Early in 2023, growth stocks have regained their footing after a difficult year in 2022. The Vanguard Growth Index Fund is up 8.8% so far this year, while the iShares Russell 1000 Growth ETF is up 7% within the same time frame. In the first two months of 2023, each of these leading growth indices has outpaced the S&P 500.
Which growth stocks stand to benefit the most from this trend reversal? Investing in stocks that are trending higher due to fundamental improvement is always a good idea. These are three growth-oriented organisations that are heating up in response to a fundamental change.
Sarepta Therapeutics
Sarepta Therapeutics (SRPT, 5.06%) specialises in uncommon diseases. The firm presently has three medicines approved by the U.S. Food and Drug Administration (FDA) for the genetic muscle-wasting disease Duchenne muscular dystrophy (DMD). In response to the likelihood of a fourth FDA clearance, Sarepta’s stock price has increased by 59% during the past year. On May 29, 2023, the FDA is anticipated to make a regulatory decision regarding SRP-9001 for the treatment of ambulatory DMD patients.
What’s the problem? At its peak, Sarepta expects this Roche-developed drug to produce sales in excess of $4 billion. In addition, this indication has a very high barrier to entry, with practically every investigational medication failing clinical trials. So, SRP-9001 has an exceptionally high commercial ceiling and an inherent competitive moat. In turn, bullish analysts believe this biotech stock has 53% more upside potential.
Hims and Her Health
Hims & Hers Health (HIMS, -10.23%) is a corporation that specialises in healthcare. It links patients with licenced healthcare providers through its multi-specialty telemedicine platform. His & Hers Health’s web platform enables patients to obtain prescription medications for a variety of illnesses, including sexual health, hair loss, dermatology, mental health, and primary care.
Although the company’s cloud-based telemedicine business model is not particularly novel, Hims & Hers Health has been rapidly gaining market share as of late. The company’s user base has increased by 190% over the past two years, causing its yearly internet revenues to more than treble. His & Hers Health’s innovative marketing campaign concentrating on taboo conditions such as sexual health and hair loss has enabled the company to wrest market share from entrenched competitors.
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The stock price of Hims and Hers Health has profited significantly from its strengthening fundamentals. In the past year, the share price of the company has skyrocketed by an astounding 120%.
But, this healthcare specialist stock should have a lot more room to run in the coming years. In fact, Hims & Hers Health has just touched the surface of its enormous target market.
MercadoLibre
MercadoLibre (MELI) (0.81%) is an e-commerce behemoth in Latin America. The company has also developed a quickly expanding fintech ecosystem to attract new customers to its platform and then retain them. In 2022, the company’s shares declined alongside those of other e-retailers. Nonetheless, MercadoLibre’s stock price has increased by nearly 42% since the beginning of 2023.
What is causing this sudden turnaround? With the rise of e-commerce throughout Latin America, MercadoLibre is presented with a massive economic opportunity. With the introduction of its integrated digital payments platform Mercado Pago and best-in-class shipping system Mercado Envios, the company has created a viable competitive moat.
In turn, MercadoLibre should continue to grab market share at a quick rate and keep potential competitors at bay. This strong mix speaks well for the long-term prospects of the e-commerce giant.