Do you want to swing for the fences with a promising growth stock to buy and hold? While many growth stocks may seem overpriced these days, you can find some decently priced mid-cap stocks, whose market caps are between $2 billion and $10 billion.
There's a bit more risk with these types of stocks, but the upside can also be substantial. Three mid-cap stocks that I believe may generate fantastic returns in the long run are CRISPR Therapeutics (CRSP 3.79%), Viking Therapeutics (VKTX 5.05%), and e.l.f. Beauty (ELF 8.60%). Here's what you need to know about these stocks, why they have the potential to take off, and what's preventing them from soaring right now.
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CRISPR Therapeutics
One stock that I think should be trading a whole lot higher than where it is right now is CRISPR Therapeutics. The company has a market cap of around $5.2 billion, and it has a terrific gene therapy treatment that's already approved in its portfolio -- Casgevy.
Casgevy is an approved treatment option for sickle cell disease and transfusion-dependent beta thalassemia. The one-time treatment is so valuable that even at more than $2 million, experts believe it's a cost-effective solution.
NASDAQ: CRSP
Key Data Points
The challenge today is that the rollout is taking some time, although the company notes there has been progress with around 300 patients being referred to treatment centers already. Casgevy was approved for its first indication (sickle cell disease) nearly two years ago, so investors may be disappointed with the progress thus far; CRISPR has incurred net losses totaling $451 million over the past nine months.
If you're willing to hang on and can afford to be patient, CRISPR could be an underrated growth stock to buy and hold.
Viking Therapeutics
At around $4.3 billion in market cap, Viking is the smallest stock on this list. It may also potentially be the riskiest to own given it doesn't have an approved product in its portfolio. The business is in the midst of developing a GLP-1 weight loss drug, which for now is just referred to as VK2735.
The company recently initiated phase 3 trials for VK2735, which means investors will still have to wait to see how it does there before getting an idea of how probable it is that the treatment will obtain approval from regulators. In an earlier trial, it helped people lose up to 14.7% of their body weight after just 13 weeks. Viking is also working on an oral version, but that is even earlier in development.
NASDAQ: VKTX
Key Data Points
If VK2735 proves to be a formidable GLP-1 drug, not only could it eventually lead to billions in revenue for Viking, but there may even be an acquisition on the horizon; many leading healthcare companies are eager to get a piece of the monstrous GLP-1 market that could be worth as much as $95 billion by 2030, according to estimates from Goldman Sachs.
Viking doesn't generate revenue today, and it has incurred losses of more than $237 million over the trailing 12 months, so this is not a suitable option for risk-averse investors. But if you are comfortable with the uncertainty, I think Viking has the potential to at least double in value if VK2735 obtains approval.
e.l.f. Beauty
e.l.f. Beauty's focus on offering low-cost cosmetics has made it popular with teens and young consumers who may end up growing up with the brand. In Piper Sandler's most recent teen survey, e.l.f. easily ranked as the top cosmetics brand with a mindshare of 36%, with the next-closest brand coming in at only 8%. The company also recently spent $1 billion to acquire Rhode, a skincare brand created by Hailey Bieber, which is also popular among teens.
NYSE: ELF
Key Data Points
This year, e.l.f. projects its revenue to be around $1.6 billion and its adjusted net income to be at least $165 million. But despite the strong numbers and promising growth prospects, share prices of e.l.f. are down more than 40% this year as the company faces significant tariff exposure with the vast majority of its products (around 80%) being manufactured in China.
However, with the company raising prices on many of its products (by $1) and still offering fairly low-priced items, e.l.f. may not be in a bad position to navigate the current headwinds. In the long run, if an agreement is reached with China and the U.S. and tariffs are no longer an issue, this stock could take off in a hurry. If you're willing to take on some risk, e.l.f. could be one of the better long-term buys to hold in your portfolio today.
