We’ve all had the experience of emptying our pockets at day’s end to find a collection of coins. Sure, you could cash them in at a Coinstar machine for some bills. But what if that spare change could turn into something meaningful instead?
True, the market certainly has no shortage of high-risk, high-reward stocks to choose. And, many have dangers that outweigh any potential payoff. But some intrepid companies may deliver tremendous returns in a short timeframe – with the profits and cash flow to match.
Investing in them still requires accepting some risk. However, targeting businesses poised for growth allows spare coins to transform into significant portfolio value. Let’s look into a few!
GigaCloud Technology (GCT)
When you first hear the name GigaCloud Technology (NASDAQ:GCT), you’ll probably assume it is yet another cloud computing business. But this company actually operates a B2B marketplace connecting buyers and sellers of furniture and large goods. At the same time, it provides logistics, fulfillment, and intelligence services.
GCT’s chart shows some historical volatility, no doubt. But drilling into recent performance reveals an exciting trajectory shaping up. This stock has already soared 139% year-to-date. Expanding profits fueled momentum last year, with income surging to $37 million in 2020 before a decline to $24 million in 2022.
However, analysts forecast earnings to rocket 227% this year, positioning shares at a modest forward P/E of 6.7X. Impressively, this earnings growth appears sustainable, with EPS potentially leaping from $1.97 this year to $2.85 in just two years.
Also, cash flow demonstrates tremendous promise. Last quarter alone, it generated $38.5 million. Revenue growth further bolsters the bull case, which is expected to climb nearly 40% this year and over 30% annually moving forward. It’s rare to encounter reliable top-line expansion at such heady rates paired with an ultra-low 0.8X sales multiple and bargain earnings valuation.
In short, GCT offers a unique growth story that appears underappreciated. This stock should have ample legs left to run.
Zymeworks (ZYME)
With biotech stocks, the industry’s risk-reward ratio doesn’t seem worth it, with failure rates and dilution uncomfortably high. But Zymeworks (NASDAQ:ZYME) looks to be a rare breed that is a financially secure with clinical promise. Boasting over $295 million in cash, ZYME can finance operations and development for years. It has a market capitalization of $600 million in comparison.
The company’s lead pipeline asset is zanidatamab, a bispecific antibody targeting HER2 expressed in breast, gastric, and biliary cancers. Already, data demonstrates zanidatamab’s efficacy and safety. This includes “meaningful clinical benefit” against HER2+ gastroesophageal cancers, as per updated results at September’s ESMO conference. Also, the FDA awarded zanidatamab Breakthrough Designation status in 2020, affirming its potential.
Even still, skepticism still warrants considering the industry’s risks. But ZYME’s strong cash position and zanidatamab’s progress may offer smart speculation if approached with eyes wide open.
Eventbrite (EB)
Wall Street overlooks Eventbrite (NYSE:EB) as pandemic drag and shifting consumer behavior clouded the reopening narrative. But its financials and growth prospects reveal a ticketing platform that is years away from maturity.
During COVID’s peak impact, losses understandably mounted, from $225 million in 2020 to $55 million last year. But the tide looks to be turning.
Analysts forecast Eventbrite’s first profitable year in 2023. Assuming profit materializes, income could continue expanding for years to come. In fact, projections indicate EPS nearly quadrupling through 2027. At that point, shares would trade around 7X earnings, a remarkable discount for a high-growth Software as a Service (SaaS) company.
Further, growth should abound, with over 25% revenue expansion expected this year thanks to firming ticket sales and platform expansion. Long-term forecasts call for more than 13% annual sales growth throughout the decade, too.
Finally, Eventbrite holds far too little premium. With profits apparently set to gain momentum and years of double-digit top-line growth ahead, this stock looks ready to exit Wall Street’s penalty box.
On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.