Since the end of the Great Recession 13 years ago, growth stocks have dominated. With lending rates at or near historic lows, access to cheap capital has allowed fast-paced companies to hire, acquire, and put their capital to work in innovative projects.
But for some publicly traded companies, sales growth is just getting started. According to consensus revenue estimates from Wall Street, the following three companies should be among the fastest-growing stocks on the planet through 2026.
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Rivian: Implied five-year sales growth of 61,173%
Perhaps it's no surprise that one of the hottest initial public offerings of 2021, electric-vehicle (EV) manufacturer Rivian Automotive (RIVN 1.85%), is expected to be one of the stock market's fastest-growing stocks over the next five years. Based on Wall Street's consensus, sales are expected to climb from a reported $55 million in 2021 to an estimated $33.7 billion by 2026. That's 61,173% sales growth for those of you keeping score at home.
In addition to benefiting from the global push to reduce carbon emissions and shift consumer vehicles and enterprise fleets to clean-energy sources, Rivian offers two unique competitive advantages.
To start with, the company landed a mammoth order for 100,000 electric delivery vans (EDV) from e-commerce giant Amazon in 2019. Although Amazon is generating more-than-enough cash from its operations to entertain a number of new projects, a 100,000-EDV order isn't pocket change. This order made Rivian a force to be reckoned with in the EV space overnight.
The second advantage is the company's R1T electric pickup truck. While America's legacy automakers have unveiled electric versions of their top-selling trucks, Rivian is beating these popular models to the road. What's more, the R1T is far more luxurious than legacy automaker trucks, which places it in a class of its own.
The big question mark for Rivian is whether it'll be able to execute without too many hiccups. For example, management anticipates 25,000 EVs will be produced this year, which is about half of the 50,000 that could have been produced were it not for semiconductor chip and part shortages. It's critical that Rivian begin generating substantial amounts of revenue to reduce its monthly and annual cash burn -- and these supply-chain concerns aren't helping.
Rivian will also need to navigate a recent PR flub that saw it try to significantly raise prices on its quad-motor vehicles. Consumers who'd already reserved vehicles were none too happy about the price hikes (which ranged from $12,000 to $20,000, in some instances), ultimately causing the company to walk back its proposed price increases on existing reservations. With inflation soaring, the company will have to walk a fine line between generating extra revenue and keeping its current and future buyers happy.
Despite its competitive advantages, Rivian Automotive continues to be a risky investment.
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Geron: Implied five-year sales growth of 26,519%
Another company with sales figures that could drop jaws over the next five years is clinical-stage biotech stock Geron (GERN 1.08%). The company reported $1.39 million in full-year revenue in 2021, but Wall Street is calling for $370 million in sales by 2026. That's a forecast increase of more than 26,500%!
Geron's fate lies entirely with the success or failure of experimental telomerase inhibitor imetelstat, which is being examined as a treatment for lower-risk myelodysplastic syndromes (MDS) and relapsed/refractory myelofibrosis (MF).
To date, Geron has produced encouraging mid-stage clinical results with imetelstat for MDS and MF -- enough so that the company has moved onto conducting phase 3 studies in both indications. In the phase 2 IMbark study for MF, Geron noted symptom response and the potential for an improvement in overall survival. The current standard of care for MF patients simply treats the symptoms and not the underlying disease.
Meanwhile, the phase 2 IMerge study for low-risk MDS patients showed a median duration of transfusion independence of 21 months, which was a clinically meaningful improvement for patients. Long story short, imetelstat has shown flashes of efficacy in mid-stage studies.
But there are huge risks here, too. For instance, Johnson & Johnson ended its collaboration with Geron in September 2018. The duo had been working on the development of imetelstat, with Johnson & Johnson's deep pockets being relied on to help with funding phase 2 clinical trials. When J&J stepped aside, all future clinical funding fell to Geron. This has meant dilutive share offerings from Geron have become necessary to fund late-stage trials.
The other concern is that Geron has put all of its eggs in one basket. The company was founded in 1990 and has yet to bring a Food and Drug Administration (FDA)-approved drug to pharmacy shelves. The success rate for small-cap cancer drug developers isn't great, either.
With roughly another year to go before we'll get top-line data from the company's MDS study, Geron looks like a stock worth watching but not owning.
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Vaxart: Implied five-year sales growth of 100,236%
But the crème de la crème of sales growth, at least among these three companies, is small-cap biotech stock Vaxart (VXRT 0.91%). Last year, Vaxart reported $892,000 in full-year sales. But if Wall Street's consensus revenue forecast of $895 million in 2026 proves accurate, sales for the company will have soared more than 100,000% in a five-year stretch!
The driving force behind this near-parabolic estimated sales growth is the company's experimental oral COVID-19 treatment. Although traditional shot-in-the-arm vaccines have worked fine, a tablet would remove a number of distributional challenges currently slowing the global inoculation effort. Not having to keep vaccines stored at a specific temperature, as well as not needing trained staff to administer injections, could quickly lift the COVID-19 vaccination rate worldwide.
Additionally, Vaxart is working with unique drug-development technology that could allow it to tackle other airborne viruses with oral solutions (e.g., norovirus). This platform, known as Vector-Adjuvant-Antigen Standardized Technology, or VAAST, aims to provide systemic and mucosal immunity. A shot-in-the-arm vaccine only provides systemic immunity.
Whether "VAAST" can lead to a vast jump in revenue is another story.
Last year, Vaxart announced mixed results from an early-stage trial involving its COVID-19 oral tablet. While it produced an immune response, the observed level of neutralizing antibodies was notably lower than in patients who'd received a traditional vaccine.
Vaxart's solution has been to specifically target the S-protein, which is involved with entry of the virus into host cells and receptor viral attachment. In a preclinical trial involving monkeys, this S-only candidate elicited neutralizing antibodies in the nasal mucosa.
Keep in mind this is a preclinical study, which means Vaxart is quite a bit away from generating recurring revenue. A whole lot would have to go right for Vaxart to be producing nearly $900 million in sales in five years. I'm not yet convinced that'll happen.
