If you're shopping for a growth stock to power your portfolio down the road, it's important to choose players that -- even if they're not at the top today -- could become tomorrow's stars. They may be recovering right now or building a platform to bring in billions of dollars in revenue in the years to come. As an investor, you'll want to focus on the particular company's plans for the future and determine if that company has what it takes to reach its goals.
Two candidates with loads of potential are Moderna (MRNA 1.69%) and Teladoc Health (TDOC -2.40%). Their shares are suffering today, but I see this as a buying opportunity for two stocks that could be unstoppable in the coming years. Let's take a closer look at these two growth players to buy in 2023 and beyond.
1. Moderna
Moderna's earnings soared over the past two years thanks to its blockbuster COVID-19 vaccine. And in earlier pandemic days, the stock climbed, too, on optimism about the vaccine, the company's first product. But in recent times, investors have worried about Moderna's post-pandemic days, and as a result, the stock has slipped.
There's plenty of good news on the horizon though. Moderna has set out a plan that could result in $30 billion in sales down the road, which surpasses its peak of about $18 billion in coronavirus vaccine sales. How is Moderna aiming to deliver so much revenue? Through the launch of as many as 15 products in the coming five years.
It sounds like a tough goal, but Moderna could very well reach it. The company has several candidates in late-stage trials; clinical data have been strong; and Moderna has the financial resources to shepherd programs through development.
Moderna's next launch may be a respiratory syncytial virus (RSV) vaccine next year. And that would pave the way for the biotech's respiratory franchise, set to include the RSV product, the COVID-19 vaccine, and a flu vaccine. The company expects this platform alone to bring in as much as $15 billion in 2027.
Even if Moderna only launches a handful of products -- instead of 15 -- over the next few years, revenue still could be significant. And the fact that Moderna no longer will depend on just one product clearly reduces the risk of owning shares of this biotech player.
Today, Moderna stock trades for about 8 times forward-earnings estimates. Considering what earnings could look like over the long term, this is a steal.
2. Teladoc Health
Teladoc Health also has gone from pandemic highs to more recent lows. In the earlier days of the health crisis, people flocked to telemedicine, and revenue and visits soared in the triple digits. As people's routines returned to normal, Teladoc still posted double-digit revenue and visit growth, but investors focused on one problem: Teladoc's lack of profitability. And billion-dollar, non-cash goodwill-impairment charges due to an acquisition made things worse.
But early this year, Teladoc started taking steps to balance its focus on revenue growth with the idea of working toward profitability. The company eliminated some jobs and office space, and is investing in key areas that could drive growth and efficiency, such as artificial intelligence (AI). For example, an AI queuing system allows Teladoc to rapidly match patients with the right provider.
All of these efforts are bearing fruit. In the most recent quarter, consolidated revenue rose in the double digits and consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) beat Teladoc's expectations. The company raised the low end of its revenue and adjusted EBITDA guidance for the year.
It's important to remember that Teladoc is a leader in a booming industry. Telemedicine is expected to grow in the double digits this decade and into the next. And the latest Teladoc research, based on its interviews with 300 corporate decision makers, showed 77% of employers aim to increase their investment in telehealth within the coming three years.
Meanwhile, Teladoc trades for about 1.3 times sales, around its lowest ever. If Teladoc continues to progress along the path to profitability, the stock could take off from here -- and early investors may reap the rewards.
