They’re often grouped together, but not all growth stocks are the same. Indeed, they’re each dramatically different in terms of risk, potential, and longevity. One’s not inherently as good as another.
With that as the backdrop, here’s a closer look at three hot growth stocks that are screaming buys right now. All three may pose above-average risk, but if you can stomach it, the prospective reward is well worth it. In no particular order…
Rocket Lab USA
For decades, putting satellites into orbit was mostly the purview of NASA (or other nations’ government-funded space programs). It just didn’t make financial sense for a telecommunications outfit to handle this occasionally needed work itself.
As most investors would expect, however, things changed on this front. The need for communications satellites exploded, and the cost of ferrying them into space plummeted. As it turns out, NASA’s oversized rockets aren’t ideally suited for getting many, many smaller satellites into orbit.
Enter Rocket Lab USA (RKLB). It’s one of the alternatives to NASA’s services, or even to privatized heavy-launch companies. Rocket Lab’s relatively small — and reusable — Electron and Neutron rockets have carried 183 satellites into orbit over the course of 47 different launches. In the meantime, Rocket Lab USA’s tech is found on more than 1,700 satellites already in orbit. In fact, NASA’s even one of its paying customers.
And this is still just the beginning. Industry research and consulting outfit Quilty Space believes the world will put another 20,000 new satellites in space by 2030. That sets the stage for annualized revenue growth of 21% in the industry during that time frame, according to a report from Mordor Intelligence.
Rocket Lab USA will likely win more than its fair share of this growth. Analysts expect the company’s top line to grow to the tune of 76% this year, and another 47% next year. And although Rocket Lab is still operating in the red, the analyst community believes it’s on pace to swing to a profit by 2026. Shares could start recovering from their pullback from the 2021 peak well before then, however, in anticipation of reaching that milestone.
Confluent
Confluent (CFLT) may not be a household name. However, there’s a good chance you or someone living in your household benefits from its tech without even knowing it. In simplest terms, Confluent helps companies manage and share their digital data more effectively and reliably.
Anyone digging into the details of the company’s business will probably come across the term “data streaming,” but don’t misunderstand the use of the phrase. While Confluent can certainly help video streaming players like Netflix and Walt Disney better manage their streaming operations, in this context the idea is much broader.
The company ensures that its clients’ software, apps, and data all seamlessly work together. Its paying customers include retailers, financial companies, factories, and government agencies, just to name a few. Any organization that relies on disseminating data via the cloud could potentially benefit from Confluent’s services.
And the need for such solutions is nothing short of incredible. UBS expects that the amount of digital data the world handles will be 10 times greater in 2030 than it was in 2020. Most of that growth will likely materialize at the latter end of this time frame. Investors won’t have to wait to see Confluent benefit from this bullish tailwind, however. The company’s expected to report top-line growth of almost 23% this fiscal year before accelerating to a pace of 25% next year.
The kicker: Confluent is already profitable, and increasingly so. This year’s projected per-share profit of $0.18 is markedly better than last year’s $0.04, en route to next year’s expected bottom line of $0.33 per share.
It’s not clear why the stock’s just drifted sideways after pulling back from its 2021 peak. The analyst community isn’t on board with its current price, though. Their current consensus target of $34.04 is nearly 20% above the stock’s present price, with most of those analysts rating Confluent stock as a strong buy.
Iovance Biotherapeutics
Finally, add biopharma outfit Iovance Biotherapeutics (IOVA) to your list of red-hot growth stocks to buy right now.
It’s anything but a well-known pharmaceutical name, mostly because it didn’t have a revenue-bearing product until early last year. That’s when it acquired Clinigen Limited’s Proleukin, which boosts cancer patients’ T-cell responses once they’ve received a tumor-infiltrating lymphocyte infusion. This generated first-ever revenue for the company, but it was ultimately part of a bigger strategy.
In February of this year the U.S. Food and Drug Administration approved Iovance’s Amtagvi, which is — you guessed it — a tumor-infiltrating lymphocyte. It’s the first time the FDA has ever approved such a therapy for solid tumors.
Almost needless to say, Amtagvi is Iovance’s current flagship drug. And well it should be. GlobalData’s cancer drug analyst Jasminemay Barcelon believes Amtagvi’s annual revenue could reach the $1 billion mark by 2030. And even that outlook could be too conservative; Barcelon suggests “this number could be even higher following the accelerated approval due to multiple factors.”
She points out that “the company’s pipeline also contains potential label expansions to other solid tumors with ongoing investigations of Amtagvi as a monotherapy in cervical cancer and in combination with immune checkpoint inhibitors for melanoma, cervical, and non-small cell lung cancer (NSCLC).”
For perspective, this company’s current market cap is just a little under $4 billion.
Biopharma stocks are risky and usually volatile, particularly when they represent young or unprofitable companies. Iovance Biotherapeutics is both of those things, so its shares aren’t likely to be an exception to this predictable volatility. Brace yourself if you’re diving in.
If your stomach can handle it, though, this pick may well be worth the seasickness.
— James Brumley
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Source: The Motley Fool