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2 Growth Stocks Analysts Think Can Double Within 2 Years

By David Jagielski – Dec 15, 2021 at 7:32AM

Key Points

  • Exelixis and fuboTV are growth stocks with loads of potential.
  • Both businesses have been growing at rates of more than 35% this year.
  • Exelixis is already profitable, while fuboTV still has a long way to go.

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But both have been crashing so far in 2021.

One way to gauge how much potential a stock has is by looking at the price targets analysts set for it. Normally they're for a period of two years or less, but they can change depending on a company's results. And there are two stocks that, if they hit their price targets, could double within just two years. 

Exelixis (EXEL 0.82%) and fuboTV (FUBO 7.69%) are two exciting growth stocks that have been generating impressive sales numbers -- and their top lines could still go higher. At the high end of analyst price targets, these stocks could easily double from where they are today. But is the risk worth the reward, and are both stocks worth taking a chance on?

A doctor looking at a tablet with another person in a business suit.

Image source: Getty Images

1. Exelixis

Multiple analysts see shares of Exelixis rising to at least $34, with investment bank H.C. Wainwright projecting a price as high as $52 (and that's after lowering their price target in November). Today, the stock trades at around $17 a share, as it has fallen by more than 15% year to date (the S&P 500 has risen by over 23%).

There's been a bit of bearishness surrounding the healthcare company after a recent trial failed to meet all of its endpoints. In June, the company released interim results from a phase 3 trial involving its key cancer drug Cabometyx in treating hepatocellular carcinoma (a type of liver cancer). And while it met the endpoint of demonstrating improvement in progression-free survival, it did not show statistical significance in its ability to increase the chance of survival overall.

However, the company has many trials ongoing to treat various cancers. This isn't an all-or-nothing type of investment in which investors are putting all their hopes on one trial or product. And unlike many risky biotech stocks out there, Exelixis is already generating strong growth -- and profits. Over the nine-month period ending Sept. 30, the company's sales of $983.8 million rose 37% year over year. Exelixis reported a profit of $135.9 million on that, for a net margin of nearly 14%.

With Exelixis, investors are getting a formidable healthcare stock that isn't a terribly risky buy. It's trading at a price-to-earnings (P/E) multiple of 33, which is higher than the average holding in the Health Care Select Sector SPDR Fund that trades at 27 times its earnings. But given Exelixis' high growth rate (and especially its strong bottom line), the stock is arguably worth a bit of a premium. This is a relatively safe growth stock to hold today, and that's what could make Exelixis a hot buy. Plus, with the company generating free cash flow of $275 million over the trailing 12 months, it could soon be in a position to bolster its pipeline and product mix in other ways (e.g. acquisitions).

The company may be coming off some uninspiring trial results, but there's still plenty of promise for this healthcare stock over the long term, making it an underrated buy right now.

2. fuboTV

Streaming company fuboTV is admittedly a riskier buy than Exelixis. Not only is it unprofitable but it has also burned through $220 million just from its day-to-day operations over the past 12 months.

The once-popular meme stock has fallen on hard times, crashing 40% so far in 2021. The threat of rising interest rates has undoubtedly weighed on investors, especially given fuboTV's weak bottom line and persistent need for cash. For the period ending Sept. 30, sales of $156.7 million were more than double the $61.2 million it reported in the same quarter last year. And although the company's net loss of $105.9 million shrank from the $274.1 million loss it reported in the prior-year period, the numbers were still firmly in the red.

A big cause for concern for investors is that the growth-oriented company will require lots of dilution. On Nov. 9, it announced the acquisition of French streaming company Molotov SAS for approximately $190 million, 85% of which it says equity will fund. Last month, it also announced the launch of its mobile sportsbook. And while it will be sure to generate more revenue for the business, it could also lead to a greater need for cash.

Currently, fuboTV's stock trades at around $17 per share. But multiple analysts have set price targets of $40 or more in recent months. If there's a resurgence in growth of meme stocks, it wouldn't be surprising for fuboTV's stock to take off. However, this is a bit of a risky buy and one investors should remain careful with. While there is the potential for it to double in value, it also wouldn't be surprising for analysts to downgrade the stock in the near future if fuboTV's cash burn doesn't significantly improve.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns and recommends fuboTV, Inc. The Motley Fool recommends Exelixis. The Motley Fool has a disclosure policy.

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