With technology advancing at a breakneck speed, investors – having taken care of their core portfolio needs – should consider must-know growth stocks with their discretionary funds. Unlike blue-chip enterprises with long-established businesses, these expansion-oriented companies tend to be quite risky. Nevertheless, their dramatic upside potential warrants closer examination.
Basically, targeting essential growth stocks is akin to running a balanced strategy in the game of soccer (or football for the international audience). Generally, teams won’t find too much success getting into a defensive shell. That’s because great teams will constantly pound away until they find a breakthrough. At some point, even the most defensive-minded team must generate some offense.
Of course, you must exercise caution and discretion with high-potential growth stocks, which usually entail high risk. Still, a relatively small amount of money can go a long way in this arena. With that, below are compelling growth stocks to watch.
Exact Sciences (EXAS)
A molecular diagnostics company, Exact Sciences (NASDAQ:EXAS) is a leading provider of cancer screening and diagnostic tests. Per its public profile, Exact successfully launched Cologuard and Oncotype, which are cancer screening tests. Given the importance of its core business, EXAS easily ranks among the must-know growth stocks. Since the start of the year, shares have almost doubled in value. Nevertheless, prospective investors may have further upside remaining to be extracted.
Again, the bullish narrative for EXAS comes down to its core business. As multiple medical resources state, screening tests are critical because they can help find cancer at an early stage before symptoms appear. As the National Cancer Institute remarked, “[w]hen abnormal tissue or cancer is found early, it may be easier to treat or cure. By the time symptoms appear, the cancer may have grown and spread.”
To be fair, EXAS runs at a hot premium to trailing-year sales given its multiple of 7.66. However, analysts consider shares to be one of the essential growth stocks. Their consensus rating is a strong buy with a $99.13 average price target. On the high side, a $130 price target implies nearly 37% upside potential.
FormFactor (FORM)
A leading provider of essential test and measurement technologies, FormFactor (NASDAQ:FORM) covers the full integrated circuit lifecycle: from metrology and inspection, characterization, modeling, reliability, and design de-bug, to qualification and production tests. According to its corporate profile, semiconductor firms rely upon FormFactor’s products and services to accelerate profitability by optimizing device performance and advancing yield knowledge.
That’s quite a mouthful. However, FORM ranks among the must-know growth stocks to watch because of its implications for quantum computing. Per its website, FormFactor offers a range of cryogenic test and measurement solutions to quantum engineers. Therefore, should the underlying industry take off, FormFactor is well-positioned to provide critical testing services.
Right now, due to the hype train bolstering various tech players, FORM runs hot against key valuation metrics. Still, it enjoys excellent strengths in the balance sheet, particularly its robust cash-to-debt ratio of 4.81x.
Finally, analysts peg FORM as a consensus strong buy. Their average price target lands at $38, with a high-side target of $45 implying over 29% growth. Thus, it’s worth consideration for high-potential growth stocks.
ATS (ATS)
Based in Cambridge, Ontario in Canada, ATS (NYSE:ATS) designs and builds factory automation systems for the world’s leading manufacturers. Fundamentally, ATS ranks among the must-know growth stocks because of its wide relevance. From life sciences to consumer products to food and beverage to even nuclear power, ATS represents a critical cog in infrastructure and commerce. Since the start of the year, shares gained over 47% of equity value.
To be fair, the impressive performance in the price chart has ATS running hot against key valuation metrics. For example, shares trade at forward earnings multiple of 23.21, above the sector median of 19.54. Also, it trades at 2.24X trailing sales, above 61.62% of its peers.
Still, the company boasts a strong three-year revenue growth rate (per-share basis) of 21.8%, above 84% of its rivals. As well, it’s consistently profitable, year in and year out. In closing, analysts peg ATS as a unanimous strong buy with a $51.76 average price target. The high price target of $54.04 implies 14% upside potential.
On the date of publication, Josh Enomoto 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.