Since the end of the Great Recession in 2009, growth stocks have been an unstoppable force on Wall Street. Historically low lending rates and the Federal Reserve's ongoing quantitative easing measures have created a pool of abundant cheap capital that fast-paced businesses have used to hire, innovate, and acquire.
These dynamics are unlikely to change anytime soon, which makes growth stocks a good bet to continue to outperform.
Even with the broader market a stone's throw from an all-time high, the following three growth stocks have the tools necessary to make you richer in November, and most importantly, well beyond.
If there's a high-growth industry just begging for bargain hunters to strike, it's advertising technology. The growth stock for investors to consider, which could make them richer in November and for many years to come, is small-cap PubMatic (PUBM -2.39%).
PubMatic operates a cloud-based programmatic ad platform that specializes in sell-side services. In English, this means the company leans on machine-based algorithms to handle the buying, selling, and optimizing of ads for its clients -- i.e., the publishers (the sales side of the ad business).
PubMatic's programmatic ad infrastructure walks a fine line between maximizing profitability for its clients by selling their display space and keeping advertisers happy. In particular, the platform doesn't always sell display space to the highest bidder. Rather, it's about putting relevant ads in front of a user, which tends to keep advertising companies happy. The more relevant ads placed in front of users, the more likely it is that the pricing power for publishers is going to climb over time.
What's really working in PubMatic's favor is the undeniable shift of ad dollars away from traditional sources and toward digital avenues. This includes online, mobile, and streaming platforms. According to a presentation from PubMatic, industrywide digital ad sales growth is expected to average about 10% annually through 2025. However, PubMatic has consistently doubled up (or more than doubled up) the industry's average growth rate.
The key catalyst for PubMatic is that a growing chunk of its revenue derives from connected TV (CTV)/over-the-top (OTT) programmatic ad placement. With more households than ever shunning traditional cable and satellite, streaming platforms are becoming a haven for advertisers. Revenue from CTV/OTT more than doubled on a sequential quarterly basis in the June-ended quarter (Q2 2021) from first-quarter 2021.
We're witnessing the tip of the iceberg for digital advertising, and PubMatic is at the center of this growth trend. With the company already profitable on a recurring basis and handily outpacing the industry's average growth rate, it looks to be a surefire growth stock to buy now.
Planet 13 Holdings
Another high-growth industry full of bargains at the moment is U.S. cannabis. Though there are a number of U.S. multistate operators (MSOs) with the potential to make investors rich in November and beyond, specialty MSO Planet 13 Holdings (PLNH.F -0.45%) stands out for all the right reasons.
Marijuana stocks have mostly been a buzzkill since February, which is when it became clear that the U.S. federal government wouldn't be legalizing cannabis or reforming cannabis law anytime soon. While it would be a relief for pot stocks if federal reforms were put into place, the reality is that federal legalization isn't necessary for companies like Planet 13 to be successful. Thus far, 36 states have legalized pot in some capacity, and the federal government is maintaining a hands-off approach to regulation.
What makes Planet 13 such an intriguing cannabis company is its approach to expansion. While most MSOs have been planting their proverbial flags in as many legalized markets as possible, Planet 13 has just two operating dispensaries. But these aren't your run-of-the-mill pot shops. The Las Vegas SuperStore spans 112,000 square feet (that's bigger than the average Walmart) and contains an events center, café, and consumer-facing processing center. Meanwhile, the Orange County SuperStore, which is a 15-minute drive from Disneyland, spans 55,000 square feet and includes 16,500 square feet of selling space.
The point is that Planet 13's stores are all about giving people an immersive experience. Its stores offer an unrivaled selection of dried cannabis flower and derivative products, and they've incorporated technology in ways that few other pot shops have employed (e.g., self-checkout kiosks).
Additionally, the coronavirus pandemic has proven to be a positive for Planet 13. Instead of being reliant on tourists to visit its Las Vegas SuperStore, the company was forced to reach out to local residents. With a steady stream of native Nevadans now shopping at its store or online, Planet 13 has been able to gobble up in the neighborhood of 9% of Nevada's total weed revenue.
Looking ahead, Planet 13 has plans to open up new stores in Chicago, Miami, and Orlando. With the company on the doorstep of recurring profitability, now is the time for growth investors to strike.
To say that Novavax has had a rough stretch over the past couple of months might be an understatement. The company's experimental coronavirus vaccine, NVX-CoV2373, has had its new drug application filing delayed in a number of developed markets, and its production capacity has taken a direct hit. Recently, the U.S. Food and Drug Administration found unacceptably low purity levels in Novavax's coronavirus vaccine, as reported by Politico.
While these are clearly not positives for Novavax, they're also far from dooming the company's long-term prospects.
For instance, the company's COVID-19 vaccine demonstrated strong efficacy in two late-stage studies. The March-released U.K. trial showed an 89.7% vaccine efficacy (VE) for NVX-CoV2373 against the original strain of the virus and the U.K. variant. Meanwhile, data from the U.S./Mexico phase 3 trial released in June showed a similar 90.4% VE. Although VE isn't everything when it comes to a COVID-19 vaccine, it should be enough to easily shuffle past AstraZeneca and Johnson & Johnson on the vaccine front.
Novavax has deals in place, as well. The company looks set to be a major player in emerging markets, and it could still prove useful for initial inoculations and future booster shots in developed countries.
What Wall Street and investors might also be overlooking is Novavax's ability to develop combination vaccines. It has the potential to beat other major drugmakers to market with a combination COVID-19/influenza vaccine, which would really allow it to stand out.
Investors too focused on the near term are probably going to be kicking themselves for not buying into this clear-cut long-term growth story.