Although value stocks have been the better ultra-long-term investment opportunity, in comparison to growth stocks, the past decade has belonged to high-growth companies. The persistent low-interest rate environment has given high-growth businesses an opportunity to borrow at a low cost, thereby fueling top-line sales increases. With the Federal Reserve seemingly intent on keeping rates low for the foreseeable future, this might mean the good times are here to stay for growth stocks.
The big question, of course, is what growth stocks you should own as we drive headlong into a new year (and decade). After scouring the market, the following mix of large-, mid-, and small-cap growth stocks should help to fatten up your portfolio by year’s end.
Robotic-assisted surgical system developer Intuitive Surgical (NASDAQ:ISRG) certainly isn’t going to be turning value investors’ heads at 42 times its forward-year earnings, but it’s a pretty hard company for growth investors to overlook considering its monumental competitive advantages.
For one, this is a company that keeps getting stronger as it ages, primarily due to its razor-and-blades business model. Though Intuitive Surgical’s da Vinci systems are pricey (ranging from $0.5 million to $2.5 million), the margins associated with these surgical systems tends to be modest. After all, these are intricate and costly systems to develop and manufacture. Rather, the instruments and accessories sold with each procedure, and the servicing done on each of its installed systems, is where Intuitive Surgical makes bank. These high-margin “blades” will continue to grow as a percentage of total sales as the company’s installed base of da Vinci systems (the “razor”) increases.
Also consider that Intuitive Surgical’s da Vinci system has a long growth runway ahead of it. Already a dominant force, in terms of market share, for urology and gynecology surgeries, management expects to gobble up significant market share in thoracic, colorectal, and general soft-tissue surgeries in the years to come. Given that healthcare companies are highly recession-resistant, Intuitive Surgical looks to be a no-brainer stock to own in 2020.
Pinterest may not have the ad-pricing power of Facebook, but all of its important metrics are headed in the right direction. Monthly active user count increased by 71 million at the end of September to 322 million from the prior-year period, with the bulk of this increase coming from international markets, which registered 38% year-on-year user growth.
Speaking of international markets, Pinterest’s efforts to monetize overseas users has been paying off, as evidenced by the more-than-doubling in year-over-year average revenue per user of $0.13, compared to $0.06 in the prior-year quarter. The company’s emphasis on video, which has been shown to improve user engagement, and its expansion of shoppable products on the site, are clearly paying off domestically and abroad. With Pinterest likely to turn profitable in 2020, now is the time to own a piece of this popular social media site.
Although marijuana was nothing short of a nightmare investment in 2019, we could see certain niches within the industry do a lot of growing up in 2020. That’s why extraction-services provider MediPharm Labs (OTC:MEDIF) deserves consideration for your portfolio.
MediPharm should turn a lot of heads this year given that it’s at the center of the high-margin derivatives movement (derivatives being alternative pot products, such as edibles, infused beverages, and topicals). MediPharm processes hemp and cannabis biomass to yield the resins, distillates, concentrates, and targeted cannabinoids that growers use to create derivatives. With these alternative products launching in Canada a little over three weeks ago, growers are likely to devote a substantial portion of their portfolios to these higher-margin products.
Additionally, MediPharm Labs has already produced back-to-back quarters of no-nonsense profits (i.e., without a number of one-time benefits or adjustments). The company’s fee-and-volume-based processing contracts are often 18 months or longer, providing the ability to forecast expenses and cash flow with reasonable accuracy, and thus allowing MediPharm to kick out profits. With the sales forecast to rise by 60% in 2020, MediPharm could continue to show shareholders the green…
Continue reading at THE MOTLEY FOOL