Not every stock is perfect for every market. Nor is market perfect for every stock.
Growth stocks have found their footing in the early 2023 period after a difficult 2022. The iShares Russell 1000 Growth ETF has tracked higher by 7% over this same time period, while the Vanguard Growth Index Fund has increased by a respectable 8.8% so far this year. Through the first two months of 2023, both of these leading growth indices outperformed the S&P 500
Which growth stocks will benefit the most from this trend reversal? Stocks that are rising in value due to improving fundamentals are always worth investigating. Three growth-oriented companies are heating up in response to a significant change in their fundamental story.
Sarepta Therapeutics, Inc.
Sarepta Therapeutics (NASDAQ: SRPT) specializes in rare diseases. The company has three treatments for Duchenne muscular dystrophy (DMD), an inherited disease that causes muscles to waste away. Sarepta’s stock has risen 59% in the last year in response to the possibility of a fourth FDA approval. The FDA is expected to issue its regulatory decision for SRP-9001 for the treatment of ambulant people with DMD on May 29, 2023.
What exactly is the big deal? Sarepta believes that at its peak, sales of this Roche-partnered medicine could reach $4 billion. Furthermore, nearly every experimental therapy has failed in clinical trials in this indication, indicating an extremely high barrier to entry. SRP-9001 thus has an extremely high commercial ceiling as well as a built-in competitive moat. In turn, bullish analysts believe this biotech stock has 53% more upside potential.
His and Her Health
Hims & Hers Health (NYSE: HIMS) is a specialty healthcare provider. It connects patients with licensed healthcare professionals via its multi-specialty telehealth platform. Patients can receive prescription treatments for a variety of conditions through the Hims & Hers Health digital platform, including sexual health, hair loss, dermatology, mental health, and primary care.
Although the company’s cloud-based telehealth business model is not novel, Hims & Hers Health has been rapidly gaining market share recently. The company’s subscriber base has increased by 190% in the last two years, causing its annual online revenues to more than quadruple. Through its unique marketing campaign focusing on taboo conditions such as sexual health and hair loss, Hims & Hers Health has been able to take market share away from entrenched competitors.
The stock price of Hims & Hers Health has benefited significantly from its improving fundamentals. The company’s share price has risen by an eye-catching 120% in the last year.
Nonetheless, this niche healthcare stock should have a lot more room to grow in the coming years. After all, Hims & Hers Health has only begun to scratch the surface of its enormous addressable market.
MarketLibre
MercadoLibre (NASDAQ: MELI) is a Latin American e-commerce behemoth. The company has also created a rapidly growing fintech ecosystem in order to attract new users to its platform and then keep those users on the site. In 2022, the company’s stock plummeted along with that of other e-tailers. However, MercadoLibre’s stock has increased by approximately 42% since the beginning of 2023.
What is causing this sudden shift? With the ongoing expansion of e-commerce throughout Latin America, MercadoLibre is facing a massive commercial opportunity. Furthermore, with the introduction of its integrated digital payments platform Mercado Pago and best-in-class shipping solution Mercado Envios, the company has created a viable competitive moat.
In turn, MercadoLibre should continue to gain market share at a rapid pace and keep potential competitors at bay. That potent combination bodes well for Amazon’s long-term prospects.
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