Every investor knows that you can’t look to a stock’s past performance as predictor of future gains. It’s become axiom, even, one of the stock phrases that we all learn about in Econ 101: ‘Past performance does not guarantee future returns’ is common formulation. But that simple phrase, while true, raises a tough question: How should an investor judge a stock?
The truth is, past is prologue, not prophet, and investors can profit by taking past performance as one of many factors in evaluating a stock. There’s no one sure path to success here, and every stock should considered as a unique individual – which makes past performance a useful indicator, even if it’s not the only one.
Investors should also look for Wall Street’s view – are the analysts impressed by the stock? And in addition to that, how does the upside potential look like?
Now we have useful profile for monster growth stocks: gangbusters gains, Buy ratings from the Wall Street analyst corps, and considerable upside for the coming year. Three stocks in the TipRanks database are flagging all those signs of strong forward growth. Here are the details.
Amyris, Inc. (AMRS)
Say ‘biotech,’ and most people will assume you’re talking about pharmaceuticals. But Amyris puts a different twist on the biotech industry. The company focuses on developing synthetic chemical replacements for common petroleum-, plant-, and animal-based products. Amyris operates three development divisions for cosmetics, health & wellness, and food flavorings, which are offered to the public through three direct-to-consumer brands: Pipette, Biossance, and Purecane.
AMRS shares have shown rapid growth recently, taking off in the past six months. During that time, the company’s stock is up 786%, impressive by any standard. The company’s growth has accelerated in recent months, and a look at the recent 4Q20 earnings report will give some reasons.
Q4 marked the third consecutive quarter of record product sales. The company reported $80 million in total sales, more than doubling the previous quarter’s result. Of that total, the $35 million in product revenue was up 71% year-over-year. The company also saw a significant yoy increase in gross margins, from 56% to 66%. The increasing sales let to full-year revenues of $173 million, a 13% year-over-year gain.
Looking ahead to the end of 2021, the company guides toward continued increasing product sales leading to full-year total revenue near $400 million, well above the consensus forecast of $231 million.
Covering this stock for Roth Capital, 5-star analyst Craig Irwin notes the company’s forward guidance and recent growth. Irwin also points out that Amyris is well-positioned to maintain its blistering pace.
“Long-term growth is underpinned by a strong pipeline of new molecules in development with strategic partners. With the 13 ingredients in the market, and 18 in active development, we expect continued healthy portfolio expansion as these come to market through 2025. Mgmt expects to add another 8 to 10 ingredients to the active development pipeline in 2021, maintaining a broad channel for expanding long-term product and ingredient potential,” Irwin opined.
Unsurprisingly, Irwin rates AMRS as a Buy, and his $33 price target implies a 59% upside potential in the next 12 months. (To watch Irwin’s track record, click here)
Fast-paced growth will always attract Wall Street’s analysts to an innovator. Amyris has picked up 4 recent Buy reviews, all coalescing to a Strong Buy consensus rating. AMRS has a share price of $20.65, and even after its recent appreciation, the $25.50 average price target still suggests a 23% one-year upside. (See AMRS stock analysis on TipRanks)
Clean Energy Fuels (CLNE)
The next growth stock we’re looking at inhabits the renewable fuel industry. This is a sector that is growing partly on political cachet – renewable are an ‘in’ thing – and partly on the strength of the business model. Clean Energy produces renewable natural gas (RNG) for transportation purposes. The company’s fuel products are marketed to transit and transport customers; among Clean Energy’s customers are Estes Express Lines, UPS, and the New York City MTA.
In early February, Clean Energy announced a major multi-year contract to provide the LA County Metro system – the largest bus fleet in the US – with 47.5 million gallons of RNG. The agreement is part of a move by the LA Metro to low-carbon fuels….