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3 growth stocks to buy in this manic market meltdown

Hang on tight Fools! Our market is heading for another sharp drop today as the US market rout deepened last night.

Around $50 billion had been wiped-off ASX investors’ portfolios yesterday and the futures market is pointing to another circa 1% drop for the S&P/ASX 200 (Index:^AXJO) (ASX: XJO) index this morning.

If you believe the drop is a buying opportunity, as I do, you would probably want to focus more on value stocks instead of growth. Value stocks have underperformed growth by a country mile, but I think the baton will be passed to the underperformers in the rebound.

However, there are three exceptions to that strategy that I think are worth buying over the next week or three.

The first is Macquarie Group Ltd (ASX: MQG). I had taken part profit on my position in the investment bank and I am thrilled to see the stock pull back as I had anticipated/hoped.

The thing about Macquarie is its high market beta. This means the stock tends to move by more than the market – whether it is to the up or downside.

What this means is that Macquarie should fall by more than the ASX 200 in the sell-off, but make no mistake, the stock is potentially cum-upgrade!

Consensus forecasts are likely to be upgraded on news that online property settlements company PEXA will be undertaking an initial public offer (IPO) in a float that’s potentially worth up to $2 billion.

Macquarie is PEXA’s largest shareholder with a 23% stake and is PEXA’s broker.

It’s too early to say how much of a windfall this will reap for Macquarie as share market conditions and how much of a stake the investment bank will be able to sell to investors have yet to be answered.

But the upside from the IPO isn’t factored into Macquarie’s earnings guidance and neither is the sale of its stake in Quadrant Energy to Santos Ltd (ASX: STO).

The second growth stock to put on the shopping list is consumer financing firm Afterpay Touch Group Ltd (ASX: APT).

It’s a controversial call as opinions are sharply divided on the stock but I think it’s a stock for the current retail industry.

While there’s a lot of macro noise from Trump and trade wars, what I believe is that the price of consumer goods is going up due to tariffs and US jobs will remain on the front foot.

A service like Afterpay fits nicely in such an environment as it will help keep shoppers spending.

The third stock is global miner BHP Billiton Limited (ASX: BHP). The stock is cum-capital return following the US$10.8 billion sale of its US shale assets but management has yet to announce how it plans to distribute the sales proceeds.

This could be a special dividend, off-market share buyback, an on-market share buyback, or a combination. Let’s also not forget its ability to release franking credits as part of the capital return program.

We should get an update from management pretty soon.

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Motley Fool contributor Brendon Lau owns shares of AFTERPAY T FPO, BHP Billiton Limited, and Macquarie Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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