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5 of the Fastest-Growing Stocks On the Planet

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I love revenue growth — it’s one of my favorite financial metrics. But you can’t look at that number in isolation. For instance, AMC Entertainment (NYSE: AMC) reported 2,252% revenue growth in its most recent quarter. But its massive debts and huge earnings losses make that stock a “no way” for me.

AMC gives us a clue as to why revenue growth might be spiking for many companies right now. Last year at this time, the COVID-19 lockdown was crushing a lot of stocks, with revenues dropping to near-zero for many companies. So the comps for movie theaters and hotels are spiking off the charts. While some of these stocks are “turn around” stories, all of the stocks in this article have strong financials and are way safer than AMC. Here’s my list of five super-fast growers that ought to be wonderful investments going forward.

Cartoon businessperson with a jetpack flies past a businessperson climbing a cliff.

Image source: Getty Images.

5. Kahoot! — 225% revenue growth 

Kahoot! (OTC:KHOT.F) is a Software-as-a-Service stock that’s seeing amazing revenue growth right now as the demand for its educational tools spikes higher. The Norwegian company has a gaming platform that kids love. Using its software, educators can create fun and colorful multiple-choice trivia games in subjects like hard science or history.

To give one example, Kahoot! recently teamed up with Disney (NYSE: DIS) so that students have the ability to use Star Wars avatars like Yoda and Darth Vader. (Disney owns shares of Kahoot!)  

Kahoot! uses a freemium model, where the games are free to play. 1.9 billion people have played a Kahoot! game. Educators have used the free software to create over 100 million games. Almost a million users have become paid subscribers. The key for Kahoot is whether the company can convert its free riders into paying members. The high revenue growth suggests the company is succeeding. Educators — both in schools and corporate training — love the company’s tools and are willing to pay more for optionality.

4. Airbnb — 298% revenue growth

Airbnb (NASDAQ:ABNB) went public during the COVID-19 lockdown. The company is revolutionizing how we take vacations. Airbnb is a classic rule-breaker. It’s the top dog and first mover in an important, emerging industry.

Airbnb is the internet hub for the bed-and-breakfast industry. The company has already achieved a $100 billion market cap, with over $4 billion in revenues and a price-to-sales ratio of 23. You might worry that a mega-cap like this might start hitting a ceiling in terms of how high it can grow. But actually, $4 billion is just a drop in the bucket for this BnB powerhouse.

Short-term vacation stays are a $1.8 trillion worldwide market. Add to that number the market for long-term vacation stays (over 30-day rentals), which is a $210 billion opportunity. And then add to that number another $1.4 trillion for experiences on your vacation. Ultimately Airbnb pegs its total addressable market to be $3.4 trillion. If Airbnb captures just a slice of this market, the stock will be a lot more valuable than it is today. With over 4 million Airbnb hosts around the world, the company has a vast amount of supply to meet our future travel demands.

3. IMAX — 475% revenue growth

While AMC terrifies me, I continue to believe in the IMAX (NYSE:IMAX) story. One major difference between the two companies is that IMAX is a technology play. The company rents its large-screen apparatus to movie theaters around the world. And the company shares in the revenues when movies play on its giant screens. 

That’s a terrific business model. You can just compare the debt loads to see what I’m talking about. AMC has a horrifying $11 billion in debt. If it used all of its cash to pay off debts, the company would still owe the banks over $9 billion. That’s an ugly number, about 270 times worse than what IMAX owes ($34 million in net debt). 

Of course, IMAX screens often play in AMC theaters. IMAX shares its technology with theater chains around the world. In the second quarter, IMAX reported that it had 1,569 screens in 85 countries across the globe. The company already has twice as many screens in China as it does in the U.S.

In my opinion, IMAX is a safe way to invest in the reopening of entertainment as we emerge from lockdowns around the world. There are no debt issues here, and as a tech solution, IMAX will enjoy far higher margins than its industry peers.

2. Novavax — 738% revenue growth

Novavax (NASDAQ:NVAX) is one of my favorite stocks, and it’s been one of the strongest stocks in the world during the pandemic. The company is one of the leading vaccine manufacturers for COVID-19, although its solution is not on the market yet. Governments around the globe have already pre-ordered a couple billion doses of Novavax’s vaccine candidate. 

Typically biotech companies have to get their drugs approved by the U.S. Food and Drug Administration (FDA) and other regulatory agencies before any revenues start rolling in. But COVID-19 is a strange situation. Governments are stockpiling the drugs ahead of time. The U.S., for instance, paid $1.8 billion to Novavax last year to pre-order 100 million doses of its vaccine candidate.

That’s why Novavax has been receiving cash (and recognizing revenues) prior to its vaccine hitting the market. The company’s already seeing tremendous revenues, even while its vaccine has yet to receive an emergency use authorization (EUA). While Novavax’s revenue growth is sky-high right now, that’s because it’s jumping off a tiny base. Nonetheless, Novavax’s amazing growth story is just getting…

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2021-10-16 12:15:00

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