Finding top growth stocks with the kind of capital appreciation upside long-term investors are seeking is the name of the game for a solid majority of investors in the market right now. Indeed, given the returns investors have gotten used to in recent years, outperforming the market has become a game for many.
I’m guilty of chasing returns during rallies as much as the next guy. Of course, past returns are no guarantee of future performance. However, looking at some of the top performers in the market over the course of the past year can be beneficial for those who believe in the past surges stocks have seen over the course of the past year.
In fact, the reality is that many of the top-performing stocks can often continue to rise due to momentum and other structural factors much faster than other underperforming names due to market dynamics. Until we’re out of this bull market and investors look to truly diversify into smaller-cap defensive names, these three momentum stocks are ones I think could be worth picking up before they surge even higher.
Rocket Lab (RKLB)
The space sector is one which many long-term investors believe could be on the cusp of becoming a central investing trend for decades to come. In this sector, Rocket Lab (NASDAQ:RKLB | RKLB Price Prediction) is a leader, dominating the world of small-satellite launches for a number of notable clients, competing with the likes of SpaceX.
Indeed, given the fact that SpaceX is about to become a publicly-traded entity, I wouldn’t be surprised to see Rocket Lab’s valuation be re-rated post-IPO. Of course, that’s an extraneous factor investors may have already priced in – the market does a pretty good job of factoring in all available information before it happens. So, perhaps a buy the rumor, sell the news trade could be in order. We’ll see.
That said, the reality is that the total addressable market for small satellite launches is expected to continue to grow at a rapid pace, with plenty of companies looking to launch their own satellite constellations for a number of key applications. With the company seeing bookings growth of 60% year-over-year to $450 million and gross margins improving to 28% from 22% (during the same quarter the year prior) in Q3, this is a stock I think could have material upside in the coming months and years.
Rigetti Computing (RGTI)
On most fundamental metrics, Rigetti Computing (NASDAQ:RGTI) isn’t cheap. In fact, this stock looks outright expensive on everything from price/sales to forward price/earnings.
That said, as one of the leading companies in commercializing quantum computing technology (and some incredible breakthroughs have come through lately from a number of companies in this space), Rigetti is well-positioned to capitalize on a wave of investor capital flowing into this sector.
Now, like most companies operating in the quantum computing arena, Rigetti is pre-revenue, so its fundamentals can’t reliably be used to come up with some sort of idea of how valuable this company should be. That’s an opportunity or risk, depending on which side of the bet one takes.
That said, for those thinking long-term and looking for a leader in commercializing this technology, Rigetti has among the best probabilities of doing so, given the company’s solid cash reserves of more than $200 million (providing at least 18 months of runway, given current spending levels).
Regencell Bioscience (RGC)
One company I haven’t covered in the past, but has demanded to be covered due to its incredible short-term momentum, is Regencell Bioscience (NASDAQ:RGC).
Regencell has become the high-octane biotech growth stock investors are honing in on, due to the company’s strong results in clinical trials for some key drugs treating ADHD and ASD. Using traditional Chinese medicine for neurodevelopmental disorders, the company hopes to achieve commercial-stage production of its key drugs in the coming years. Still a clinical-stage company, there’s plenty of risk to go around when analyzing RGC stock. However, as is the case with most early-stage biotech plays, the binary nature of the outcomes means the higher the potential target market for a given portfolio of drugs, the higher the implied value up front.
Right now, market participants appear to view Regencell’s growth potential as worth investing in. With research continuing at a fast pace, and administrative expenses declining by around 18% year-over-year, Regencell has a robust runway given its $50 million cash position and strong early clinical trial results.
In short, this is a highly speculative stock investors may want to consider, but I think investors would be best served taking a cautious approach until further data comes through. That said, RGC stock is one of the top speculative ideas on my high-growth watchlist, due to its recent performance and still-small market capitalization.
Top Gaining Stocks
Top Losing Stocks