From tech to consumer goods to healthcare, few growth stocks were spared the wrath of the broader market in the past year. Investors who have stayed in the market throughout these ups and downs know this better than anyone. Even now, with fears of a recession still hanging like a cloud over the financial markets and economic conditions still mixed, outstanding stocks with businesses primed for continued growth are still going strong and benefiting from a stream of strong market days.
The market may be showing signs of a turnaround, but regardless of what happens in the next few weeks or months, here are two fantastic stocks with monster growth potential that risk-resilient investors can buy without hesitation in 2023.
1. Pinterest
Pinterest (PINS 1.02%) may be seeing a light at the end of the tunnel after a tough year (that followed a great pandemic-affected year) and a still-challenging macro landscape. The final quarter of 2022 saw the company return to GAAP profitability, bolstered by steady growth in revenue, monthly active users, and average revenue per user over the 12-month period.
The company reported net income of $17.5 million in the fourth quarter of 2022. Meanwhile, full-year revenue came to $2.8 billion, a 9% hike from the prior-year period. Monthly active users and average revenue per user grew by 4% and 10%, respectively, in the 12-month period. It's worth noting that management isn't just focusing on growing its monthly active user base, although this is of course a key element of its long-term strategy. Importantly, the company is training its focus on continuing to monetize its active user base, and the numbers bear out that this approach is working.
Commenting on the company's results in the final quarter of 2022, CEO Bill Ready noted, "Our global mobile app users, which account for over 80% of our impressions and revenue, grew 14%. And our U.S. and Canada mobile app users grew 5%, accelerating from last quarter." He continued "More importantly, sessions continued to grow significantly faster than users, demonstrating deepening engagement per user as we focus on driving greater per-user monetization."
Pinterest's platform is an ideal playground for merchants to advertise to consumers across virtually every industry, with its selection of images and videos that range from simple pins to actual ads that users can click on and buy from. Video content is also an important part of Pinterest's long-term growth strategy. Bill Ready said in the company's 2022 earnings call that not only was its supply of video content up 30% on a sequential basis in the fourth quarter of the year, but that over 30% of the company's revenue was derived from ads in the form of short-form videos.
The current macro landscape is weighing heavily on companies across a range of sectors, so it's not surprising that as ad spending remains in flux this can continue to impact the pace of growth that Pinterest records in the coming quarters. Still, the company is making progress on a multitude of key fronts, and its growing monetization and retention of its user base indicate that its advertising initiatives are working well. In a less constrained spending environment, Pinterest looks well-positioned to benefit from a boost in ad dollars, and investors with the patience and fortitude to get through these choppy waters could benefit too.
2. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX 1.43%) might not be the household name that many healthcare stocks are, but this company continues to prove its ongoing and long-term potential with quarter after quarter of robust financial reports. Full-year 2022 was another in a series of years of consistent, strong growth for the company.
Even as Vertex Pharmaceuticals still has just four approved products in its portfolio to date, it continues to rake in revenue and profits while building out its pipeline's roadway to success in key areas of the rare disease drug market. All of the company's approved drugs treat cystic fibrosis. However, it's important to note that these drugs are the only CFTR modulators that have made it to market. CFTR modulators target the underlying cause of cystic fibrosis, and rather than being a one-time treatment, patients must take these drugs every single day.
The fact that CFTR modulators are not only improving quality of life but longevity outcomes for cystic fibrosis patients means that there is a durable, and even growing, need for Vertex Pharmaceuticals' products. Even with its wide footprint in the cystic fibrosis therapeutic space, management has said that it believes there are still as many as 20,000 cystic fibrosis patients worldwide that could take its products but are not yet doing so. The company's first-mover advantage means that it is well-positioned to benefit from and delve into the considerable untapped market opportunity of this space.
Meanwhile, Vertex Pharmaceuticals has a pipeline of candidates that could address a wide range of rare diseases. These include exa-cel, a potential one-time functional cure for sickle cell disease and transfusion-dependent beta thalassemia (this could be approved as soon as 2023), VX-548, a non-opioid candidate for acute pain, and VX-147, targeting the rare genetic disorder APOL1-mediated kidney disease.
Vertex Pharmaceuticals reported total revenue of $9 billion in 2022, with net income of $3.3 billion. Compared to full-year 2021, its top and bottom lines rose by respective amounts of 18% and 42% in 2022. The stock has risen about 30% over the trailing 12 months, compared to the S&P 500's negative return of about 6% in that same period. This healthcare stock's growth story is far from over, and for investors seeking a stock they can buy and hold for the long haul, Vertex Pharmaceuticals is definitely worthy of a second look.
