It's not difficult to uncover the fastest-growing stocks on the market. Just find a screener, sort the market by growth rates over the last 52 weeks, and you're done. It's much more of an art and a science to pinpoint stocks that are poised to deliver amazing growth in the future.
To help out with that monumental task, we asked a handful of your fellow investors here at The Motley Fool to share some of their best growth stock ideas. Read on to see why they would recommend buying Momo (NASDAQ: MOMO), Impinj(NASDAQ: PI), and Sociedad Quimica y Minera de Chile (NYSE: SQM) right now.
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Buckle up for the next phase of growth
Maxx Chatsko (Sociedad Quimica y Minera de Chile): It's a pretty good time to be a lithium producer. At the beginning of 2015, prices for the two major types of the material, lithium carbonate and lithium hydroxide, were hovering near $7,500 per metric ton (MT). While that was an all-time high then, prices have since nearly tripled. Funny thing is, market fundamentals and expectations for rising global demand indicate that selling prices of $20,000 per MT are here to stay -- even with rising production.
That alone bodes well for Sociedad Quimica y Minera de Chile, more commonly referred to as SQM, but the company has several other significant tailwinds at its back. After a few years of distractions, the world's third-largest lithium producer is finally turning a corner.
Its home country of Chile -- the world's largest lithium producer and owner of reserves -- has a new pro-business and pro-mining administration in place, which is making increased lithium production a priority. Progress has been swift so far: The government recently increased the company's annual production quota.
Additionally, potash leader Nutrien is nearing a deal to sell its 32% stake in SQM. The buyer figures to be a much more attentive parent than Nutrien has been in recent years (that won't be difficult to do), which could smooth SQM's push into its next phase of growth. That includes a project for 50,000 MT per year in a highly coveted region of Argentina with up-and-coming lithium producers supported by global conglomerates. Translation: The project is greatly de-risked and diversifies production assets.
Long story short, investors looking for growth shouldn't overlook SQM. Revenue and profits are rising again, and with selling prices soaring and production increases on the way, there are ample opportunities to keep the party going for the foreseeable future.
Blood in the streets
Anders Bylund (Impinj): If you like to buy when there's blood in the streets, this maker of radio-frequency ID tags and associated systems is waist-deep in the red stuff right now.
Impinj's stock is trading some 78% below its 52-week highs right now. Skyrocketing growth in 2016 and early 2017 was followed by three sharp drops as the company appeared to run out of rocket fuel. First, Impinj slashed its full-year guidance for shipment volumes of RFID chips, then the actual results turned out even softer.
Crash and burn, Icarus flew too close to the sun, and so on. But that's not the whole story here.
What's holding Impinj back these days is the fact that several of its largest customers are taking their time to plan, test, and implement their RFID technology plans. According to CEO Chris Diorio, Impinj isn't actually losing any business here, just delaying it into the second half of 2018 and beyond.
At least one client of substantial size is reportedly moving forward with its Impinj-based RFID plans in 2018 and others may follow. The real kick-start should come next year, or perhaps when management can show beyond a reasonable doubt that the bottom of this valley has been reached.
In the meantime, Impinj is struggling along with year-over-year revenue shrinkage, crashing earnings, and negative free cash flows. If that's too much risk for your investing style, that's perfectly fine. But I'll harken back to the classic Baron Rothschild quote I mentioned earlier -- when there's blood in the streets, you can pick up great investments at an even greater discount. Watching Impinj make a full recovery as its delayed orders come rolling in should be fun for those who dare to buy in at today's prices.
Give China's Tinder a chance
Leo Sun (Momo): Momo's social app, often called "China's Tinder," lets users find each other based on their shared locations. However, its core growth engine is its live video streaming business, which generates revenue from viewers paying membership fees for premium broadcasters or the purchase of "virtual gifts." A much smaller percentage of Momo's revenue comes from its ads and internally developed mobile games.
Last year, revenue surged 313% to $553.1 million, non-GAAP net income jumped 469% to $177 million, and GAAP net income rose more than tenfold to $145.3 million. For 2017, analysts expect Momo's revenue and non-GAAP earnings to climb 137% and 97%, respectively.
Momo's growth is slowing down, but it's still growing faster than many other Chinese tech stocks. Monthly active users went up 27% annually to 94.4 million during the third quarter of 2017, and the company continues to expand its ecosystem with new features like Quick Chat "previews" of live chats, the Werewolf platform for virtual gifts, and Momo Radio.
The bears often cite Momo's slowing growth and the Chinese government's crackdown on live-streaming platforms as reasons to dump the stock. Those are valid points, but the stock's forward P/E of 17 remains surprisingly low relative to its growth forecasts -- despite the stock's rally of nearly 50% this year. So if Momo's growth evens out and censorship concerns fade, shares could have a lot more room to run.
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*Stock Advisor returns as of February 5, 2018
Anders Bylund has no position in any of the stocks mentioned. Leo Sun has no position in any of the stocks mentioned. Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool recommends Impinj and Momo. The Motley Fool has a disclosure policy.