The stock market is highly volatile now. Some excellent growth stocks got hammered amid the uncertainty. But history has shown that stock market declines create opportunities. Investors with a long investment horizon and the stomach to bear the risk might not regret investing in these three stocks.
Robotic-assisted surgery is the future of surgery, and Intuitive Surgical (ISRG +1.85%) is already dominating the space. Biotech company Exelixis (EXEL +1.60%) and internet retail company Etsy (ETSY +5.03%) also have remarkable growth prospects that could bring in some exciting long-term returns. Let's take a closer look.
Image source: Getty Images.
1. Intuitive Surgical
With the easing of pandemic-related rules, people are again opting for elective medical procedures. Though the rate of these procedures still doesn't match pre-pandemic levels, Intuitive continues to report stellar growth in revenues and profits.
Its state-of-the-art da Vinci systems are widely popular in the robotic surgery market. These systems allow surgeons a 3D high-definition view of the operating field and use tiny, machine-manipulated instruments for smooth precision. Recovery time is also shorter with minimally invasive surgeries.
In its recent Q1, total revenue came in at $1.5 billion, up from $1.29 billion in the prior-year period. A 19% surge in the number of procedures performed worldwide using the da Vinci systems fueled this revenue growth. Sales of disposable instruments and accessories used during these surgeries also add to Intuitive's top line, which jumped 15% to $810 million from the prior-year quarter.
NASDAQ: ISRG
Key Data Points
Robotic-assisted surgery is a landscape yet to be fully explored, which is why Intuitive has a lot of room to grow. Moreover, it provides training to surgeons to use its systems, which comes in at a price for hospitals. A cheaper replacement in the market won't convince hospitals to switch products easily. Thus, Intuitive's revenue is safe for years to come.
This healthcare stock has the potential to outperform the market in the longer run. Hovering near its 56-week low, Intuitive's stock is the best buy on the dip now.
2. Exelixis
This California biotech company's first-quarter results reveal its exciting growth potential. The oncology-focused drugmaker has some star products in its portfolio. Cabometyx (cabozantinib) is used to treat advanced renal cell carcinoma (RCC), among other cancers. It is also used in combination with Bristol-Myers Squibb's drug Opdivo (nivolumab) to treat patients with advanced RCC who haven't received prior treatment for the disease.
Cabometyx helped the company earn net revenue of $355 million; the drug alone brought in $303 million in Q1. Another formulation of cabozantinib, Cometriq, used for the treatment of thyroid cancer, also contributed around $7.5 million in the quarter. Exelixis reported an adjusted net profit of $68.5 million for the quarter. The company also earned royalty revenue of $27 million from a collaboration with its non-U.S. partners Ipsen Pharma and Takeda Pharmaceutical.
Image source: Getty Images.
What's intriguing about healthcare stocks is they are highly defensive. No matter the economic conditions, people will get sick and require treatment, thereby driving demand and revenues for healthcare companies.
Management believes many of its other drugs in the pipeline could contribute to total revenue over the year. For 2022, the company made no change to its previous revenue guidance range of $1.5 billion to $1.6 billion. And after the its strong Q1 results, analysts are hopeful about Exelixis' future, seeing a probable upside of 37% for the stock in the next 12 months.
NASDAQ: EXEL
Key Data Points
3. Etsy
Etsy is an internet retail company that brings together buyers and sellers globally, with operations in the U.S., U.K., Germany, Canada, Australia, France, and India.
Most of the growth stocks that got a boost amid the pandemic are facing some market skepticism, which is why Etsy's stock is way down from its 52-week high of $307. E-commerce platforms were high-flying amid the lockdown. But now with easing of most of the rules, investors wonder whether these businesses are sustainable. However, Etsy proved with its Q1 results that its business is profitable and growing.
For the period, gross merchandise sales (GMS) rose 3.5% to $3.3 billion, bringing in revenue of $579 million, a 5.2% year-over-year increase (YOY). Q1 turned to be profitable with $86 million in net income, but it also dipped 40% from the prior-year quarter. Management blames that on increased headcount.
NYSE: ETSY
Key Data Points
Headwinds like consumer spending and geopolitical events affected the results to an extent in Q1, according to management. But it still managed to acquire around seven million new buyers in the quarter. Etsy expects second-quarter GMS in the range of $2.9 billion to $3.2 billion. Revenue could be around $540 million to $590 million, with YOY growth in the range of 2% to 12%. Short-term uncertainties could take a toll on the Q2 results, but management is still optimistic for the long term.
Etsy ended the quarter with $1 billion in cash and cash equivalents, along with short- and long-term investments. Though it has ongoing potential, investors should still watch to see if it maintains its GMS and active buyer level. With a possible upside of 101% over the next 12 months, the stock is a good buy on the dip now.
