Growth stock investors have a lot to smile about these days. Optimism for stocks tied to innovative businesses is surging because the Federal Reserve is widely expected to cut interest rates this year.

Lower costs of capital are a powerful tailwind for growth stocks. Shrinking interest rates make the future cash flows their underlying businesses could produce seem a lot more valuable in the present.

Of course, not every growth stock is positioned to produce long-term gains for investors. However, the two I'm going to talk about here stand out in ways that excite the investment bank analysts who follow them closely. Consensus price targets for these stocks suggest they can double or even triple your money over the next 12 months.

A person holding a smartphone stands on a city street.

Image source: Getty Images.

Ginkgo Bioworks

Shortly after its market debut in 2021, Ginkgo Bioworks (DNA 1.25%) boasted a $24 billion market cap. Now that its market value has collapsed to just $2.7 billion, Wall Street analysts expect a rebound. The consensus price target on the stock suggests an eye-popping 140% return over the next 12 months.

Ginkgo Bioworks is the world's leading synthetic biology company. In a nutshell, it produces new strains of microorganisms with valuable properties not found naturally. For example, the U.S. Department of Energy recently hired Ginkgo to develop new pest-resistant strains of algae that could be used to produce biofuels.

Ginkgo's foundry business added 21 new cell programs in the third quarter of 2023. Unfortunately, cell engineering revenue that reached just $37 million in the quarter isn't nearly enough to make ends meet. The company lost a stunning $686 million during the first nine months of 2023.

Ginkgo can begin heaps of foundry programs because its clients have nearly nothing to lose. The company structures contracts that are heavily weighted toward downstream revenue in the form of milestone payments and royalties on related sales.

Starting new cell engineering programs is a lot easier than getting its clients to achieve milestones. Ginkgo has been in business for 15 years, but downstream revenue remains disappointing at just $4 million during the first nine months of 2023.

To Ginkgo's credit, it also has a diagnostics business that became a big provider of infectious disease monitoring in the early days of the COVID-19 pandemic. This doesn't make the stock very attractive, though. The first thing to know about the diagnostics industry is that it's hyper-competitive. Expecting a company initially focused on synthetic biology to become a reliably profitable provider of infectious disease testing seems overly hopeful.

If Ginkgo's operations were producing profits, or at least approaching profitability, buying this stock would make sense for most growth-focused investors. Until it stops bleeding money, though, it's only appropriate for folks at the extreme edge of the risk tolerance spectrum.

Intellia Therapeutics

Intellia Therapeutics (NTLA -6.87%) is a pre-commercial-stage developer of CRISPR-based gene therapies. Shares of its biggest peer, CRISPR Therapeutics, bounded higher in November after the FDA approved its first treatment, but Intellia's stock didn't follow suit despite recent progress with its pipeline.

Intellia stock is down about 39% over the past six months, Wall Street analysts think it can bounce back. The average price target on the stock implies a 202% gain in the year ahead.

Analysts are excited about Intellia's differentiated pipeline. CRISPR Therapeutics' first drug, Casgevy, is a gene therapy for sickle-cell disease and beta-thalassemia, which are hemoglobin-related disorders. Intellia's lead candidate, NTLA-2001 is an experimental treatment for transthyretin amyloidosis (ATTR). An estimated 200,000 to 500,000 people suffer from this progressive and often fatal condition.

Intellia is also setting itself apart with candidates that edit genes in the body. Treatment with Casgevy involves the removal of stem cells, which are modified outside the body and then reinfused. In November, the company showed us that NTLA-2001 produces durable responses. Among 29 patients with at least a year of follow-up following a single dose, all showed a lasting response.

Future revenue from NTLA-2001 could be significant. Pfizer sells a daily capsule for ATTR called Vyndaqel and it racked up $2.4 billion in sales during the first nine months of 2023. Before you get too confident with future sales estimates, though, you should know that selling once-and-done treatments is an uphill battle even when there isn't an easy-to-swallow capsule available to compete with.

At recent prices, Intellia sports a $2.2 billion market cap that could soar if it looks like NTLA-2001 can succeed. Unfortunately, it's going to be a long time before we know if NTLA-2001 has any chance to generate sales. The company expects to begin a phase 3 trial by the end of 2024 with ATTR patients who suffer heart damage. It will take years for that trial to produce meaningful results that can support an application for marketing authorization.

Enthusiasm driven by clinical trial data, not sales, could cause this stock to triple in the year ahead. Betting on continued success, though, is so risky that most growth stock investors are better off avoiding this company until it has a product to sell.