article, we are going to take a look at where Pinterest, Inc. (NYSE:PINS) stands against other high growth large cap stocks.
BlackRock highlighted that its portfolio managers are broadly optimistic about US equities. Its portfolio managers opine that there is still some expected upside potential, despite the steep US stock valuations. However, the contrast between lagging European economic growth, and stock performance, is stark. The US Fed decided to reduce the policy rate by another 25 bps in a recent meeting as the apex bank sees inflation moving closer to its target of 2%.
However, the financial conditions remain loose after a historically sharp tightening cycle. The firm believes that such an unusual backdrop strengthens its view that the environment is being dominated by structural forces and not by a typical business cycle.
Overall, the firm remains overweight on the US given the positive view on the AI theme. The valuations for AI beneficiaries have strong backing as technology companies continue to beat high earnings projections. The asset manager believes that falling inflation continues to ease pressure on corporate profit margins.
High-Single Digit Growth in S&P 500
Goldman Sachs Research’s projections for the S&P 500 Index of stocks remain broadly the same as it was before Trump’s win. As per David Kostin, the chief US equity strategist at the firm, the S&P 500 is expected to reach 6,300 in the upcoming 12 months. The researchers expect growth in EPS of 11% in 2025 and 7% in the following year. That being said, David Kostin highlighted that the estimates might change as and when the new administration’s policy agenda gets revealed. Overall, strong earnings growth is expected to fuel continued equity market appreciation into next year.
Historically, the S&P 500 index generated a median return of 4% between election day in November and calendar year-end, as per Goldman Sachs. Together with the resilience in broader economic growth data and the expectation for further rate cuts, the near-term outlook for US equities remains healthy, as per Kostin.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
US Tariffs’ Impact
Several investors remain focused on trade policy, and Mr. Trump might have plans to implement some of the tariffs without legislation. Goldman Sachs believes that Trump will impose tariffs on imports from China. These are expected to average an additional 20 percentage points. Furthermore, European companies can face tariffs. The large investment bank also highlighted that, during Trump’s previous administration, domestic-facing and defensive industries, including utilities, telecom services, and real estate, outperformed. On the other hand, the stocks of automobiles, capital goods, and technology hardware underperformed.
The company believes that M&As might increase under Trump’s presidency. Though the policy uncertainty will take time to recede, there are expectations that antitrust regulation will be more relaxed. Moreover, the continued economic expansion and higher confidence among CEOs might result in increased corporate combinations. Approximately, $4 trillion of corporate spending in the next calendar year might roughly get evenly split between returning cash to shareholders and growth investments (such as CapEx, R&D, and M&A).
Stocks chart
Our Methodology
To list the 12 High Growth Large Cap Stocks to Buy Now, we sifted through several online rankings and a screener. We extracted the stocks that have a healthy 5-year revenue growth and a market cap of more than $10 billion. Finally, the stocks were ranked in ascending order of upside potential, as of 12th November.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Pinterest, Inc. (NYSE:PINS)
5-Year Revenue Growth: ~27.8%
Average Upside Potential: ~31.6%
Market cap as of 12 November: $20.7 billion
Pinterest, Inc. (NYSE:PINS) carries out its operations as a visual search and discovery platform in the US and internationally.
Wall Street experts believe that Pinterest, Inc. (NYSE:PINS)’s unique selling proposition revolves around its ability to connect users with ideas and products they might not have known they wanted. As a result, it makes it an attractive platform for advertisers who focus on reaching out to consumers early in the buying process.
The analysts are optimistic about Pinterest, Inc. (NYSE:PINS)’s strategic partnerships with tech giants such as Amazon and Google. The collaborations should fuel revenue growth throughout various regions and categories. The Amazon partnership has increased coverage in underserved categories, which has supported Pinterest, Inc. (NYSE:PINS)’s advertising reach. Furthermore, its integration with Google demonstrated promising signs, with its inclusion in ‘targeted placements’ in Google Ads Manager. This hints at the potential for further data sharing and revenue opportunities.
Pinterest, Inc. (NYSE:PINS)’s advertising strategy continues to evolve, with a strong focus on improving the ad tech stack and increasing ad relevancy. Also, its Al-driven initiatives, like Performance+, continue to demonstrate potential for cost savings and efficiency improvements for advertisers. All such advancements, together with the platform’s high-intent user base, place Pinterest, Inc. (NYSE:PINS) favorably amidst the competitive digital advertising market.
Analysts at Wedbush upped their price target on the shares of Pinterest, Inc. (NYSE:PINS) from $37.00 to $38.00, giving a “Neutral” rating on 8th November. ClearBridge Investments, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“Selection in the communication services sector also weighed on performance, primarily driven by a decline in Pinterest, Inc. (NYSE:PINS), which operates a social media platform where users can express their interests and discover ideas through images they “pin” to their pages. Having been a strong contributor in the first half of the year, the company gave back some of its gains as investors captured gains and an uptick in economic uncertainty pushed out spending by leading advertisers. We capitalized on this weakness to add to the position, as we believe that several of its internal initiatives to increase the monetization of its users and become a better value-added advertiser to its customers are coming to fruition.”
Overall, PINS ranks 8th on our list of 12 High Growth Large Cap Stocks to Buy Now. While we acknowledge the potential of PINS as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than PINS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
