Over the past few years, new investors have learned the hard way that investing in growth stocks can be highly unpredictable. You may remember the Nasdaq Composite, which contains heaps of growth stocks, rose 21% in 2021, only to collapse 33% in 2022.
Giant market swings like the one recently experienced may lead you to believe that growth stock investing is an endeavor only suited to Wall Street professionals, but this is not the case. Now that practically every discount brokerage lets customers buy stocks with hardly any fees or commissions, anyone can take advantage of a risk mitigation technique called dollar-cost averaging.
Making smaller, more frequent purchases of your favorite growth stocks ensures you never put too many eggs in one basket -- just before that basket falls apart. These two stocks look like smart buys right now. Best of all, you can scoop up a share of both for less than $150 total, assuming all your bills are paid and your emergency fund is already topped off.
1. Axsome Therapeutics
Axsome Therapeutics (AXSM 2.79%) is a small, commercial-stage biopharmaceutical company marketing and developing treatments for significant central nervous system disorders like depression and ADHD. Its lead drug, Auvelity, launched last October as a new treatment option for millions of Americans with major depressive disorder.
In its first full quarter as an FDA-approved drug, Auvelity sales reached $15.7 million. This is an impressive start for an independent drug launch and suggests it could go to reach some lofty peak sales expectations.
An estimated 21 million American adults had at least one episode of major depressive disorder in 2020. It's one of the most commonly diagnosed disabilities, and most patients don't respond strongly enough to their first line of treatment. With these factors in mind, analysts expect peak Auvelity sales to top $1 billion annually.
Axsome also markets Sunosi, a nonstimulant treatment to improve wakefulness for sleepy adults who also have narcolepsy or sleep apnea. An upcoming trial testing Sunosi's ability to help adults with ADHD could give it much longer legs.
Despite having two marketed therapies with over $1 billion in peak sales potential, Axsome's market cap is still just $3.4 billion at recent prices. Investors who buy at this reasonable valuation can come out way ahead if either Auvelity or Sunosi meets expectations.
2. InMode
InMode (INMD 1.34%) is a medical technology company that specializes in aesthetic treatments based on proprietary technology. The company sells lots of workstations that can tighten aging skin and smooth out wrinkles, but its BodyTite device has been especially popular in recent quarters.
With one narrow probe inserted under the skin, BodyTite devices melt fat cells before they're vacuumed away in a procedure that resembles liposuction. The minimally invasive procedure got a lot of extra attention during the lockdown phase of the pandemic, but growth remains strong. Despite difficult comparisons due to surging demand in the previous-year period, first-quarter sales rose 23.5% year over year.
InMode also sells consumable accessories that need to be replaced between procedures. Revenue from consumables and services rose 43% year over year to $20 million, indicating that already installed workstations are getting a lot of use.
With annualized sales of around $424 million, InMode still has a lot of room to grow. The global market for noninvasive cosmetic procedures reached $61 billion last year, and it's expected to climb by 15.4% annually through 2030, according to Grand View Research.
InMode is a magnificent growth business to invest in because it's already profitable, and the rest of the stock market hasn't noticed how rapidly it's growing. Right now, you can scoop up shares of its stock for just 13.4 times management's earnings estimate for 2023. If InMode continues growing at even half its present pace, investors who buy at recent prices could realize market-beating gains over the long run.
