4 hypergrowth stocks to buy for a Biden bull market
Historically, it doesn’t matter which political party occupies the Oval Office: if investors buy good companies and hang on for the long haul, they tend to do well.
However, it is difficult to ignore the perfect storm of catalysts awaiting the Biden administration.
Although Joe Biden inherits one of the worst economic times in decades, he is aggressively pushing for a $ 1.9 trillion federal stimulus package to support struggling workers and businesses. This is in addition to the more than $ 3 trillion in federal coronavirus aid that was passed in 2020.
In addition, the Federal Reserve is doing everything to revive the engine of US economic growth. The country’s central bank is expected to keep interest rates at or near their all-time lows until 2023 and will continue its monthly quantitative easing measures (i.e. bond buying activity Treasury) for the foreseeable future.
All of this indicates that a strong bull market is taking shape with Joe Biden in the White House. So what should investors buy to benefit from it?
With borrowing rates close to their all-time low, access to capital is cheaper than it has ever been. This should open the door to hypergrowth stocks – growth stocks with exceptionally high sales growth potential – to shine. If you are looking to buy into fast paced, innovative companies, the following four would be perfect for a Biden bull market.
The 2019 Coronavirus Disease (COVID-19) pandemic has completely changed the way consumers and businesses buy goods, and it has become an online shopping platform. Etsy (NASDAQ: ETSY) an absolute star. Although it profited greatly from face mask sales during the pandemic, this business will thrive long after the crisis is behind us.
Etsy is a special business due to the personalization of the purchasing process. Etsy focuses specifically on connecting small businesses with motivated buyers. About half of the company’s lifetime buyers have purchased something on the platform in the past 12 months, and in the third quarter, the company noted that existing customers had increased their purchases (as measured by sales gross of goods) by more than 50%. That’s the secret to Etsy’s growing profitability: getting loyal customers to spend more.
Etsy was also aggressively reinvesting in its platform to make it faster and easier for buyers to use, as well as more profitable for the business itself. This innovation involved the deployment of SEO videos, as well as improved analytics tools (eg performance charts) for traders.
Investors should expect Etsy to triple its annual sales between 2019 and 2023 to $ 2.8 billion.
Green thumb industries
Marijuana is starting to sound like one of the most promising growth stories of the decade. A Democrat-led Congress offers a real chance for meaningful federal cannabis reforms in the months and years to come. But even if the status quo remains in place, the US multi-state operator Green thumb industries (OTC: GTBIF) will grow like a weed.
To date, 36 states in the United States have legalized medical cannabis to some extent, with more than a dozen of those states also allowing recreational use or retail. Green Thumb has 52 operating sites, but holds 96 licenses in a dozen of those 36 states. Most of the states he chose to focus on have a potential annual sales of $ 1 billion jars by the middle of the decade.
Perhaps the main catalyst for Green Thumb Industries is the way it generates income. About two-thirds of all sales come from derived pot products, such as edibles, vapes, beverages, concentrates, topicals, and oils. Derivatives are more expensive products with a juicier margin compared to the dried cannabis flower, and can also be easily marketed. Leaning into derivatives has helped Green Thumb connect with younger, more casual cannabis users, and it will push the company to recurring profitability faster than most of its peers.
Expect Green Thumb sales to skyrocket from $ 216 million in 2019 to over $ 1.3 billion by 2023.
A lot of people have probably noticed how the social media platform Pinterest (NYSE: PINS) has adapted to the pandemic. Last year, it gained 124 million new monthly active users (MAUs), which equates to a 37% increase. But what you might have forgotten is that Pinterest has increased its MAUs by an average of 30% per year since 2017. This business didn’t slow down until COVID-19, and it’s even more compelling now.
Interestingly, Pinterest’s 98 million MAUs in the US will not be responsible for long-term growth. Although it offers a significantly higher average revenue per user (ARPU) in the United States, it is international users who give Pinterest the strongest growth prospects. After more than doubling ex-US ARPU in 2019, Pinterest’s international ARPU jumped 62% in 2020 (i.e. during the worst economic downturn in decades).
Pinterest is also just scratch the surface in its role as an e-commerce player. With its users willingly posting about the things, places, people, and services that interest them, it makes sense that Pinterest is pitching these motivated users to small businesses that suit their desires. Using video to keep users engaged and in partnership with Shopify To give merchants the best chance for success, Pinterest may soon become a go-to ecommerce destination.
Growth equity investors should expect Pinterest sales to triple between 2020 and 2024 to $ 5.1 billion.
Health care innovation is happening at a rapid pace, which bodes well for companies focused on precision medicine in the years to come. If a Biden bull market takes shape, the booming telehealth giant Teladoc Health (NYSE: TDOC) is one of the fastest growing companies.
If you notice a small theme here, it’s that Teladoc has also benefited from the COVID-19 pandemic. And, like the other transformative companies on this list, it was growing exceptionally fast long before COVID-19 hit (75% average annual sales growth between 2013 and 2019).
One of Teladoc’s main selling points is that telemedicine is a winning solution for the entire healthcare sector. This is more convenient for many patients and it allows doctors or specialists to fit more consultations into their busy schedules. Additionally, since virtual visits are billed at a lower rate than office visits, they will receive approval from healthcare providers.
Teladoc’s acquisition of applied health signals company Livongo Health, finalized in early November, is expected take growth to the next level. Livongo is currently focused on improving the quality of life for diabetics, but will soon be offering its services to people with high blood pressure and weight management issues.
Teladoc is expected to be able to more than triple its revenue from nearly $ 1.1 billion to around $ 3.5 billion between 2020 and 2023.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.