Investing in growth stocks can be an excellent way to maximize your portfolio’s returns over the long haul. While dividend stocks are good options for investors who are looking for safety and recurring income, investing in a growth stock in its early stages can generate much more significant returns over the years.
Two companies that are experiencing incredible growth right now are BioNTech (NASDAQ:BNTX) and Coinbase Global (NASDAQ:COIN). Their sales have more than quadrupled in their most recent quarters, and investors shouldn’t be surprised if their top lines continue to rise.
Image source: Getty Images.
1. BioNTech
BioNTech made its debut on the Nasdaq in 2019. And without the pandemic, it may be one of many risky biotech stocks out there that investors might be tempted to take a chance on, in the hopes that their shares go parabolic. But it’s a much safer buy than that.
The COVID-19 vaccine it developed with Pfizer has led to a windfall of money for BioNTech. Revenue in its most recent quarter, for the period ending Sept. 30, 2021, totaled 6.1 billion euros. That’s 90 times more revenue compared to the prior-year period. The boost, of course, comes from its vaccine sales. And over the past three quarters, its top-line totaled 13.4 billion euros (close to 100 times last year’s revenue).
BioNTech investors may worry about what its future might look like, especially after the pandemic. However, what I find encouraging is that the company is still partnering with Pfizer. The two healthcare companies are working on an mRNA-based shingles vaccine, the first of its kind. Having a strong partnership with Pfizer could position BioNTech for some promising growth opportunities, especially in the mRNA market.
According to estimates from Brand Essence Market Research, the mRNA vaccine and therapeutics market will rise at a compound annual growth rate (CAGR) of more than 28% until 2026. And given the success that Pfizer and BioNTech have enjoyed from their collaborations thus far, I wouldn’t bet on that partnership ending anytime soon.
2. Coinbase
If you want exposure to the upside of digital currencies but don’t want to actually own them, a good option is to invest in Coinbase Global. The company runs a cryptocurrency exchange where users can buy and sell digital currencies.
Coinbase has been experiencing significant growth amid the rising popularity of cryptocurrency last year, where Bitcoin hit a record high of nearly $69,000. Whether you own Coinbase stock or Bitcoin may not make a significant difference on your returns in the near future, as the two have been closely correlated over the past year. But that link may not persist over the longer term, especially as more digital currencies rise in popularity.
Unlike a digital currency, which has the potential to be more volatile, there are some solid fundamentals behind Coinbase that make it a more prudent investment.
For the period ending Sept. 30, 2021, the company’s net revenue of $1.2 billion was more than four times the $287 million it reported a year earlier. The company’s 7.4 million monthly transacting users was up 252% year over year. And Coinbase is also profitable, recording a net income of $406 million last quarter, netting an impressive margin of 33%.
As with the mRNA market, there’s more growth likely ahead here as well. Analysts at Fortune Business Insights project that the global cryptocurrency market will rise at a CAGR of more than 11% until 2028. Crypto can have wide applications, especially in a metaverse where more of everyday life could become digitized. Today, more than 7,700 merchants use Bitcoin and nearly 4,000 use Ethereum, according to the latest figures from cryptwerk.com.
If you’re bullish on crypto as a concept, Coinbase could make for an attractive growth stock to own. You’re not tying yourself to one digital currency (even though it remains highly correlated to Bitcoin), and Coinbase is a profitable business backed by strong fundamentals. It’s also incredibly cheap, trading at just 17 times its earnings — well below the average S&P 500 stock that trades at a multiple of more than 26.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.