They are often grouped together, but not all growth stocks are the same. In fact, they differ significantly in terms of risk, potential and longevity. One is not naturally as good as the other.
With that in mind, here’s a closer look at three hot growth stocks that are screaming to be bought right now. All three may represent above-average risk, but if you can stomach it, the prospective reward is worth the effort. In no particular order…
Rocket Lab USA
For decades, the task of putting satellites into orbit was primarily the responsibility of NASA (or other countries’ government-funded space programs). It simply didn’t make financial sense for a telecommunications company to handle this occasional work itself.
However, as most investors would expect, things changed on that front. The need for communications satellites exploded and the costs of launching them into space fell dramatically. As it turns out, NASA’s supersized rockets aren’t ideal for putting many, many smaller satellites into orbit.
Input Rocket Lab USA (NASDAQ:RKLB). It is one of the alternatives to the NASA services or even to privatized heavy-lift rocket companies. Rocket Lab’s relatively small – and reusable – Electron and Neutron rockets have placed 183 satellites into orbit over the course of 47 different launches. Rocket Lab USA’s technology can now be found on more than 1,700 satellites in orbit. In fact, NASA is one of their paying customers.
And that is just the beginning. Industry research and consulting firm Quilty Space expects the world to launch an additional 20,000 new satellites by 2030. According to a report from Mordor Intelligence, this is the basis for the industry’s annual revenue growth of 21% during this period.
Rocket Lab USA will likely gain more than its fair share of this growth. Analysts expect the company’s revenue to grow 76% this year and another 47% next year. And although Rocket Lab is still in the red, the analyst community believes the company is on track to turn a profit by 2026. However, stocks could recover from their decline from the 2021 peak well before then in anticipation of reaching that milestone.
Confluent
Confluent (NASDAQ:CFLT) may not be a well-known name. However, there’s a good chance that you or someone living in your household is benefiting from the technology without even knowing it. Put simply, Confluent helps companies manage and share their digital data more effectively and reliably.
Anyone delving into the details of the company’s operations will likely come across the term “data streaming,” but don’t misunderstand the use of the term. While Confluent can certainly help video streaming gamers Netflix And Walt Disney In order to better manage their streaming operations, the idea in this context is much broader.
The company ensures that its customers’ software, apps and data work together seamlessly. Paying customers include retailers, financial companies, factories and government agencies, to name a few. Any business that relies on distributing data via the cloud could potentially benefit from Confluent’s services.
And the need for such solutions is nothing short of incredible. UBS predicts that the amount of digital data the world processes will be ten times larger in 2030 than it was in 2020. Most of this growth will likely occur at the end of this period. However, investors don’t have to wait for Confluent to benefit from these positive tailwinds. The company is expected to report revenue growth of nearly 23% this fiscal year before reaching 25% growth next year.
The highlight: Confluent is already profitable, and increasingly so. This year’s forecast earnings per share of $0.18 is significantly better than last year’s earnings of $0.04 and is on track for next year’s expected bottom line of $0.33 per share.
It’s not clear why the stock simply traded sideways after pulling back from its 2021 peak. However, the analyst community does not agree with the current price. Their current consensus target of $34.04 is almost 20% higher than the current share price, with most of these analysts rating Confluent stock as a Strong Buy.
Iovance Biotherapeutics
Finally, add the biopharma outfit Iovance Biotherapeutics (NASDAQ:IOVA) to your list of hot growth stocks to buy now.
It’s far from a well-known pharmaceutical name, especially because it didn’t have a revenue-generating product until early last year. That’s when the company acquired Proleukin from Clinigen Limited, which boosts the T-cell responses of cancer patients after they receive a tumor-infiltrating lymphocyte infusion. This brought the company revenue for the first time, but was ultimately part of a larger strategy.
In February of this year, the US Food and Drug Administration approved Iovance’s Amtagvi, which is – you guessed it – a tumor-infiltrating lymphocyte. It is the first time the FDA has approved such a therapy for solid tumors.
Almost needless to say, Amtagvi is Iovance’s current flagship drug. And that’s how it should be. GlobalData cancer drug analyst Jasminemay Barcelon expects Amtagvi’s annual sales could reach $1 billion by 2030. And even that outlook might be too conservative; Barcelon believes that “after accelerated approval, this number could be even higher due to several factors.” It notes that “the company’s pipeline also includes potential approval expansions to other solid tumors, as Amtagvi is currently used as a monotherapy in cervical cancer and is being studied in combination with immune checkpoint inhibitors in melanoma, cervical cancer and non-small cell lung cancer (NSCLC).”
To illustrate, this company’s current market cap is just under $4 billion.
Biopharma stocks are risky and typically volatile, especially when they are young or unprofitable companies. Iovance Biotherapeutics is both, so its shares are likely to be no exception to this predictable volatility. Be prepared as you dive in.
However, if your stomach can handle it, this choice may well be worth the seasickness.
Should you invest $1,000 in Rocket Lab USA now?
Before you buy Rocket Lab USA stock, consider the following:
The Motley Fool Stock Advisor The analyst team has just identified what they think this is The 10 best stocks so investors can buy it now… and Rocket Lab USA wasn’t one of them. The ten stocks that made the cut could deliver huge returns in the years to come.
Think about when Nvidia created this list on April 15, 2005… if you have $1,000 invested at the time of our recommendation, You would have $544,015!*
Stock Advisor provides investors with an easy-to-understand roadmap to success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor has service more than quadrupled the return of the S&P 500 since 2002*.
See the 10 stocks »
*Stock Advisor returns as of April 30, 2024
James Brumley has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Confluent, Iovance Biotherapeutics, Netflix, and Walt Disney. The Motley Fool recommends Rocket Lab USA. The Motley Fool has a disclosure policy.
Do you have $500? “These Hot Growth Stocks Are Screaming to Buy Right Now” was originally published by The Motley Fool