- With many extremely powerful technologies proliferating, it’s easer than ever to find disruptive growth stock winners.
- Bionano (BNGO): The company’s product is superior to existing tools when it comes to analyzing DNA.
- Shoals (SHLS): Shoals’ incredible growth shows that its offerings are disrupting the solar sector.
- Upstart (UPST): The company’s changes have put it back in disruptive mode.
Everyone who invests in growth stocks hopes that one of their holdings will become the next Netflix (NASDAQ:NFLX), the next Amazon (NASDAQ:AMZN), or the next Facebook. In other words, they’re looking for names that can transform, or disrupt, entire sectors. I believe that in the current era, which features several truly transformative technologies — such as artificial intelligence, the Internet of Things, and improved renewable-energy systems — it’s easier than ever to find disruptive growth stock winners.
Here are three growth stocks that are disrupting their industries. Because of these companies’ disruptive offerings, their stocks should soar over the longer term. And since the Street has frowned on most growth stocks for nearly two years, these names, along with many other of the best disruptive growth stock picks, are trading at very low valuations.
Data last updated: May 15, 2023 1:10 AM EDT
|BNGO||Bionano Genomics Inc||$0.66|
|SHLS||Shoals Technologies Group Cl A||$24.08|
|UPST||Upstart Holdings Inc||$16.39|
Bionano’s (NASDAQ:BNGO) optical genome mapping system, Saphyr, has consistently shown, in many studies, its ability to identify significantly more structural variations in DNA than standard tools.
And since structural variations are a key cause of diseases, Saphyr is allowing researchers to more easily find information that can lead to developing cures for illnesses. Moreover, studies indicate that the device will enable healthcare professionals to accurately diagnose many more patients sooner. Also noteworthy is the fact that Saphyr takes less time and effort to use than the current, standard tools that are utilized to analyze DNA.
On the company’s first-quarter earnings call, held on May 9, CEO Erik Homlin stated that it would focus this year on demonstrating evidence of Saphyr’s efficacy in diagnosing blood cancers, since BNGO sees this area as its biggest near-term market opportunity.”
Encouragingly, studies have already shown that OGM can identify structural variations in blood cancer patients that standard tools cannot find.
On the reimbursement front, Homlin reiterated that “individual labs” are getting reimbursed for their use of Saphyr, while the company intends to seek coverage of the system from Medicare and FDA approval of the device. Of course, most insurers would cover the use of Saphyr if the device was approved by the FDA.
And in more positive news, the CEO reported that the company intends to have “preliminary pre-submission discussions with the FDA by the end of the year.” Based on that statement, I believe that the agency has expressed interest in approving Saphyr.
Shoals (NASDAQ:SHLS) develops critical equipment used to build and operate solar energy projects. Importantly, it has created simplified “electrical balance of system” components that enable “electric currents from solar panels [to be transmitted] to the power grid.” The firm’s products save solar developers significant amounts of money.
Showing how popular Shoals’ products are becoming, it reported great first-quarter results on May 8, as its revenue jumped 55% year-over-year and came in at $105 million, $7.5 million above analysts’ average estimate. Additionally, the firm’s gross margin rose 7.2 percentage points YOY to 45.9%, while its backlog soared an incredible 75% YOY. And the company is profitable, as its net income came in at $14.3 million, versus $2.6 million during Q1 of 2022.
Investment bank Guggenheim responded to the company’s results by upgrading SHLS stock to “buy” from “neutral” and placed a $30 price target on the name. The firm believes that the company is gaining market share.
Given the company’s tremendous growth, I believe that the company’s forward price-earnings ratio of 40.8 greatly undervalues the shares.
Upstart Holdings (UPST)
Back in early 2022, I was very upbeat about Upstart (NASDAQ:UPST), which uses artificial intelligence to identify reliable borrowers who often cannot receive loans. But then as interest rates rose, the company’s financial results tumbled, causing me to become disillusioned with the shares.
However, it appears that the company has taken a number of steps in recent months to “right the ship.” Specifically, the firm stated on its Q1 earnings call on May 9 that it has raised the interest and prices that it charges for its loans and is approving fewer borrowers, pleasing the banks that buy its loans.
Additionally, Upstart said that it had greatly improved the quality of its AI tools. And it appears that the changes have enabled the company to again predict “risk with impeccable precision,” as Seeking Alpha columnist Sunil Shah put it.
And indicating that financial institutions have renewed confidence in UPST, the company announced that it had obtained about $2 billion of new funding that will enable it to originate more loans.
Given all of these points, I’m again confident in Upstart’s disruptive abilities.
This post originally appeared at InvestorPlace.
As of the date of publication, Larry Ramer owned shares of BNGO and SHLS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.