Now is a great time to load up on growth stocks because they may be among the first to benefit in the next bull market. We've already seen some of the biggest ones -- such as Amazon and Apple -- take off as indexes rallied in recent weeks. Buying these longtime winners could lift your portfolio, and if you want an additional boost, you could also add a few younger growth players to the mix. They're earlier in their stories, so if all goes well, they could truly pop -- and deliver great returns.
You'll find a lot of these candidates in the area of biotech, and two possibilities that come to mind right now are gene-editing company CRISPR Therapeutics (CRSP 0.34%) and genetic-testing specialist Invitae (NVTA -94.44%). The former is heading for a big milestone, and the latter could make a compelling recovery story. Which is the better growth stock to buy now? Let's find out.
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The case for CRISPR Therapeutics
The U.S. Food and Drug Administration (FDA) is set to issue a regulatory decision by the end of this week on what may become CRISPR Therapeutics' first product. The FDA will decide on exa-cel for sickle cell disease first, then in March, the agency will rule on the potential treatment for beta thalassemia.
The potential product represents blockbuster revenue for CRISPR Therapeutics and partner Vertex Pharmaceuticals for two reasons: First, the blood disorders it treats today have limited treatment options; and second, exa-cel is designed as a functional cure -- an element that should attract doctors and patients.
The companies already scored an initial win when the U.K. recently authorized exa-cel for both blood disorders. This marks the world's first authorization of a CRISPR gene editing-based product.
Regulatory acceptances of exa-cel are important because they'll result in revenue for CRISPR Therapeutics, but they're also key because they can be seen as a vote of confidence in the technology -- a technology the company uses throughout its pipeline.
So, CRISPR Therapeutics may be very close to generating product revenue; it's already bringing in revenue by licensing out its technology, and its financial situation looks good with $1.7 billion in cash as of the end of the most recent quarter.
The case for Invitae
Invitae has grown revenue over time, but it hasn't been able to turn that growth into profitability. Instead, it's continued to burn through cash. At the same time, its stock has declined, even slipping below a dollar. The New York Stock Exchange issued a non-compliance notice earlier this fall. The company has some time to try to bring the stock back into compliance before facing a delisting.
But here's the good news: Invitae last year set to work on a recovery plan and has made progress on the path to reduce cash burn and accelerate along the path to profitability. To do this, Invitae decided to focus on its core-testing unit, exiting certain businesses and regions.
In the most recent quarter, if we exclude the exited businesses, revenue rose 4%. The company saw significant growth in its U.S. hereditary-cancer business, with testing volume climbing in the double digits.
Invitae is also progressing in its ability to generate profit from testing. Non-GAAP gross margin widened to more than 52% from about 45% for the ninth straight quarter of improvement. The company reaffirmed its annual forecasts for revenue, margin, and cash burn, showing its recovery plan is on track.
Should you favor gene editing or genetic testing?
Both of these fields are exciting, and CRISPR Therapeutics and Invitae are key players that could win over time. The decision about which stock to buy depends on your comfort with risk. CRISPR Therapeutics offers investors more visibility and fewer financial worries right now. Aat the same time, a huge revenue source may be right around the corner. So, for most investors, CRISPR Therapeutics is the better growth stock to buy now.
That said, if you're an aggressive investor and can handle the risks associated with Invitae -- and you like recovery stories -- you may want to pick up a few shares. Invitae is high risk, so it isn't right for everyone, but if the company's recovery plan succeeds, the stock could take off.
