There's still opportunity in U.S. large-cap growth stocks

January 10, 2020

Despite their outperformance in recent years, U.S. large-cap growth stocks continue to present attractive opportunities, says Wellington Management’s John A. Boselli, CFA, portfolio manager of John Hancock U.S. Quality Growth Fund. His investment team has identified a select group of dozens of large companies with strong organic revenue growth and healthy balance sheets.

While larger-cap U.S. growth stocks have outperformed markets over the last few years, we have built a portfolio of large-cap growth stocks that we think have substantial upside. The average company in our portfolio is growing 9% to 10% organic revenues over the next five to seven years in our forecast period, and the average company is generating about a 25% free cash flow margin as a percentage of sales. In addition, these companies have such strong balance sheets that they're able to allocate a substantial portion of their free cash flow each year back to investors through dividends and stock repurchases. We have found 50 large-cap growth stocks across the U.S. that we believe will outperform the markets over the next three to five years.

The opinions expressed are those of the speaker(s) at the time of recording and are subject to change as market and other conditions warrant. The subadvisors’ affiliates, employees, and clients may hold or trade the securities mentioned, if any, in this commentary. The information is based on sources believed to be reliable, but does not necessarily reflect the views or opinions of John Hancock Investment Management. No forecasts are guaranteeed, and past performance does not guarantee future results.

This material is for informational purposes only and is not intended to be, nor shall it be interpreted or construed as, a recommendation or providing advice, impartial or otherwise. John Hancock Investment Management and its representatives and affiliates may receive compensation derived from the sale of and/or from any investment made in its products and services.

Growth stocks may be more susceptible to earnings disappointments. Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. Please see the fund's prospectus for more information.

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