Long-term investors looking to overcome the effects of inflation can find some satisfaction from quality growth stocks, especially from companies generating triple-digit growth in revenue and share-price appreciation.
Shares of Inspire Medical Systems (INSP 3.87%), Axsome Therapeutics (AXSM 2.79%), and Abermarle (ALB 1.71%) can all be purchased for under $300. All three companies have had triple-digit percentage revenue and share-price growth over the past five years. Current market tailwinds should help each continue to generate outsized revenue growth. Here's how.
Inspire Medical Systems helps you breathe easily
Inspire provides an alternative to continuous positive airway pressure (CPAP) machines for people with sleep disorders. The company, which spun off from Medtronic in 2007, makes an implantable neurostimulator device that is controlled by a small remote. The device monitors a patient's breathing and, when needed, delivers a mild stimulation to the hypoglossal nerve to allow a patient to keep his or her airway open while sleeping.
Some patients with sleep apnea find that CPAP machines don't work well for them. For them, Inspire's product is useful. Over the past five years, the company's revenue grew by 987%, while Inspire's share price is up more than 880%. Over the past year, the stock is up more than 19%.
On Jan. 9, the company released preliminary fourth-quarter and full-year results. Management forecast fourth-quarter revenue between $137.5 million and $137.9 million, up 76%, year over year, and full-year revenue between $407.5 million and $407.9 million, up 75% over 2021. The company opened 61 new centers where it implants Inspire's therapy, giving the company a total of 905 centers.
In the third quarter, Inspire had a gross margin of 81.9%, but it is not yet profitable. It has increased its direct-to-consumer advertising and reported a net loss of $16.8 million in the quarter, compared to $10.3 million in the third quarter of 2021. As the company grows and the costs of implanting its device come down, the company has a chance to be a disruptive force in the sleep disorder industry.
With the rise in obesity, the number of people with sleep disorders is also climbing. One report, by brandessence.com, put the compound annual growth rate (CAGR) for sleep apnea therapy at 6.8% over the next five years, growing to a $10.4 billion market by 2027.
Axsome Therapeutics is just getting started
Axsome Therapeutics is a pharmaceutical company that focuses on therapies to treat central nervous system disorders. The company's shares are up more than 182% over the past year.
Axsome is just beginning its revenue cycle after launching Auvelity to treat major depressive disorder (MDD) in adults and Sunosi as a therapy to treat excessive daytime sleepiness. Sunosi, which the company purchased from Jazz Pharmaceuticals in May of last year for $53 million plus royalties, was responsible for all of the company's $16.8 million in revenue in the third quarter, as Auvelity wasn't launched until Oct. 20.
Axsome could have plenty of additional products soon, as it has several pipeline candidates in Phase 3 trials: AXS-05 for Alzheimer's disease agitation, AXS-14 to treat fibromyalgia, AXS-12 to treat narcolepsy, and ADHD drug Solriamfetol. The company is also awaiting word from the FDA on approval for AXS-07 to treat migraines. It received a complete response letter from the FDA last may regarding AXS-07, and Axsome said it expects word on the resubmission of its New Drug Application in the third quarter of this year.
Albemarle is set for electric growth
Mining company Albemarle is the world's largest producer of lithium and the second-largest producer of bromine. The company's quarterly revenue has risen 183% over the past three years, and its share price has gone up more than 226% over that period, including a 22% rise over the past year.
The demand for lithium has nowhere to go but up, as it is the key ingredient for lithium-ion batteries, which are used in electric vehicles and other electronic equipment. A study by Fastmarkets said that 345,000 metric tons of lithium were produced in 2020, and to meet expected demand production will need to quadruple through 2030 to 2 million metric tons.
Through nine months, Albemarle reported revenue of $4.7 billion, up 93%, year over year, with EPS of $13.30, compared to EPS of $1.10 in the same period last year.
Albemarle has said it expects 2023 revenue to climb between 50% and 70% over 2022, with sales of between $11.3 billion and $12.9 billion. It also forecast yearly EPS in 2023 to be between $26 and $33, compared to anticipated yearly EPS in 2022 of between $22.50 and $23. It also said it anticipates revenue to climb over the next five years at a CAGR of between 19% to 21%.
The company has also raised its dividend for 28 consecutive years. Last year it increased its dividend by 1% to $0.40 a share, delivering a yield of around 0.06%. The yield is low mostly because of the elevated stock price appreciation.
