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2 Top Growth Stocks to Buy for 2022

By Daniel Sparks – Jan 1, 2022 at 9:45AM

Key Points

  • As well known as Apple and Meta Platforms already are, their stocks still look attractive today.
  • Meta Platforms, the recently renamed Facebook, trades at just 24 times earnings despite analyst projections for double-digit earnings growth over the next five years.
  • Apple grew its revenue 33% year over year in fiscal 2021.

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These two fast-growing cash cows are throwing off billions of dollars of free cash flow every year.

As the new year is upon us, many people are revisiting their finances. Furthermore, many may be looking for some new stock ideas as they either reallocate or deploy new money into the market. But what stocks should they buy?

While it may sound exciting to own emerging companies in new industries, sometimes the most established companies in the world can make great investments. Indeed, both Meta Platforms (META 2.20%) and Apple (AAPL 1.19%) look attractive today -- despite their gargantuan market capitalizations of approximately $1 trillion and $3 trillion, respectively.

A finger presses a button labeled Buy on a keyboard.

Image source: Getty Images.

Meta Platforms (Facebook)

After starting off the first half of 2021 well, shares of Facebook parent Meta Platforms stumbled in the second half, falling 3%. This is much worse than the S&P 500's 11% gain over this same period. But this recent underperformance is arguably a great buying opportunity for investors.

With Meta's price-to-earnings ratio of just 24, you'd think that the market largely expects the tech company's earnings to grow slowly in the coming years. But this is far from reality. On average, analysts expect Meta Platforms' earnings per share to grow at an average annualized rate of more than 21% over the next five years. Furthermore, management guided for fourth-quarter revenue to grow as much as 21% year over year. While the midpoint of the social network specialist's fourth-quarter revenue guidance calls for 17% top-line growth, management's revenue guidance has historically proven to be very conservative. So the 21% growth modeled at the high end of management's range will likely be closer to actual results.

Not only should Meta's revenue and earnings grow nicely in 2022 and beyond, but the company also has significant momentum in its user base. Total unique daily active users across the company's apps totaled 2.81 billion in the third quarter of 2021, up 11% year over year. With such an engaged user base, you can bet Facebook is hard at work finding many ways to monetize this activity, including improving advertising products, and enabling more e-commerce features.

With Meta Platforms' relatively low valuation despite still being in growth mode, this stock will likely earn investors attractive returns over the long haul from here.


Unlike Meta Platforms', Apple's shares have had a year of outperformance. The tech giant's stock has risen more than 33% -- beating the S&P 500's 28% gain. In addition, investors will have to pay a higher valuation premium to buy into this growth story. The stock currently trades at about 32 times earnings.

But Apple is worth its premium price. Revenue in fiscal 2021 grew 33% year over year to $366 billion, despite demand constraints that led to billions of dollars of lost revenue. The company also saw revenue in every product segment grow 20% or more over this time frame. With its product segments including iPhone, Mac, iPad, services, and a segment called "wearables, home, and accessories," Apple is benefiting from a broad base of important growth drivers.

Driving home the value proposition of Apple is the company's enormous cash flow, which it's using to supplement shareholder returns. Trailing-12-month free cash flow was $93 billion -- up from $73 billion the prior year. Apple is using this excess cash to repurchase shares and pay dividends. In the fourth quarter of fiscal 2021 alone, Apple returned $24 billion to shareholders through a combination of dividends and share repurchases.

Neither of these profitable and established companies may possess the excitement that a younger, faster-growing company might have, but their strong cash flow and established businesses shouldn't be viewed as downsides: They're proof points of their powerful business models. These robust tech companies have the characteristics of investments likely to perform well over the long haul.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns and recommends Apple and Meta Platforms. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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