Growth stocks climbed 35% in the last year, as represented by their benchmark ETF, the SPDR Portfolio S&P 500 Growth ETF (SPYG).Disruptive insurer Root, Inc., and biotech company EyePoint Pharmaceuticals, Inc. led the charge for this month, notching more than 700% in returns from March 2023.
The data below are current as of March 7, 2024.
Key Takeaways
- Growth stocks are companies with the potential for above-average growth in revenues and earnings, often because they operate in emerging industries or have unique products or services that give them a competitive advantage.
- Instead of paying dividends, growth companies typically reinvest their earnings back into the business to fuel further growth.
- While these companies have the potential for high returns, they also face more volatility, making these investments higher risk.
Root, Inc. (ROOT)
- Sector/Industry: Insurance Brokers/Services
- Price: $44.12
- Market Cap: $644 million
- 1-Year Total Return: 847%
Root is attempting to disrupt the car insurance industry by basing rates on driving behavior rather than demographics, utilizing over 20 billion miles of mobile telematics data to offer personalized, fair rates to good drivers. As of the fourth quarter of 2023, the Root app had 13 million downloads. For fiscal year 2023, Root saw a 31% increase in gross written premiums to $783 million, though gross earned premiums slightly declined by 1% to $636 million. The company also saw significant improvements in profitability indicators, including a 50% reduction in net loss to $147 million.
EyePoint Pharmaceuticals, Inc. (EYPT)
- Sector/Industry: Health technology/Pharmaceuticals
- Price: $25.74
- Market Cap: $1.4 billion
- 1-Year Total Return: 720%
EyePoint Pharmaceuticals is a clinical-stage company focused on developing therapeutics for serious retinal diseases, leveraging its proprietary technology for sustained intraocular drug delivery. The company's leading product, EYP-901, is a novel intravitreal injection therapy consisting of a receptor blocker that targets the protein Vascular Endothelial Growth Factor (VEGF), which can lead to loss of vision when produced in excess.
In December 2023, EyePoint's share price jumped 200% after the company announced positive results from a trial of EYP-901.
GigaCloud Technology Inc. (GCT)
- Sector/Industry: Distribution services/wholesale distributors
- Price: $36.64
- Market Cap: $1.5 billion
- 1-Year Total Return: 639%
GigaCloud Technology Inc. specializes in providing comprehensive business-to-business (B2B) e-commerce solutions for bulky items through its GigaCloud Marketplace, which combines discovery, payment, and logistics across manufacturers in Asia, with resellers in the U.S. and Europe. Initially targeting the furniture market with its launch in January 2019, the company has since expanded its offerings to include home appliances and fitness equipment.The company has generated strong financial returns, resulting in year-over-year improvements in revenue and profitability.
In February, GigaCloud announced the addition of suppliers from Colombia, Mexico, and Turkey to its e-commerce platform. For the 12 months ending Sept. 30, 2023, theGigaCloud Marketplace had 741 active third-party sellers and 4,602 active buyers. GigaCloud Marketplace's gross merchandise value was $684.8 million for the 12 months ending Sept. 30, 2023.
CleanSpark, Inc. (CLSK)
- Sector/Industry: Financial services
- Price: $15.63
- Market Cap: $3 billion
- 1-Year Total Return: 596%
CleanSpark describes itself as “America’s Bitcoin Miner,” owning and operating 3.2 million square feet of low-carbon mining centers located in Georgia and New York. CleanSpark's stock price is heavily tied to Bitcoin and has benefited from the cryptocurrency's surge to all-time highs this year.
CleanSpark announced it had mined 650 Bitcoin in February, adding to its treasury valued at almost $260 million.
Aquestive Therapeutics, Inc. (AQST)
- Sector/Industry: Health technology/ Pharmaceuticals
- Price: $5.0
- Market Cap: $336 million
- 1-Year Total Return: 492%
Acquestive is a pharmaceutical company focusing on the development of orally administered alternatives to complex and invasive therapies. The company’s lead product in development is Anaphylm, a groundbreaking pill form of epinephrine, aiming to be a convenient
alternative to injection pens used for serious allergic reactions. Thus far, Anapylm has received encouraging feedback from the U.S. Food and Drug Administration (FDA) during its late-stage trial. For fiscal year 2023, Acquestive saw total revenues increase to $50.6 million, up from $40 million in 2022, due to higher manufacturing, supply, license, and royalty revenues.
How We Selected the Best Cheap Growth Stocks
Weselected these growth stocksbased on their stock price appreciation over the past year. We only listed companies that are trading under $50 per share and are listed on the Nasdaq or the New York Stock Exchange (NYSE).
Growth stocksare companies that focus on revenue growth over other metrics. They typically use capital gained from operations to reinvest into the company rather than giving investors dividend
payments, as mostvalue companieswill focus on. Because of the increased attention growth companies put towards growing revenue, these stocks can be more volatile than other similar companies.
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As of the date this article was written, the author does not own any of the above stocks.
