If you're looking for stocks that can produce market-beating gains, there's one tried-and-true method that works out more often than you might think: buying exceptional stocks that are already on their way up.
This has been a tremendous year for growth investors, but many of the stocks that rocketed up to the stratosphere this year are destined to come crashing back to earth.
Image source: Getty Images.
Investment bank analysts are eager to help investors sort out which of the market's high flyers are likely to climb even higher. The price targets they've pinned on these two growth stocks are way above their recent prices. Here's a closer look to see if investors should follow their advice.
fuboTV
Shares of fuboTV (FUBO 1.46%), a streaming service for sports fans, have climbed about 103% from the 52-week low they hit this April.
Investment bank analysts on Wall Street who follow the stock think it has a lot more upside. The average price target for fuboTV suggests a 55% gain is up ahead.
Millions of cord-cutters refusing to pay for content they don't watch make fuboTV's streaming business look like a buy. In March, a Sinclair Broadcasting subsidiary, Diamond Sports, filed for bankruptcy because cable providers lost so many subscribers in recent years that many can't afford to license rights to air local sporting events.
In addition to a partnership with MLB.TV to stream out-of-market games, fubo is starting to air local games in some markets. The Seattle Mariners recently became the fourth Major League team to enter a marketing partnership with fubo and begin streaming games to local viewers on the platform. Now that the first few dominos have fallen, it will probably take just a few more years before all of fubo's subscribers can watch all their local sports on fubo.
While it looks like fuboTV is in the right place at the right time, investors should know it lost $504 million over the past 12 months. If the company doesn't break even soon, investors who buy now could suffer heavy losses.
FUBO Revenue (TTM) data by YCharts.
FuboTV's stock is risky, but its business is at a tipping point. Trailing-12-month (TTM) revenue that surged while operating expenses flattened out suggests sustainable profitability is in this company's near-term future.
As more non-sports watchers wave goodbye to increasingly expensive cable subscriptions, the rapidly rising revenue that fuboTV reported this year will likely continue. Putting some shares of this stock in a well-diversified portfolio looks like a smart move.
Nano-X Imaging
Nano-X Imaging (NNOX 0.45%), Nanox as it calls itself these days, is a medical-imaging specialist that's trying to revolutionize something fundamental about the way medicine is practiced all over the world. An important approval recently helped the stock more than triple earlier this spring, and it's still up around 167% over the past three months.
Analysts on Wall Street think its proprietary technology could be a gold mine. Despite its recent rise, the average price target on the stock implies another 120% upside.
In April, Nanox received clearance from the U.S. Food and Drug Administration (FDA) to market its Nanox.ARC system. This is a multiple-source X-ray device that produces 3D images. The images are similar to those produced by computer-aided tomography or CAT scanners that rotate a single source of X-rays around the patient.
Healthcare providers don't request nearly as many CAT scans as they would like because those machines are really expensive to maintain. Wall Street is bullish for Nanox because its proprietary X-ray sources can produce quality images for pennies on the dollar compared to a traditional CAT scanner. At least that's what the company has promised ahead of its launch.
Unfortunately, Nanox's performance since earning FDA clearance for the single-source version of its X-rays more than two years ago has been extremely disappointing. It lost $103 million over the past 12 months while recording just $9.2 million in revenue. It's probably best to wait for signs this company can successfully launch Nanox.ARC before risking any money on its stock.
