雅虎香港財經 7 High-Beta Growth Stocks to Buy for 20-Bagger Returns
In simple words, beta denotes the volatility of a stock in comparison to the index. If the stock has a beta of 1, it would move in sync with the index. However, the higher the beta, the greater the volatility. For aggressive investors, it makes sense to have a portfolio of high-beta growth stocks that can outperform the index.
In general, blue-chip stocks have a low beta and growth stocks have a high beta. Therefore, if the index moves by 10%, a growth stock with a beta of 1.5 will move by 15%.
It’s however important to note that in a market correction, a portfolio that’s overweight high-beta stocks will underperform. Therefore, there must be a balance of growth and blue-chip stocks in the core portfolio.
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For investors looking for high beta, we’re identifying some high-beta growth stocks best positioned to deliver 20-bagger returns by 2028. These stocks represent companies with good fundamentals and prospects of multi-fold growth in revenue and cash flows during the investment horizon.
EHang Holdings (EH)
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The flying car industry is at a nascent stage. Early movers will be rewarded if the business execution is good. EHang Holdings (NASDAQ:EH) is among the promising eVTOL stocks to buy. The company has made significant progress while EH stock has remained sideways in the last six months. With the likelihood of stellar revenue growth in the coming years, the flying car stock is poised to skyrocket.
EHang has already commenced operations in China. The mass production certificate from the aviation authority will allow the eVTOL player to scale up operations significantly. EHang has undertaken demo flights in UAE, Spain, Japan and Costa Rica. With geographic expansion, there is ample headroom for growth.
For Q1 2024, EHang reported revenue growth of 178% on a year-on-year basis. While operating losses are likely to sustain in the foreseeable future, I don’t see that as a concern for a business that’s at an early-growth stage.
Li Auto (LI)
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Li Auto (NASDAQ:LI) is possibly the most undervalued name among electric vehicle stocks. After a steep correction of 46% in 2024, the high-growth stock trades at a forward price-to-earnings ratio of 16.8x. With negative sentiments for the EV industry, it’s the best time to accumulate LI stock for the long term.
Li Auto has a market valuation of $21.7 billion. As of Q1 2024, the EV company had a cash buffer of $13.7 billion. This puts into perspective the extent of undervaluation.
Li Auto indicated in March that emphasis has been shifted away from sales volume and competition. Instead, the company is focusing on its core competency of “creating value for our users and driving operating efficiency.” From the perspective of long-term value creation, this is a move in the right direction.
I also like the fact that Li Auto has remained focused on China. Expanding into multiple geographies too early would only imply higher cost. I therefore expect margins to remain robust and Li Auto will continue to report healthy free cash flows.
Ibotta (IBTA)
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Ibotta (NYSE:IBTA) is a relatively new listing that’s still under the radar. At a forward P/E of 28, the technology company is worth considering. Ibotta provides a network (Ibotta Performance Network) that allows consumer packaged goods brands to deliver digital promotions to consumers.
The company has big clients including Walmart (NYSE:WMT), Coca-Cola Company (NYSE:KO) and Nestle (OTCMKTS:NSRGY). Overall, the client base is more than 850 and Ibotta is exclusively focused on the U.S. However, the addressable market is $200 billion and it provides ample headroom for growth.
For 2023, Ibotta reported revenue of $320 million, up 52% from a year ago. Further, adjusted EBITDA margin was healthy at 26%. For Q1 2024, revenue growth was 42.7% on a year-on-year basis to $82.3 million. Healthy growth is likely to sustain and potential expansion outside the U.S. will be a catalyst for growth acceleration.
DraftKings (DKNG)
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DraftKings (NASDAQ:DKNG) stock recently touched highs of $49.50. It has since corrected 28% from its highs, and I see this as a good opportunity to accumulate.
DraftKings is an online sports and iGaming company in the U.S. As of 2023, the addressable market was $20 billion. The market size is expected to swell to $30 billion by 2028 in existing states alone. Therefore, there is ample scope for growth and DKNG is positioned to benefit.
Another important point to note is that the online gaming company was reporting a significant EBITDA loss. However, that reversed and DraftKings guided for adjusted EBITDA of $500 million for the year. The company further expects adjusted EBITDA to increase to $1.4 billion in 2026 and to $2.1 billion in 2028. As online gambling is legalized in more states, the growth visibility will improve. With these positives, DKNG stock is a potential millionaire-maker.
Miniso Group (MNSO)
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Miniso Group (NYSE:MNSO) is a company that wholesales and retails lifestyle products. With an increasing global presence and healthy growth, I am bullish on MNSO stock delivering multi-bagger returns. Even after a 40% rally in the last 12 months, the stock trades at an attractive forward P/E of 18.3x. It’s, therefore, a good time to accumulate this 1.8% dividend yield stock.
Miniso differentiates itself from competition from the perspective of attractive pricing coupled with a dynamic product portfolio. New products are added at a robust pace and that makes the stores worth visiting on a frequent basis.
The lifestyle retailer’s strategy has been delivering results. For the first quarter, Miniso reported revenue growth of 26% on a year-on-year basis to $515.7 million. For the same period, the adjusted EBITDA margin increased by 200 basis points to 25.9%.
An important point to note is that Miniso ended the quarter with a store count of 6,630. On a year-on-year basis, the number of stores increased by 1,116. This is a key factor that’s driving growth. Further, Miniso plans to open 900 to 1,100 stores annually through 2028. Therefore, robust growth will be sustained, and MNSO stock has significant upside potential.
Lithium Americas (LAC)
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Lithium Americas (NYSE:LAC) is among the penny growth stocks that’s likely to be a 20-bagger in the next five years. LAC stock plunged by 50% so far this year on the back of lower lithium prices and equity dilution.
However, the lithium miner has a game-changing asset. To put things into perspective, the Thacker Pass asset has an after-tax net present value of $5.7 billion. That’s 8x the market valuation of Lithium Americas.
Further, once both phases are in production, Thacker Pass is likely to deliver an average annual EBITDA of $2 billion. With a mine life of 40 years, the asset is a cash flow machine. Lithium Americas also received a conditional commitment for a $2.26 billion loan from the U.S. Department of Energy.
The focus for the next few years will be on completing the construction of the asset and commencing production. Once lithium starts trending higher, the upside in LAC stock is likely to be meaningful.
Cronos (CRON)
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Cronos (NASDAQ:CRON) is another penny stock that’s worth including in the portfolio. The cannabis company has strong fundamentals and is likely to see accelerated revenue growth in the coming years. If regulatory headwinds wane, CRON stock has the potential to deliver 20x returns in the next 24 months.
Cronos reported healthy revenue growth of 30% on a year-on-year basis for Q1 2024. Adjusted EBITDA losses also narrowed on a year-on-year basis. With the cannabis player entering new geographies of Germany, Australia, and the U.K., I expect revenue growth to accelerate.
Further, Cronos has a strong balance sheet and ended Q1 with a cash buffer of $855 million. Cronos has been conservative in using its cash buffer. Once regulatory headwinds decline, I expect aggressive organic and acquisition-driven growth. The likelihood of cannabis’s reclassification as a Schedule III drug is an impending catalyst.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Faisal Humayun did not hold (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.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
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