Despite the infamous market crashes in October of 1907, 1929, and 1987, October is actually one of the better months for stocks from a historical perspective. In fact, stocks tend to perk up at the start of the fourth quarter, making it one of the better-performing periods for U.S. equities over the last 100 years.
Which growth stocks stand out as top buys heading into the final quarter of 2023? My three top picks are CRISPR Therapeutics (CRSP 0.34%), DraftKings (DKNG 4.96%), and Roivant Sciences (ROIV 1.38%). Here's why these three incredible growth stocks are no-brainer buys in October and beyond.
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CRISPR Therapeutics: A new era of human medicine
CRISPR Therapeutics and its partner Vertex Pharmaceuticals are poised to make history in the fourth quarter of 2023. The Food and Drug Administration is considering their CRISPR/Cas9 gene-edited sickle cell disease candidate, exa-cel, and the pair should learn their regulatory fate in December.
And then in March of 2024, the FDA is expected to hand down its decision on the therapy's second indication, a rare blood disorder known as transfusion-dependent beta-thalassemia. If approved in either setting, exa-cel would be the first CRISPR/Cas9-based therapy to earn a green light from the FDA for a major indication.
While that historical milestone will definitely be noteworthy, it's far from the only reason to consider buying and holding CRISPR Therapeutics' stock for the long haul. This leading gene-editing company sports a broad pipeline of candidates that could bend the curve on several hard-to-treat ailments such as diabetes, a variety of blood cancers, and scores of rare diseases.
I don't say this lightly, but CRISPR Therapeutics could be one of those exceptionally rare mid-cap drugmakers that gradually morphs into a mega-cap behemoth. This potentially explosive growth trend won't happen overnight, and there will undoubtedly be hiccups along the way. But CRISPR Therapeutics' high-powered platform could represent the dawn of a new era of human medicine -- a fact that the broader market probably doesn't fully appreciate right now.
DraftKings: A powerful growth trend
DraftKings stock has been red-hot in 2023. Even though the company is still losing money, investors have bid up shares of the online gaming and sports-betting specialist by an eye-popping 154% year to date. The secret ingredient in DraftKings' apparently irresistible gumbo is its ability to continually grow revenue, even in an environment characterized by sky-high interest rates and sticky inflation. In the second quarter of 2023, for example, the company posted a whopping 88% jump in revenue relative to the same period a year ago.
Of course, past performance is never a good reason to buy a company's stock. DraftKings stock is still a no-brainer buy because it's only scratching the surface of its potential. The lowdown is that online sports betting is one of the fastest-growing industries in the world. This tailwind, in fact, could very easily lead to DraftKings more than doubling its annual revenue before the end of the decade.
This is a booming industry that growth investors probably won't want to miss out on. And DraftKings, with its top-shelf platform and proven ability to gain market share, should be able to capitalize on this favorable trend to deliver stellar returns for shareholders over the next five to 10 years.
Roivant Sciences: An immunology powerhouse
Roivant Sciences is a unicorn of sorts. The company's business strategy centers around building specialized units called "vants" that operate essentially as independent businesses designed to accelerate the development of major new drugs. This unique business plan has been a slam dunk with investors recently: Roivant Sciences stock has rocketed higher by an astounding 276% over the prior 12 months. The best part is that this scorching growth trend probably won't cool off anytime soon.
The key is that Roivant Sciences could benefit from two blockbuster immunology drugs. Thanks to an asset divestiture from Pfizer late last year, Roivant Sciences is now home to a groundbreaking dual inhibitor of inflammation and fibrosis known as RVT-3101. The drug has reportedly already drawn interest from a major pharma company as a possible acquisition target, and its emerging clinical profile paints a picture of a new medicine that could be important in the field of inflammatory bowel disease -- an indication that's already worth over $15 billion a year in sales.
Next up, Roivant Sciences stock has also been benefiting from the strong clinical profile of Immunovant's IMVT-1402, an early-stage inhibitor for the neonatal fragment crystallizable receptor (FcRn). Immunovant, while a public entity in its own right, is a member of Roivant Sciences' family of companies. While it's still early days for IMVT-1402, the drug could prove to be a major step forward in treating a range of autoimmune conditions that currently comprise a market worth $40 billion per year.
Note that Roivant Sciences' current market cap is just shy of $10 billion. That's not exactly a premium valuation for a company with two immunology drugs under its roof that are capable of generating sales in excess of $2 billion per year. The biopharma still has plenty of work to do in the clinic, so several risk factors remain in play. But Roivant Sciences does offer a rather compelling value proposition for investors with a long-term outlook.
