Due to less concern over inflation and lower treasury yields, growth stocks are once again outperforming their value counterparts. Foot Locker (NYSE:FL) and Signet Jewelers (NYSE:SIG) are two growth stocks poised to see their shares rise in the weeks ahead. Read more to learn why.Growth stocks, which took a back seat to their value counterparts from January through May of this year, have been bouncing back in the past month. For example, the S&P SPDR 500 Growth ETF (SPYG) is up 5% in the past month, compared to a 2% loss for the S&P SPDR 500 Value ETF (SPYV). I believe the main driver of this performance is less concern over inflation and lower treasury yields.
Treasury yields had been rising over the past couple of months due to concerns over inflation. Inflation is considered a negative to growth stocks as it discounts a growth stock’s present value. But investors have since changed their tune and now view inflation as transitory. This has led to lower treasury yields and higher stock prices for growth stocks. While the Fed just announced plans to raise rates in 2023, there’s still plenty of time to generate strong returns in growth stocks if you know where to look.
I like to focus on four components of our proprietary POWR Ratings system when looking for top growth stocks. I want a stock with a Strong Buy rating that also has a grade of A for Growth Grade, Value Grade, and a Momentum Grade. I call these the four aces. These are highly rated stocks based on 118 different factors and exhibit strong growth characteristics. Plus, they’re undervalued and trading in an uptrend, making it the perfect time to buy. Foot Locker, Inc. (FL) and Signet Jewelers (SIG) certainly fit the bill.