The best game-changing stocks buck conventional wisdom by doing things differently. As a result, these investments tend to pay off big time because the companies have a unique ability to continually beat forecasts. While true game-changers are a rare breed, we have three top stocks that are buys right now:
|Game-Changing Stock||Market Capitalization||Returns since IPO||
Sign of a Game-Changer
|Under Armour (NYSE:UAA)||$16.5 billion||1100%||Moving from a niche product to a dominant brand|
|Coherus BioSciences (NASDAQ:CHRS)||$1.2 billion||114%||Quickly capitalizing on a new drug category|
|Tesla (NASDAQ:TSLA)||$29.2 billion||723%||Accelerating into the mass market|
Make your portfolio healthier
Dan Caplinger: Demographic trends have made the athletic apparel industry grow exponentially in recent years, and between increasingly fitness-conscious Baby Boomers and younger generations that are more in tune with their health than their elders, Under Armour has sought to give its customers an alternative to the domination that industry pioneer Nike has had for decades. Under Armour has to some extent followed Nike's strategy of finding well-known athletes to endorse its products, and often, championships in major sports are seen as much as a battle between Under Armour and Nike as between the teams themselves.
Investors have high hopes for Under Armour when it reports its quarterly financial results later this month, including growth of more than 20% in revenue and continued increases in profitability. After having moved aggressively to go beyond apparel and incorporate footwear into its lineup, Under Armour is now looking at capturing more of the mainstream clothing market, with plans to introduce a line of apparel for everyday use. Fashion items will likely never become the majority of the company's business, but Under Armour rightly believes that offering more products to its most loyal customers could pay off with higher sales. Moreover, the more exposure Under Armour can get, the more likely it is to keep boosting its market share in a growing industry.
A brand new class of drugs
Brian Feroldi: Last year, the FDA made waves when it approved the sale of the first biosimilar drug. That decision opens the door to a potential flood of new drug approvals in the years ahead, which could be a game-changing development in the biotech industry.
First, what is a biosimilar drug? Think of it as a copy-cat version of a biologic drug, kind of like a generic. However, unlike small molecule drugs (which generics mimic) that can be easily replicated by chemical processes, biologic drugs are made inside living cells, which makes them substantially more difficult to manufacture. As a result, the FDA had previously been highly resistant to allowing them to be sold in the states, which allowed biotech companies to continue to rake in billions in profits even after their drugs lost patent protection.
However, that's no longer the case, and investors have a golden opportunity to get in before this market takes off.
While there are plenty of companies focused on creating biosimiliar drugs, I think that Coherus BioSciences is worthy of investor attention. This company has three biosimilar product candidates in development that target Amgen's Neulasta and Enbrel as well as AbbVie's Humira. Each of these drugs generates billions in annual sales, so if Coherus succeeds in bringing their copycats to market then it could be sitting on a gold mine.
Coherus just announced that its biosimliar candidate for Neulasta was just accepted for review by the FDA. The agency set a target decision date of June 9th, 2017, which means that this company could be less than a year away from generating product revenue.
Of course, Coherus is still just a clinical-stage biotech, which means that it is burning through capital each quarter. That makes it a much higher-risk stock than average. Nonetheless, if you are looking for a stock that offers game-changing potential, Coherus BioSciences could be it.
Changing the game again and again
Matt DiLallo: Most companies would be lucky to develop one game-changing product in their lifetime. Tesla seems to produce a game changer every year. For example, in 2013 CNBC billed Tesla's Model S as a game-changer because its combination of power, looks, and space threw out the conventional wisdom of what an electric car could be. Given its sales over the past few years, it's clear that car buyers agree.
Tesla, however, didn't stop there. Analysts, pundits, and customers have called its batteries, powerwall, autopilot, top range, and upcoming Model 3 game changing developments. Driving this view is the company's ability to transform the belief that electric cars would be just a niche product for those serious about going green into a category where the masses are lining up to buy.
This shift drove its stock price up more than 700% since its IPO. Its ability to continue to change the game could send it even higher in the future if sales keep accelerating.
Brian Feroldi owns shares of Nike, Tesla Motors, and Under Armour (A Shares). Dan Caplinger has no position in any stocks mentioned. Matt DiLallo owns shares of Under Armour (A Shares) and has the following options: long January 2018 $45 calls on Nike and short October 2016 $60 calls on Nike. The Motley Fool owns shares of and recommends Nike, Tesla Motors, and Under Armour (A Shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.