3 monster growth stocks that can turn $350,000 into $1 million by 2028
This is not the start of 2022 that most investors envisioned. The reference S&P500 delivered its worst first half to a new year since 1970, while growth dependent Nasdaq Compound plummeted, at one point, by more than 30%!
While there is no doubt that bear markets can be scary due to the unpredictability and rapidity of their bearish movements, they are also the perfect opportunity for patient investors to do some buying. No matter how volatile things may appear in the short term, any noticeable declines in broad market indices have eventually been erased by bull market rallies.
This is a particularly good time to go bargain-hunting in the veritable sea of innovative and downbeat growth stocks. The following three monster growth stocks have all the tools and intangibles needed to turn an initial investment of $350,000 into $1 million by 2028.
The first gigantic growth stock with the potential to almost triple your money in the next six years is the biotech stock Novavax (NVAX 5.44%).
Novavax fame is the company’s development of a COVID-19 vaccine, NVX-CoV2373. Last year, Novavax published the results of two large-scale studies involving its vaccine in the adult population. The UK trial produced a vaccine efficacy (VE) of 89.7%, while the US/Mexican trial produced a VE of 90.4%. Earlier this year, Novavax released the results of a third study in adolescents that produced an 80% VE. The fact is, NVX-CoV2373 is one of the few vaccines to have reached the elusive 90% VE mark in clinical trials.
What makes Novavax’s COVID vaccine so intriguing is that it’s protein-based, rather than messenger RNA-driven. There is a real possibility that vaccine holders who were concerned about mRNA vaccine technology may be more willing to receive the Novavax vaccine, assuming it receives the green light from the US Food and Drug Administration (FDA). United States for an Emergency Use Authorization (EUA).
To build on that point, the FDA’s advisory board apparently gave Novavax’s vaccine a resounding endorsement in June. The panel, with one abstention, voted 21-0 in favor of approving the company’s vaccine for EUA. Ultimately, the FDA granted EUA to Novavax’s COVID vaccine last week.
In addition to its success in fighting COVID-19 infection, the development of NVX-CoV2373 demonstrates the value of Novavax’s pharmaceutical platform. In particular, it suggests that the company could quickly become a leader in the development of combination vaccines, such as influenza and COVID-19, or variant-specific COVID-19 vaccines.
Plus, Novavax is sitting on a veritable mountain of cash. The company ended March with $1.57 billion in cash and cash equivalents, and is likely to add to those totals as it picks up between $4 billion and $5 billion in COVID-19 vaccine orders in 2022. With a significant portion of the company’s market capitalization backed by its cash, Novavax is a highly de-risked investment.
Priced at less than 3 times Wall Street’s expected earnings for this year, Novavax looks like an absolute steal among growth stocks.
Green Thumb Industries
A second monster growth stock with the ability to turn a $350,000 investment into $1 million by 2028 is the US marijuana stock. Green Thumb Industries (GTBIF 0.42%).
In February 2021, there was no industry busier than cannabis. It was expected that the Democrats taking control of Congress and Joe Biden taking over the Oval Office would roll out the proverbial green carpet for federal cannabis reforms. Unfortunately, the ongoing pandemic and a host of other issues have derailed lawmakers’ attempts to legalize weed in the United States. As a result, multi-state operators (MSOs) like Green Thumb took it on the chin. Luckily, this myopia can be your opportunity to leapfrog.
The first thing to understand about the American pot industry is that federal legalization is not necessary for its success. About three-quarters of all states have green-lighted cannabis to some degree, which provides more than enough organic opportunities for MSOs like Green Thumb.
It should also be noted that cannabis is treated as a non-discretionary good. It’s a fancy way of saying that consumers continue to buy pot products even if economic activity falters or inflation soars. In a way, this makes marijuana products a staple for consumers in legalized states.
What makes Green Thumb such an intriguing MSO is its revenue mix. According to a May presentation from the company, well over half of the company’s sales come from merchandise, such as drinks, vapes, oils and pre-rolls. Besides their higher price, derivatives boast juicier margins than dried cannabis flower. Green Thumb’s product line has played a key role in the company generating a profit under generally accepted accounting principles (GAAP) in each of the past seven quarters. For context, most US MSOs are still not consistently profitable.
Green Thumb has also focused on expanding into limited license markets. States where dispensary licenses are deliberately limited allow a company like Green Thumb time to grow its brands and a loyal customer base.
With a rapidly growing operating model clearly working, Green Thumb Industries should soon see its patient shareholders see green.
The third and final monster growth stock that can turn $350,000 into $1 million by 2028 is the cloud-based lending platform Assets received (UPST 6.41%).
Undoubtedly, there will be no shortage of skeptics willing to bet against Upstart. Last week, the company pre-announced its second-quarter operating results, well below its previous guidance. According to the company, revenue is expected to be around $228 million, with a net loss ranging from $31 million to $27 million. That compares to its own earlier forecast of $295 million to $305 million in sales and a quarterly loss of $4 million to $0 (breakeven).
The company cited fears of inflation and recession as driving up interest rates and making lenders far more cautious. As a reminder, Upstart’s platform is new and has yet to be battle tested during an economic downturn.
But despite this negative news, my opinion of Upstart’s artificial intelligence (AI) lending model remains unchanged. Rather than relying on a decade-old loan verification model, Upstart’s platform is able to use AI to fully automate and instantly approve around three-quarters of all requests. This means that more loans can be processed at lower cost to financial institutions.
Additionally, Upstart’s AI lending platform produced approvals at a lower average credit score than the traditional loan verification process; however, there has been no deterioration in outstanding payments despite this drop. This suggests that Upstart’s lending platform can open doors for a wider section of society. Even as loan applications dwindle, Upstart’s recent success makes it more likely that financial institutions will turn to its AI solutions as a verification tool.
But perhaps the most exciting aspect of Upstart’s lending platform is its potential for expansion. Throughout the company’s young history, it has primarily focused on personal loans. Following the acquisition of Prodigy Software in 2021, Upstart now has access to AI-powered auto loans. The addressable auto loan market ($751 billion) is nearly seven times larger than the personal loan market ($112 billion). For many years, I’d be surprised if Upstart’s AI lending platform wasn’t also used for mortgages – a $4.5 trillion market.
Although Upstart is tough at the moment, it has the innovation capability and AI-powered platform to make financial institutions and its patient investors much wealthier.