For over 12 years, growth stocks have been the talk of Wall Street — and with good reason. Persistently low lending rates have allowed fast-growing companies abundant access to cheap capital that they’ve been able to use to hire new employees, acquire other businesses, and innovate for the future. With the nation’s central bank standing firm on its monetary policy, at least in the near-term, growth stocks should continue to thrive…
Of course, not all growth stocks are created equally. The following five companies are projected by Wall Street to be some of the fastest-growing stocks on the planet over the next four or five years, assuming analysts’ sales projections (per FactSet) come to fruition.
Snowflake: Implied five-year sales growth of 819%
Among cloud stocks, you’d struggle to find a company with a persistently higher annualized growth rate than Snowflake (NYSE:SNOW). After bringing in $592 million in full-year sales in fiscal 2021, Wall Street is looking for the company to deliver $5.44 billion in annual sales in fiscal 2026.
What really has Wall Street excited are Snowflake’s plain-as-day competitive advantages. Most notably, its cloud data-warehousing solutions are layered atop the most-popular infrastructure storage solutions. Whereas it can be difficult for businesses to share data that’s stored on competing cloud service providers, this sharing of information is seamless for Snowflake’s customers.
Snowflake also shunned the subscription-based operating model in favor of a pay-as-you-go model. By charging its clients for the amount of data stored and the number of Snowflake Compute Credits used, the company is making its pricing transparent and potentially more cost-effective for users.
While there’s no question Snowflake is one of the fastest-growing stocks on the planet, where the company’s stock should be valued is debatable. Though some premium is merited for such consistently high growth rates, I’m not so sure paying 71 times sales for this year makes sense for a company that’s still many years away from profitability. There may not be significant downside here, but I also fail to see how this valuation stretches much further to the upside.
Teladoc Health: Implied five-year sales growth of 416%
Healthcare stocks on the leading edge of innovation are a pretty good bet to be among the fastest-growing stocks on the planet through mid-decade. Telehealth services giant Teladoc Health (NYSE:TDOC) is expected to see its annual sales climb from a reported $1.09 billion in 2020 to an estimated $5.62 billion by 2025. That’s an increase of 416%, for those of you keeping score at home.
Even though Teladoc found itself in an ideal scenario in 2020, with the coronavirus pandemic wreaking havoc in the U.S., this was a company growing sales by an annualized average of 74% in the six years leading up to the pandemic. In other words, we’re clearly not talking about a one-hit wonder.
Telemedicine is the future of healthcare in the U.S. and globally. While not all appointments can be conducted virtually, telehealth visits will provide added convenience for patients and make it considerably easier for doctor’s to keep tabs on patients with chronic illnesses. This ease-of-use should result in…
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