There’s little doubt that 2022 was a trying year for the vast majority of the investing community. All three major U.S. stock indexes fell into a bear market, with the broad-based S&P 500 delivering its worst return since 2008.
But growth stocks were hit hardest. Companies with premium valuations tend to fall victim to skepticism during a bear market as more traditional fundamental metrics come into focus. It’s why the Nasdaq Composite lost a third of its value last year.
Despite this turmoil, some growth stocks are expected to deliver phenomenal sales growth in 2023 — even as their share prices come under pressure. What follows are three of the fastest-growing stocks on the planet in 2023.
Rivian Automotive: Estimated sales growth of 207% in 2023
The first fast-paced company with jaw-dropping sales-growth potential in the new year is electric-vehicle (EV) manufacturer Rivian Automotive (RIVN). After producing $55 million in full-year sales in 2021 and a Wall Street-estimated $1.73 billion in revenue last year, the consensus for the current year clocks in at $5.31 billion. For those of you keeping score at home, this represents a more-than-tripling in year-over-year sales.
The bulk of this increase is expected to come from ramping up production of its R1T pickup and R1S SUV. The R1T is likely to be Rivian’s core driver.
While other legacy automakers have started taking orders for their flagship heavy-duty trucks, the R1T sits in its own niche as a luxury pickup that’s still capable of going off-road. With little in the way of design competition (at least in EV form), the R1T could have a real runway in the luxury-pickup space.
Rivian is also counting on global supply chain constraints to improve throughout the year. Thanks to some combination of COVID-19 vaccines and natural immunity, much of the world returned to some semblance of normal by the second half of 2022. With China also ripping off the proverbial Band-Aid in recent weeks by ending its controversial zero-COVID mitigation strategy, the expectation is for R1T and R1S production to meaningfully grow in 2023.
However, it’s not a guarantee that investors are going to benefit from this ramp up in production. Last year, Rivian stood by its estimate that it would produce 25,000 EVs on multiple occasions. The company ultimately produced 24,337 EVs in 2022. While that’s not a huge miss, it demonstrates the very real and persistent supply chain issues adversely impacting the auto industry.
Furthermore, building an auto company from the ground up to mass production is an extremely costly venture. Rivian burned through $4.9 billion in cash and cash equivalents through the first nine months of 2022 and it’s outlaying approximately $5 billion to build a manufacturing plant in Georgia that’s still more than a year away from production. While the company ended September with $13.3 billion in cash and cash equivalents, it may eventually need additional capital to fund its expansion.
Ocugen: Estimated sales growth of 1,075% in 2023
Small-cap biotech stock Ocugen (OCGN) is, without a doubt, one of the fastest-growing stocks on the planet in 2023. If Wall Street’s estimate of $2.6 million in sales for 2022 proves accurate, the roughly $30.5 million consensus estimate for 2023 would represent 1,075% year-over-year revenue growth.
If you’re wondering where this awe-inspiring sales increase is going to come from, look no further than the COVID-19 vaccine Covaxin, which Ocugen has commercially licensed from India’s Bharat Biotech for North America. Covaxin utilizes inactivated parts of the SARS-CoV-2 virus that causes COVID-19 to “train” a person’s immune system to recognize the virus and fight back. This differentiates it from the popular messenger-RNA vaccines made by Pfizer/BioNTech and Moderna.
Back in April 2021, Bharat Biotech released the interim results of its phase three study that enrolled more than 25,000 people in India. All told, Covaxin produced a vaccine efficacy (VE) of 78% against mild, moderate, and severe COVID-19 disease.
Ocugen has received emergency-use authorization (EUA) in Mexico for Covaxin, which is where I’d expect all of its sales growth to come from this year.
But once again, rapid sales growth doesn’t mean shareholders should be uncorking the champagne. The U.S. and Canada are the high-dollar markets that Ocugen needs to penetrate with Covaxin. Unfortunately, its VE of 78% is pedestrian next to the likes of Pfizer/BioNTech (95%), Moderna (94.1%), and even Novavax‘s protein-based vaccine (90.4%). The U.S. and Canada invested tens of billions into COVID-19 vaccines and mitigation measures, and there doesn’t appear to be any pathway for Covaxin to succeed.
Additionally, Ocugen’s ocular therapies look to be years away from any chance of commercialization. With only its Mexico EUA as a fallback, Ocugen could struggle.
Lucid Group: Estimated sales growth of 283% in 2023
The third company that can chime in as one of the fastest-growing stocks on the planet in 2023 is EV maker Lucid Group (LCID). After generating $27 million in full-year sales in 2021 and a Wall Street-estimated $682 million last year, the consensus among analysts is for $2.61 billion in revenue in 2023. This would be closing in on a quadrupling in year-over-year sales.
Perhaps Lucid’s biggest advantage, and the reason its sales could skyrocket for a second consecutive year, is that it’s sliding into a niche portion of the EV market that rival Tesla (TSLA) has seemingly abandoned. At one point, Tesla was all about selling its luxury Model S sedan. But the world’s largest automaker pivoted to the more-affordable Model 3 sedan and Model Y SUV.
Last year, the Model 3 and Model Y accounted for nearly 1.3 million of the close-to 1.37 million EVs Tesla produced. This means the luxury Lucid Air sedan has somewhat limited competition — and that’s a good thing for an upstart.
The expectation of easing supply chain constraints should aid production this year. While COVID-19 hasn’t disappeared, countrywide lockdowns should no longer be leading to supply shortages that curtail EV production.
But in keeping with the theme for Rivian and Ocugen, fast revenue growth doesn’t mean Lucid will necessarily be a good investment in 2023. For instance, Wall Street had been counting on the company to produce 20,000 EVs in 2022 shortly before the year began. By the time Lucid reported its second-quarter operating results, it lowered its already-reduced production forecast to just 6,000-7,000 EVs. While production should be smoother this year, Lucid still has a lot to prove after producing just 7,180 EVs in 2022.
To add to this point, Lucid Group took a page out of Tesla CEO Elon Musk’s book and delayed the launch of its next vehicle, the Project Gravity SUV, by a year. Now, the expected launch is in 2024. Musk has a terrible habit of promising innovations and failing to deliver. Lucid would be wise not to follow that same path.
With the company’s losses potentially widening in 2023 as production ramps up, it could be a trying year for Lucid Group’s investors.
— Sean Williams
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Source: The Motley Fool