Three very different stocks, but all with the kind of long-term earnings potential that growth investors look for: Industrial software company PTC (NASDAQ:PTC) is a play on the fourth industrial revolution, wind blade manufacturer TPI Composites (NASDAQ:TPIC) benefits from growth in the use of wind power, and bioprocessing technology company Repligen (NASDAQ:RGEN) is a niche player in an exciting growth market. Here's why all three are worth closer looks.

Repligen

Bioprocessing is simply the process of using a biological catalyst to produce a pharmaceutical, chemical, or even food in a manufactured environment. In general, the equipment market is split between upstream bioprocessing (equipment used for cell isolation and cultivation) and downstream bioprocessing (separation, filtration, and purification).

A growth stock concept.

Image source: Getty Images.

With the acquisition of GE's biopharma business, Danaher (NYSE:DHR) has added significant upstream capability to its existing strength in downstream equipment, and is now positioned to challenged Merck's MilliporeSigma for overall industry leadership. Other leading players include ThermoFisher (largely upstream) and Sartorius (largely downstream).

It's an unusual market in that GE and MilliporeSigma are both significant Repligen customers in some areas -- GE and MilliporeSigma accounted for 12% and 13% of Repligen's revenue in 2019, respectively -- and they are competitors in other areas.

The key to the investment case is Repligen's dominant position in prepacked chromatography (purification through separating mixtures), and its significant position in the filtration market.

As such, Repligen sits as a niche but key player in a high-growth industry surrounded by much larger companies. It's not hard to see that the company is potentially a takeover target.  In addition, the growing demand for biologic drugs (including vaccines, gene therapies and monocolonal antibodies) is creating strong demand for bioprocessing equipment.

All told, Wall Street analysts have Replien growing revenue at 25% in 2020 and 17.4% in 2021. If these kind of growth rates can extend into the future then Repligen's heady looking valuation of more than 100 times forward earnings might not look so expensive after all. 

TPI Composites

The wind power market is highly competitive and dominated by leading players, including Vestas, Siemens Gamesa, and GE, all three of which are in a fierce battle to win market share while trying to grow margin. TPI is the only remaining independent manufacturer of composite blades, after GE acquired rival LM Wind Power in 2017..

Wind turbines.

Image source: Getty Images.

It gets even more complicated, though: GE, Siemens Gamesa, Vestas, and other players such as ENERCON and Nordex are all customers of TPI, and have long-term customer agreements in place.

In a nutshell, the case for buying TPI stock is based on the idea that outsourcing blade production will help the leading players improve profit margin, particularly as the trend is toward the kind of larger, more technologically advanced blades that TPI manufactures. Given that TPI has supply agreements in place with all the leading non-Chinese players, it appears that the company is relatively agnostic over who wins wind farm contracts. Moreover, using TPI will allow wind power companies to reduce supply chain headaches as they rush to grab market share.

As such, analysts have TPI growing revenue by double digits over the next few years, with good prospects thereafter as the cost of using renewable energy for electricity production continues to fall. However, the stock isn't without risk -- there is always the chance that GE will decide to shift all of its blade production in house.

PTC

The industrial software company has generated most of its revenue from its core computer-aided design (CAD) and product lifecycle management (PLM) offerings in recent years, but it's its augmented reality (AR) and internet of things (IoT) solutions that are set to drive growth in the future.

In a nutshell, PTC is a play on the increasing digitization of the factory through the so-called fourth industrial revolution -- the use of automation alongside digital technologies and web-enabled devices. The use of IoT and advanced analytics allows the owners of physical assets to better manage those assets through technologies such as "digital twins."

One example could be the use of web-enabled devices and analytics on a gas turbine in order to predict when it needs servicing -- saving valuable downtime and improving efficiency. Meanwhile, AR allows a technician to service the equipment without even being physically present.

Management sees its CAD and PLM annual sales growing in high single digits over the medium term, with IoT growing in the mid-20% range, and AR up to 60%. As such, analysts see PTC growing overall annual sales in the double digits over the next few years at least. 

Stocks to buy?

Growth stocks are usually priced in terms of their future earnings and cash flows rather than what they are generating right now. That's certainly the case with all three stocks, because even on a one-year-out basis their valuations look heady.

TPIC PE Ratio (Forward 1y) Chart

Data by YCharts

Of the three, PTC looks the most attractive, as the COVID-19 pandemic may well accelerate adoption of digital technologies once the near-term headwinds from the manufacturing slowdown start to alleviate. There's still some lingering uncertainty over what GE (a significant TPI customer) will do going forward with regard to continuing to outsurce, and Repligen's valuation is looking stretched after a fantastic run.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.