Growth Isn’t Off The Table
Hyper-growth, that ever-elusive massive ramp-up in revenue as businesses begin to scale. It is what VCs, CEOs, and startups all dream about because it means a rapid expansion of revenue, earnings, and profits. What it means for the market is a business that has proven its worth. If you can get in early enough, it's possible to share some of the gains. The stocks I am highlighting today are all poised for rapid growth within rapidly growing industries, they are supported by secular trends, and all have positive catalyts pushing their shares higher.
Insider Buying At Elys Game Technology
Elys Game Technology Corp (NASDAQ:ELYS) is a B2B platform provider for sports betting and gaming. The company offers a suite of options for businesses saving them the trouble of setting up and maintaining systems on their own. The company is still a nanocap but one with a very strong outlook for growth. The 3rd quarter revenue, the first quarter reported since going public, increased by 44% over the previous year and there are signs of acceleration. Growth was fueled by digital accounts offsetting weakness in brick-and-mortar channels and putting the company on solid footing until the reopening is in full swing.
“Overall, we are very excited about the outlook for the business, as we have built an efficient, fully integrated omni-channel gaming company, combining both online and land-based retail channels, and our own cutting-edge betting technology, which services we plan to offer globally on a B2B basis."
Shares of ELYS began moving higher after the 3Q report and got another boost when the company CEO disclosed a large purchase. CEO Michele Ciavarella bought 58,000 shares in early December betting on the company’s position. With gaming up in all segments, social distancing still the norm, and analysts warming up to the hotels/casinos industry Elys Game Technology could easily see revenue grow with a CAGR greater than 40%.
Whole Earth Brands On Par With Beyond Meat And Freshpet
Whole Earth Brands (NASDAQ:FREE) is moving higher on a round of analyst upgrades. The company manufactures “all natural” colors, flavors, and additives for the food and drug industries and poised for triple-digit growth. The company operates in two segments that together are valuable enough but offer an opportunity for spin-offs as well. Cantor Fitzgerald thinks the sweetener business could be disruptive to its market in the way Freshpet (NASDAQ:FRPT) and Beyond Meat (NASDAQ:BYND) are in theirs.
The latest analyst call is from D.A. Davidson. The firm is initiating coverage with a buy rating and price target of $16 or about a 50% upside. Cantor Fitzgerald sees shares trading closer to $23 or just over 110% upside. Regarding revenue, the company delivered 4.5% revenue growth in the 3rd quarter which is not much but consider this. The company is expected to see its revenue ramp to doudle-digits over the next four quarters, it is only now entering its hyper-growth phase.
Lovesac Makes A Big Deal
The Lovesac Company (NASDAQ:LOVE) manufactures sustainable foam-filled furniture products using recycled and natural materials. The company is well-ranked among ESG investors and benefiting from a combination of factors that are leading to accelerated growth. For one, the entire furniture industry is on the brink of a massive earnings acceleration driven by its response to the trade war and rising demand for home goods. For another, Lovesac expanded upon a deal it has with Best Buy that will extend its reach and open entirely new markets.
Analyst Camilo Lyon at BTIG thinks the 3Q report is a game-changer for the company. In his view, there has been a meaningful change in the company’s margin profile that will provide leverage moving forward. Among other things, the deal with Best Buy will drive customer acquisition to the point the company will no longer be reliant on promotional selling. The combination of accelerated customer acquisition and higher-realized selling prices will not only lead to improving margins but to exponential profit growth as well.
