Key Points
- Revenue growth doesn’t always give investors the full story behind a company’s long-term outlook.
Since the Great Recession ended more than 12 years ago, growth stocks have ruled the roost on Wall Street. A combination of historically low lending rates and ongoing quantitative easing measures from the Federal Reserve have rolled out the red carpet for fast-paced companies and given them access to abundant cheap capital.
Yet for some high-growth stocks, their parabolic sales increases are just beginning. Based on analysts’ consensus sales estimates, the following five big-name stocks are expected to increase their sales by 356% to as much as 1,605% by 2025.
Shopify: 464% implied sales growth by 2025
The first well-known hypergrowth stock that could deliver a jaw-dropping sales increase over the next five years is cloud-based e-commerce platform Shopify (NYSE:SHOP). Following $2.93 billion in full-year sales in 2020, Wall Street is forecasting $16.54 billion in annual sales by mid-decade. That’s a 464% increase, for those of you keeping score at home.
The beauty of the Shopify operating model is that it finds itself in the right place at the right time. Prior to 2020, businesses were shifting their presence online at a steady pace. But in the wake of the pandemic, businesses of all sizes have come to realize how important it is to have their products available for sale on e-commerce marketplaces. Known best for helping small merchants reach large audiences, Shopify estimates its total addressable market for small businesses is currently $153 billion. Thus, with $2.9 billion in sales last year and the company constantly innovating and introducing new tools, it’s just scratching the tip of the iceberg in terms of its potential.
What’s more, Shopify is benefiting from its high-margin subscription-based services. Whereas entrepreneurs can take advantage of the company’s basic services for $29 a month, it offers its core service to small businesses for $79/mo. to $299/mo., or its Shopify Plus service for $2,000/mo. to larger businesses. This is a company that shouldn’t have any issue growing its operating margins over time.
Teladoc Health: 356% implied sales growth by 2025
Another big-name stock on track to produce eye-popping sales growth over the next half-decade is telemedicine kingpin Teladoc Health (NYSE:TDOC). Last year, Teladoc generated $1.09 billion in sales. But by 2025, Wall Street’s consensus has the company pegged for $4.98 billion in sales.
There’s little question that Teladoc Health benefited immensely from the COVID-19 pandemic. With physicians wanting to keep potentially sick and high-risk people out of their offices, demand for virtual visits soared.
But this isn’t a one-trick pony. What Teladoc is doing is fundamentally altering the personalized treatment landscape. While virtual services won’t replace all in-person visits, it’s far more convenient for patients, and it can help doctors keep better tabs on chronically ill patients. Ultimately, that’s a recipe for improved patient outcomes and less money out of the pockets of health insurers.
Teladoc also expects a serious long-term growth boost from the acquisition of leading applied health signals company Livongo Health. Livongo leans on artificial intelligence to send tips to its chronic care members to help them lead healthier lives. With a focus on diabetes, hypertension, and weight management, Livongo’s services could cater to a large swath of the U.S. adult population.
Sea Limited: 430% implied sales growth by 2024
Singapore-based Sea Limited (NYSE:SE) is expected to deliver such robust sales growth that it doesn’t even need a full five years. With consensus estimates looking out to 2024, the company’s sales are projected to more than quintuple to $23.2 billion from $4.38 billion in 2020.
Sea’s success is the result of three very different but rapidly growing segments. The first, digital entertainment, is the only one generating positive earnings before interest, taxes, depreciation, and amortization (EBITDA). Sea had approximately 725 million quarterly active mobile game users in the June-ended quarter, 12.7% of which were paying customers. For some context, only about 2% of mobile gamers are being converted to paying customers industrywide.
Second, and arguably the more intriguing segment, is its e-commerce platform Shopee. Shopee has consistently been the most downloaded shopping app in Southeastern Asia, and it managed $15 billion in gross merchandise value (GMV) on its platform in the second quarter. This $60 billion annual run-rate is a 500% increase from what it did in all of 2018 ($10 billion in GMV). E-commerce sales in the emerging market countries Shopee serves are still in the early stages of ramping up.
Third, Sea’s digital financial services segment has almost 33 million paying digital wallet customers. Since many of the markets Sea serves are underbanked, mobile wallets could be a key growth driver for the company.
Roku: 408% implied sales growth by 2025
Television streaming platform Roku (NASDAQ:ROKU) is yet another big-name stock on pace to more than quintuple sales in just five years. After bringing in $1.78 billion in full-year sales in 2020, Wall Street’s consensus is calling for about $9.05 billion in revenue by 2025. That’s an increase of 408%.
Roku has two key catalysts in its sails. First, there’s ongoing cord-cutting from consumers. Over a four-year stretch, the number of U.S. households with traditional cable, satellite, or telcoTV services has fallen by more than 21 million to 75.6 million, according to a report from NScreenMedia.com. Meanwhile, the number of households without these traditional services now stands at more than 50 million. The opportunity to provide these households with streaming content of their choosing, be it free or paid content, is clearly helping Roku win over customers (55.1 million active accounts, as of June 2021).
But the more exciting opportunity for Roku is with programmatic digital ads. As consumers shift their viewing content from traditional cable and satellite to streaming providers, advertisers are responding by putting more of their budget to work with companies like Roku. More active accounts will give Roku increased ad pricing power, which in turn will it allow it grow its average revenue per user (ARPU) at a rapid clip. In the June-ended quarter, ARPU grew by 46%, even though active accounts increased by only 28% year over year.
Moderna: 1,605% implied sales growth by 2025
However, the king of the mountain, at least on this list, is biotech stock Moderna (NASDAQ:MRNA). Sales for Moderna are expected to grow from a reported $803.4 million in 2020 to an estimated $13.7 billion by 2025. That’s an increase of more than 1,600%!
While it’s not uncommon to see rapid nominal sales growth when clinical-stage biotech stocks introduce their first drug for sale, Moderna’s launch from minimal revenue to multiple billions occurred quickly, thanks to its development of a COVID-19 vaccine, mRNA-1273. In clinical studies, mRNA-1273 led to a 94% vaccine efficacy and demonstrably helped inoculated patients stay out of the hospital with severe forms of the illness.
From a business standpoint, Moderna continues to benefit from the need to inoculate billions of people worldwide, as well as the mutability of the SARS-CoV-2 virus that causes COVID-19. The need for booster shots or annual vaccines could give Moderna a source of recurring revenue.
On the other hand, the vaccine space is growing more crowded, with a number of new entrants expected within the U.S. and globally. Considering that mRNA-1273 is the company’s only revenue-generating drug, Moderna’s $126 billion market cap can best be described as precarious.
