2021 is nearly over, and that means it's time to plan for 2022. With stocks, crypto, real estate, and several other asset classes hovering around all-time highs, there's certainly a lot to be grateful for this year. However, those gains have come and gone. The challenge now is finding the best places to invest for 2022 and beyond.
Corteva (CTVA -0.74%), Amyris (AMRS -33.33%), and ChargePoint Holdings (CHPT -3.73%) are three growth stocks that could bring you closer to securing financial freedom. Here's what makes each a great buy now.
Image source: Getty Images.
Investor confidence is growing in the agriscience company
Lee Samaha (Corteva): After a few years of questionable performance, it looks like Corteva is starting to realize the potential in its business. The company was created out of the DowDuPont merger and subsequent breakup. As such, it's the leading U.S. player in seed and crop protection, competing with international companies such as Monsanto owner Bayer, BASF, and Syngenta.
The potential in the business lies in the expectation that Corteva can improve productivity and catch up to the kind of margins enjoyed by its peers. Among the ways it can enhance margin is by selling more of its products under its patents. This means Corteva will lower the share of revenue it pays in royalty costs to other companies, and Corteva's profit margin will go up.
The good news is the company is making progress on all fronts. For example, management recently reaffirmed its target of $2.8 billion to $3.1 billion in adjusted earnings before interest, taxation, depreciation, and amortization (EBITDA) in 2022, rising from $2.5 billion to $2.6 billion in 2021. Moreover, management noted that the adoption rate of its Enlist (seed and crop protection) system was better than it had expected in 2021. In addition, there's a strong pipeline of other products under Corteva's patents coming through in the next few years.
As such, a combination of mid-single-digit revenue growth and margin expansion promises to deliver double-digit earnings growth over the medium term for Corteva.
Supply chain woes knocked this stock down, but it's poised to get back up again
Scott Levine (Amyris): Shares of synthetic biology specialist Amyris have both thrilled and devastated investors in 2021. While the stock skyrocketed more than 209% through the first three months of the year, it came back to earth in the second half -- particularly last month, when it fell 54%. Although it's the bears who are most interested in the stock at the moment, the company has several catalysts on the horizon in 2022 that could propel it considerably higher.
One of the primary reasons for the stock's sell-off last month was concern related to supply chain headwinds facing Amyris and fear that they'd continue to plague the company in the coming months. But Amyris is working to shore up its supply chain, developing two facilities in Brazil and Nevada, both of which are expected to commence operations in the first half of 2022. According to John Melo, the company's CEO, the importance of the two facilities will have a material impact on its finances. On the company's third-quarter conference call, Melo said, "These facilities will not only provide us much more resilience on the supply chain, they will also reduce our operating costs significantly and improve our gross margin by about 1,000 basis points."
The company's growth, however, transcends an improvement in its gross margin as management forecasts revenue will rise to over $500 million in 2022 and $1 billion in 2023. For some perspective, Amyris reported $173 million on the top line in 2020, and it has booked sales of $357 million over the past 12 months. Looking toward the bottom of the income statement, investors can expect the company to report positive earnings before interest, taxes, depreciation, and amortization (EBITDA) -- a feat it last achieved in 2014.
As companies look to source their products with sustainable ingredients, Amyris and its line of synbio-based products will likely become increasingly appealing. For forward-looking investors who have the patience to let this growth story play out, the stock's recent sell-off offers a great opportunity to pick up shares on the cheap, leaving more money available to splurge on presents for friends and loved ones.
This EV charging stock is off to the races
Daniel Foelber (ChargePoint Holdings): America's largest electric vehicle (EV) charging infrastructure company, ChargePoint, reported third-quarter fiscal year 2022 earnings on Tuesday that exceeded expectations. After generating $65 million in revenue, ChargePoint now expects to earn between $73 million and $78 million in fourth-quarter revenue, bringing its full-year sales to between $235 million and $240 million. If it hits its target, ChargePoint would have grown its top line by 63% compared to last year. For context, consider that ChargePoint earned $146 million in revenue in fiscal year 2021 and $144.5 million in fiscal year 2020 revenue.
The growth rate is impressive, but even if ChargePoint hits its revenue target it would still have a price-to-sales ratio of 28.7, which is more expensive than some of the market's hottest growth stocks. However, COVID-19 stunted its fiscal year 2021 growth and the company could now be off to the races now that EV investment is increasing. ChargePoint expects its rise to be directly proportional to the growth rate of U.S. passenger EV sales. Between 2020 to 2026, ChargePoint expects U.S. passenger EV sales to rise at a compound annual growth rate (CAGR) of 41% as more affordable EVs come on stream and consumer demand for EVs increases.
Although still a long way from profitability, ChargePoint is an excellent catch-all way to expose your portfolio to the growth of EVs without having to risk picking a particular automaker to win out.
