Are you looking for new growth stocks for your portfolio? The idea was compelling a week ago when the market was roaring higher. Now, with fresh headwinds blowing, not so much.
Just bear in mind there are some growth stories that are too good to ignore, just as there are some growth stocks that are too beaten down to pass up. Here’s a rundown of four stocks that are not only “on sale” by virtue of their recent weakness, but are also shares of companies with very bright futures. One or more of them could be a great buy for any investor on the hunt for above-average returns.
1. Sarepta Therapeutics
Drugmaker Sarepta Therapeutics (SRPT) isn’t exactly a household name; its focus on developing treatments for rare diseases (by design) keeps it relatively small. With such focus on usually underserved drug markets, however, a research and development (R&D) win can prove to be a relative windfall.
That’s what’s happening for this biopharma company right now. After the first of its drugs was approved for the treatment of Duchenne muscular dystrophy (DMD) all the way back in 2016, it’s been widening its drug portfolio’s approved uses ever since. It’s still doing so, in fact.
In June, its Elevidys became the first-ever gene therapy drug approved to treat the disease. Given this approval, in addition to several others, analysts believe the company’s top line will swell by nearly 30% this fiscal year before accelerating to the tune of 56% next year.
It’s what this rapid revenue growth is expected to do for the company’s bottom line, though, that makes the stock’s recent sell-off such a compelling prospect. That’s a swing to a profit. The analyst community believes the per-share loss of nearly $7 per share this year will grow into a profit of $2.08 per share next year.
And yet that’s still just the beginning. The company’s got other gene editing and gene therapy drugs in trial right now using the same proven biotech behind its treatments approved to treat DMD. It’s also targeting limb-girdle muscular dystrophy and Charcot-Marie-Tooth disease, two other underserved markets.
The advent of artificial intelligence (AI)-powered chatbots like OpenAI’s ChatGPT and Google’s Bard has been pretty cool to be sure. However, these platforms have a limited amount of commercial appeal to enterprise-level organizations. How can corporations use the power of AI in a practical, meaningful way?
That’s the question C3.ai (AI) was asking several years ago when artificial intelligence was barely on the horizon. The company has answered the question in full since then. The U.S. Air Force is using C3’s tech to determine when an aircraft’s components are likely to fail before they actually do so.
Oil giant Shell is relying on C3.ai’s software to do the same for its equipment. Utility outfit Con Edison‘s smart metering infrastructure was put in place thanks to C3’s platforms capable of figuring out what to do with 180 billion unique lines of digital data.
As is so often the case for cutting-edge organizations, C3’s stock was far too hyped when the company finally went public back in late 2020. Investors were stoked by its ability to analyze and then respond to the mountains of data being created because of the COVID-19 pandemic. The euphoria’s cooled off in the meantime, as has the stock.
Take a step back and look at the bigger picture though. Precedence Research believes the AI software market alone — which C3 is a part of — is set to grow from around $170 billion this year to more than $1 trillion in 2032. That’s an enormous tailwind even if C3.ai doesn’t even capture its fair share of it.
There was a time when PayPal (PYPL) was the king of online payments. Then competition crept in. And a little more. And then a little more. Now 25 years from its founding, it’s just not the company it once was. The stock’s 80% pullback from its 2021 high says as much.
It’s far too soon to chalk PayPal up as a has-been, however. This company’s got plenty of life left in it. And new CEO Alex Chriss may be just the person to unlock it. See, he’s not a company insider.
He came from software company Intuit, where he oversaw a different kind of consumer fintech platform; this outsider’s point of view may be just what PayPal needs. Chriss hasn’t been afraid to stir the proverbial pot either, hitting the ground running by conceding as he was taking the helm that “our cost base remains too high, and it’s actually slowing us down.”
It’s not just Chriss bringing a fresh perspective to the organization’s leadership and planning processes either. A month ago PayPal tapped Jamie Miller to be its new CFO. She came from EY where she served as CFO of its global division. Before that, she was CFO of food company Cargill. Again it’s not online-payment-specific experience, but that’s arguably what a relatively stagnant PayPal’s been missing for some time now.
Last but not least, add electric vehicle maker Nio (NIO) to your list of strong growth stocks to consider buying before this week comes to a close.
For years it was questionable whether or not EV powerhouse Tesla would ever have any serious rivals. Now it’s clear it will. Although last quarter’s total deliveries of 55,432 battery-powered vehicles are only a fraction of the 435,059 cars Tesla delivered in the same quarter, Nio’s tally is still 75% better than the year-earlier comparison of 31,607 units.
In short, a couple of years’ worth of production planning is finally paying off.
That’s not the most bullish aspect of last quarter’s numbers though. Far more compelling is the fact that the company is making clear progress toward profitability. Gross profit margin rates as well as Nio’s losses are improving, even if erratically; they didn’t last quarter.
The analyst community still expects next year to be a breakout year for the company in terms of sales, with top-line growth of more than 50% leading into a swing to a profit under generally accepted accounting principles (GAAP) in 2026.
Driving this prospective growth is a detail too few investors are talking about, or perhaps even know about. That’s Nio’s plans to manufacture more lower-priced electric cars and relatively fewer high-end electric vehicles, up to and including the launch of a new brand name altogether.
In the meantime, Nio’s U.S. chief executive Ganesh Iyer has suggested the company is even eyeing an entry into the United States market — a market that could use some more affordable EV options — as soon as 2025 if it can just find the right domestic partner.
Expansion anywhere beyond its home country of China, of course, bodes well for the stock.
— James BrumleyWhere to Invest $99 [sponsor]
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