Any investor knows that you cannot view the past performance of a stock as a predictor of future earnings. In fact, it has become an axiom we all know in Econ 101: "Past performance is no guarantee of future returns" is a common phrase. But that simple sentence, while true, raises a tricky question: How should an investor rate a stock?
The truth is, past is a prologue, not a prophet, and investors can benefit by considering past performance as one of many factors when evaluating a stock. There is no set path to success here, and each stock should be viewed as a unique individual – making past performance a useful indicator, even if it isn't the only one.
Investors Should Look to Wall Street Too – Are Analysts Impressed by the Stocks? And what does the upside potential look like?
Now we have a useful profile for monster growth stocks: profit for gangbusters, buy ratings from the Wall Street analyst corps, and a significant advantage for the coming year. Three stocks in the Investing Insights platform mark all those signs of strong forward growth. As if that wasn't enough, all three have a "Perfect 10" smart score.
The platform gives each stock a one-digit score, based on the sum of 6 separate factors. The factors used are known to correlate with future overperformance; when they line up, this is a strong indicator for buyers to be aware of. Let's take a closer look.
Amyris, Inc. ( AMRS )
Say "biotech" and most people will assume you are talking about drugs. But Amyris (NASDAQ 🙂 puts a different spin on the biotech industry. The company focuses on developing synthetic chemical substitutes for common petroleum, vegetable and animal products. Amyris has three development divisions for cosmetics, health & wellness and food flavors, which are offered to the public through three direct-to-consumer brands: Pipette, Biossance and Purecane.
AMRS shares have shown rapid growth recently and have grown strongly in the past six months. During that time, the company's stock has increased 786%, impressive by any standard. The company's growth has accelerated in recent months, and a look at the recent 4Q20 earnings report will provide some reasons.
The fourth quarter was the third consecutive quarter of record sales. The company reported total revenue of $ 80 million, more than doubling the previous quarter's earnings. Of that total, product sales of $ 35 million were up 71% year-over-year. The company also saw a significant increase in gross margins yoy, from 56% to 66%. Rising sales led to annual sales of $ 173 million, a 13% year-over-year gain.
Looking ahead to the end of 2021, the company is aiming for continued increasing product sales, leading to total annual sales of nearly $ 400 million, well above the consensus forecast of $ 231 million.
Regarding this stock for Roth Capital, five-star analyst Craig Irwin notes the company's outlook and recent growth. Irwin also points out that Amyris is well positioned to maintain her blistering pace.
“Long-term growth is supported by a strong pipeline of new molecules in development with strategic partners. With the 13 ingredients on the market and 18 in active development, we expect continued healthy portfolio expansion as they enter the market through 2025. Mgmt expects to add an additional 8 to 10 ingredients to its active development pipeline by 2021, while maintaining a broad channel for long-term expansion of product and ingredient potential, ”said Irwin.
Unsurprisingly, Irwin views AMRS as a buy, and his $ 33 price target implies a 59% upside potential over the next 12 months.
Rapid growth will always draw Wall Street analysts to an innovator. Amyris picked up 4 recent Buy reviews, all of which merge into a Strong Buy consensus review. AMRS has a stock price of $ 20.65, and even after its recent appreciation, the $ 25.50 average price target still suggests a 23% rise over a year. (See AMRS Stock Analysis)
Clean Energy Fuels ( CLNE )
The next growth stocks we are looking at are in the renewable fuels sector. This is a sector that is growing partly at a political level – renewable is an & # 39; in & # 39; thing – and partly based on the business model. Clean Energy Fuels (NASDAQ 🙂 produces renewable natural gas (RNG) for transportation purposes. The company's fuel products are marketed to transit and transportation customers; Clean Energy's customers include Estes Express Lines, UPS and the New York City MTA.
In early February, Clean Energy announced a major multi-year contract to supply the LA County Metro system – the largest bus fleet in the US – with 47.5 million gallons of RNG. The agreement is part of a move from the LA Metro to low-carbon fuels. Clean Energy was allocated three tank depots for five years, with an option to extend the contract for another three years. This is in addition to five Clean Energy filling stations already working for Metro.
The news about LA Metro came out after CLNE stock has seen explosive growth recently, part of an overall trajectory with stocks rising 492% over the past 6 months. That increase coincided with several other recent contracts, totaling more than 58 million gallons of RNG. Customers include Pacific Green Trucking and Waste Connections (NYSE 🙂 WCN.
Craig-Hallum analyst Eric Stine, rated 5 stars at TipRanks, writes of Clean Energy: “We think it is becoming increasingly clear that natural gas (and RNG) is going to be a critical fuel as part of the development. carbonization of transport with the first Amazon deploy an exclamation mark. With CLNE's dominant position and RNG's plans, RNG's significant financial impact, amplified by RNG's higher contribution with low CI, and the most extensive station footprint, we see CLNE as an ideal natural gas and brands investment also note that it is one. of the few pure play investments in renewable natural gas. "
In light of his optimistic comments, Stine places a Buy rating and a price target of $ 25 on CLNE. His goal points to confidence in a growth of 68% for the coming year.
In general, Wall Street analysts are optimistic about this stock's ability to continue to merge into new highs. CLNE's Strong Buy consensus rating is based on 3 purchases and 1 hold. It doesn't hurt that the $ 23 average price target puts the potential 12-month gain at ~ 55%. (See CLNE Stock Analysis)
Aemetis ( AMTX )
Aemetis (NASDAQ 🙂 is another renewable fuel company. Aemetis' main products are ethanol and biodiesel, along with glycerine, an important industrial chemical. However, the company does not rely on one sector and has a wide production portfolio that also includes distillation grains, edible oils and palm olein and other food products. Aemetis sells a lot in the food sector in India and in the California Central Valley.
Shares of Aemetis have shown robust growth recently, with net profit of 736% year-to-date. A significant portion of that profit has come after the company's announcement that it will start a "Carbon Zero" plant to produce renewable fuels for trucks and aircraft, with a capacity of 23 million gallons per year. The company has also published a five-year growth plan targeting $ 1 billion in total revenues by 2025.
Aemetis reported 4Q20 results earlier this month, and despite annual losses, the company was able to put a positive spin on the results. The report noted that while demand was seriously disrupted in 2020, revenues from ethanol and fuel alcohol were $ 112 million, only $ 3 million less than the previous year.
Amit Dayal, widely rated No. 9 among Wall Street analysts, notes this in his recent coverage of AMTX.
“We believe the company is emerging as one of the leaders in implementing a zero-to-negative carbon intensity (CI) strategy to market renewable fuels that would have a superior margin profile over competitors. must support. We also believe that the company has timed these initiatives well in a very friendly federal regulatory environment, increasing the likelihood of success, ”Dayal wrote.
To that end, Dayal sets a price target of $ 28 on the stock, supporting his Buy rating and suggesting 34% growth potential for a year.
AMTX stocks have managed to slip under the radar so far, receiving only 2 recent ratings. However, both agree that this stock is a purchase proposal. The stock is priced at $ 20.83, with an average target of $ 26.50 indicating that there is room for 27% growth by the end of the year. (See AMTX Stock Analysis)
For more ideas for stocks trading at attractive valuations, visit Investing Insights .
