Could These 4 Growth Stocks Improve Your Investment Portfolio?
Finding the next big stock, the next trillion dollar company, is not easy.
You have to filter out the noise and the sentiment surrounding different stocks on the market, even if it means going against the public opinion.
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Like Amazon, Tesla and Apple, the diamond in the rough must be a stock that disrupts the industry it belongs to, or at the very least, does what it does extremely well.
We’ll take a closer look at four different stocks that fit the criteria.
Palantir (NYSE: PLTR) Palantir Technologies Inc $PLTR
52-week high: $39.22
Current price: $13.32
Founded in 2003 by Peter Thiel, Facebook’s first investor, Palantir is a SaaS (Software as a service) company that uses big data analytics to power its data management and business analytics solutions.
Palantir’s products include Foundry, which automates the construction of a data system from the end-user’s existing information.
Gotham, which processes complex datasets into a comprehensible format that empowers decision-making; and Apollo, a delivery system to carry out scaling and upgrades to the user-facing systems.
Palantir is the leading company at the enterprise level, without any competitor that offers a substantially similar product.
Its main customers have been government agencies, such as the US Army, which renewed its contract for a third consecutive year.
The path ahead for Palantir looks bright. In January 2022, Palantir recently appointed a new President of Palantir Europe, Middle East and Africa, demonstrating its global ambitions.
In Q3 2021, Palantir saw a total revenue growth of 36%, reaching a year-to-date total revenue of over $1.1 billion.
If Palantir is able to realise its expansion plans and keep to its revenue growth, it will no doubt be the next big thing.
Keep in mind potential concerns such as Palantir’s continuous stock dilution and its need to be able to expand its customer base beyond its government contracts.
Palantir has been volatile since its direct listing in October 2020.
It has fallen around 50% since its high in November 2021, signalling a huge discount at its current price.
Considering Palantir is well-positioned in its market space and has amazing potential, investors can choose to capitalise on this buying opportunity if they are prepared to hold for the long term.
In 5 years, Palantir’s share may very well be worth multiples of its current price.
Alibaba Group Holding Ltd (NYSE: BABA) $BABA
52-week high: $274.29
Current price: $122.96
Alibaba is a Chinese conglomerate with its reaches in e-commerce, artificial intelligence, cloud computing and financial technology.
It is one of the largest retail companies in the world, positioned in one of the largest consumer markets.
A direct comparison can be easily drawn between Alibaba and Amazon, considering Alibaba does the same and more; AliExpress/Taobao and Alibaba
Cloud are essentially counterparts of Amazon Marketplace and Amazon Web Services. Furthermore, Alipay, Alibaba’s fintech payment service, is the world’s largest and eclipses PayPal and Square.
Although Alibaba has already established its dominance across multiple sectors, it has not exhausted its potential.
Much of the total addressable market has not been exploited. With the rising middle class in China, the user penetration in the Chinese eCommerce market will be 71.9% in 2022 and projected to rise to 83.9% by 2025.
Alibaba can easily make use of its massive cash flow and positioning to capture the market.
In its FY 2022 Interim Report, Alibaba achieved over $63 billion in revenue and over $6.6 billion in free cash flow.
The staggering revenue is a massive 32% increase year-on-year, with the international e-commerce portion at an increase of 41% year-on-year.
There is little doubt that looking at the company alone, Alibaba parallels the trajectory of Amazon.
However, the biggest hindrance to Alibaba is no doubt the regulation by the Chinese government.
In 2021, a $2.8 billion fine was imposed on Alibaba as part of antitrust regulations.
This may herald greater regulations and crackdowns in the future, bringing much uncertainty to Alibaba’s business.
Regardless, Alibaba is down almost 55% from its high in February 2021.
If Alibaba survives the government’s efforts in China, it can most definitely follow on the footsteps of Amazon in 5-10 years time and be the next trillion-dollar company.
Moderna Inc (NYSE: MRNA) $MRNA
52-week high: $497.49
Current price: $163.95
Moderna has been in the spotlight since its ground breaking mRNA technology was used to develop a Covid-19 vaccine at an unprecedented speed.
The mRNA technology essentially introduces a code that trains the immune system to produce antibodies against specific viruses.
Compared to a traditional vaccine, an mRNA vaccine is easier, quicker and cheaper to produce.
Moderna, together with BioNTech (NASDAQ: BNTX), are by far the two largest pharmaceutical and biotechnology companies focused on mRNA.
It is no coincidence that they were early proponents of the technology.
With its first-mover advantage and newfound fame, Moderna is well-positioned to take the pharmaceutical industry by storm.
Currently, Moderna has a wealth of products in its pipeline.
These products target infectious diseases, immuno-oncology, rare diseases and autoimmune diseases.
For example, mRNA-4157 is being developed as a personalised cancer vaccine, and mRNA-6981 is a therapeutic to help restore immune homeostasis.
Any of these products, if realised, can solve a significant unmet need.
They can, obviously, act as catalysts to Moderna’s stock price.
As with any pharmaceutical company, the growth of the stock depends on whether the products from the pipeline can generate substantial revenue.
Certain products, although useful, are only purchased by a tiny number of customers and do not contribute greatly to the company’s profitability.
Down a whopping 65% from its high, Moderna has been beaten down and presents a great opportunity to buy in.
Investors must count on the company to prove that it belongs in the big leagues of pharmaceuticals.
If it achieves this, the stock value may skyrocket in 5-10 years time.
Draftkings Inc (NASDAQ: DKNG) $DKNG
52-week high: $74.38
Current price: $21.79
Draftkings is a sports betting company providing fantasy sports and sportsbook in authorised US states.
Since the Supreme Court struck down the Professional and Amateur Sports Protection Act in 2018, states have scrambled to legalise sports betting, inviting companies such as Draftkings to set up its operations.
Draftkings is one of the leaders in the online gambling sector, ranking just behind Flutter’s FanDuel.
In this day and age, it is not far fetched to imagine gamblers turning from physical casinos to online sportsbooks, where Draftkings has made its presence known.
The outlook for Draftkings is premised on continued legalisation of sports betting in other US states.
Currently, there are 20 states where plans for sports betting have not been implemented, including the massive markets of California and Florida.
However, in January 2022, New York launched its sports betting program, opening up a $1 billion market for companies such as Draftkings.
The company’s main concern is its road to profitability. While Draftkings saw over $1.2 billion revenue in 2021, its high costs – in pursuit of acquiring customers – has kept the company unprofitable since its inception.
It may be many years until Draftkings is able to scale back its costs and turn a sustainable profit.
Given that the company has plunged over 65% since its high in September 2021, if investors intend to bet on the gambling sector, Draftkings is a promising candidate.
As more markets in US continue to open up, it is easy to foresee Draftkings become even more dominant and drive its stock price upwards.
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