It’s a truism that the longer you hold a company that’s expanding at a steady clip, the more likely you are to get major returns. But even better than that are businesses that are expected to expand at an even faster pace in the future than their already decent rate in the present.
On that note, let’s examine a pair of growth stocks that are likely to experience a combination of significant catalysts or long-lived tailwinds that will make their shareholders richer over the next five years and beyond.
1. CRISPR Therapeutics
CRISPR Therapeutics (CRSP 0.69%) is worth buying and holding for at least five years because it has a credible chance of becoming the world’s leading gene therapy business. Though the biotech doesn’t generate any consistent revenue today, by 2028 it could have a therapy on the market, not to mention a few cutting-edge oncology programs in mid-stage clinical trials. The therapy it could commercialize, exa-cel, is designed to address the genetic blood disorders, sickle cell disease and beta thalassemia.
The company is presently putting together the information for its official request to regulators to approve exa-cel for sale, and it expects to be done before the close of Q1 of this year. If the medicine gets the green light, the stock price could skyrocket. However, beyond the initial rally driven by exa-cel’s commercialization, CRISPR shares potentially have an even larger upside.
That upside rests in the company’s oncology programs, three of which are currently in early-stage clinical trials. They’re intended to treat conditions like large b-cell lymphoma and other forms of highly aggressive cancers. And with around $1.9 billion in cash on hand, the biotech has plenty of money to spend on research and development to get those medicines out the door.
More importantly, the three oncology programs are engineered such that the company can manufacture the therapy in a central location and ship an identical product out to treatment sites. That’s key, as the current immuno-oncology cell therapies require patients to donate some of their cells to be modified into the therapeutic product, which is extremely inefficient and prone to problems stemming from the variability of cell quality between patients. CRISPR’s approach means that the medicines could actually be produced at scale, thereby massively reducing the manufacturing overhead while also likely improving outcomes for patients at the same time.
If the company is succeessful in commercializing its oncology therapies down the line, people who bought shares today will benefit tremendously, and they’ll also potentially get a decent boost in the near term from exa-cel’s approval too. While it’s true that the risks of failure with CRISPR’s more ambitious projects is high, investors who can handle the uncertainty might want to consider a purchase soon.
2. NextEra Energy Partners
NextEra Energy Partners (NEP -0.90%) buys and operates wind and solar electricity generation farms as well as some natural gas power plants, all of which are exactly the type of assets that are capable of providing long-term, stable growth. The argument for buying and holding this stock is quite simple: As the transition to greener energy sources takes place in the U.S. and worldwide over the coming decades, the businesses that own and operate those sources will make tons of money, as will their shareholders.
In 2022, NextEra’s fleet of energy assets produced $477 million in net income, up 148.4% from five years prior. Plus, its forward dividend yield is nearly 4.5%, which isn’t half bad.
In NextEra’s case, its most important growth driver is its ability to borrow cash at an attractive rate to acquire new projects. And with $235 million in cash in the bank and a revolving credit facility with $2.5 billion in available borrowing power, the company is ready to pounce on any opportunities it sees. For shareholders, that’ll mean the company can continue to grow its dividend by between 12% and 15% through at least 2026, per management.
That makes for a decent runway of near-guaranteed dividend growth over the next three years, but there’s also a good chance that NextEra will continue to grow its dividend beyond that period too. After all, in Q4 of 2018, management anticipated the exact same rate of dividend growth through 2023 as it’s now predicting through 2026, and it delivered on its promise. And successful execution of company priorities over time is one thing that’s always a positive factor when you’re deciding whether to invest.