One may not expect companies to grow exponentially in a choppy market, but such companies do exist, and it's not hard to find such potentially explosive stocks if you know where to look.
Some megatrends, for example, could thrive even during a downturn, which means stocks riding them could outperform regardless of where the markets are. Here are two such potentially explosive stocks you could buy this month.
This is one of the fastest-growing industries
The automotive industry is undergoing a paradigm shift: Nearly every automaker is taking its foot off traditional fuel-burning vehicles as they prepare for a world driven by electric vehicles (EVs). Global EV sales more than doubled in 2021, and are on track to hit record highs this year despite the raw material supply and price bottlenecks.
To play the boom, you could either buy EV stocks, or look at shares of companies that supply parts essential to run the EV industry. Among the latter, one stock is growing exponentially.
Nearly every EV out on the roads today runs on lithium-ion batteries, and the demand for lithium is so strong that prices of the metal have shot up nearly 80% year to date and just hit all-time highs even as I write this. Livent (LTHM), once a part of chemical company FMC, is among the few publicly traded pure-play lithium stocks today and is making huge amounts of money.
Livent's revenue surged 87% in the first six months of the year, and it earned a hefty gross margin of nearly 45% during the period. Its cash from operations doubled year over year.
The second quarter was a record for Livent thanks to higher lithium prices. With metal prices rising even further since, there should be no stopping Livent's top-line growth for the rest of the year. In Q2, Livent raised its full-year guidance and projected a whopping 97% growth at the midpoint in its revenue for 2022, and expects to quintuple its adjusted earnings before interest, tax, depreciation, and amortization (EBITDA).
With Livent also aggressively expanding capacity at existing plants and setting up new lithium plants in North America, Europe, as well as China, this is one explosive growth stock you'd not want to ignore.
The market is overlooking this leader stock's potential
Telehealth is one of the biggest megatrends that the COVID-19 pandemic set off. More people were compelled, even encouraged, to avail themselves of virtual health services from home during lockdowns, and that trend is here to stay given the comfort and convenience associated with telehealth. From primary care to urgent care, mental healthcare, remote monitoring, and even chronic disease management, Teladoc Health (TDOC -0.07%) provides all of this and more and its revenues skyrocketed during the peak pandemic.
Although growth has decelerated since and Teladoc has reported big write-offs on its Livongo acquisition that have raised questions about the company's pricey move, the market is reacting as if there's no growth left for Teladoc. That's far from the truth.
In the second quarter, Teladoc's paid membership in the U.S. rose 9%, while its total patient visits and revenue grew 28% and 18%, respectively, all year over year. Teladoc now foresees 15%-19% growth in revenue for the third quarter and at least 18% growth for the full year.
One of the biggest potential threats to Teladoc lately has been rising competition, with e-commerce giant Amazon's (AMZN -1.64%) entry into the market in particular spooking investors.
Amazon launched its Amazon Care business in 2019 and made big expansion plans in 2021, only to quit the game this year: Amazon is shutting down its telehealth business. Amazon cited the lack of "complete enough offering" for large enterprise customers as the primary reason behind the move. Teladoc, for that matter, has several large enterprise customers; it serves more than 12,000 clients, including more than half of the Fortune 500 companies, and 50 million members worldwide.
If anything at all, Amazon's failure suggests that establishing and running an economically viable telehealth business isn't a cakewalk, and that it won't be easy for any company to displace Teladoc from the top position in the industry. Teladoc was the first mover in the global telehealth market and is the clear leader today.
With the global telehealth market expected to grow exponentially in the coming years, it could only be a matter of time before Teladoc starts delivering consistent growth numbers. That should reinstate investors' faith, and once that happens, Teladoc stock too could grow explosively alongside the industry.
