If you’re an aggressive growth investor who can afford to take risks, the five stocks that I’m about to present to you may be your best bet at obliterating the markets over the next year. Some of these names have valuations that are likely too rich for the average value-conscious investor, however. So, ensure you understand the risk/reward trade-off before backing up the truck on any stocks mentioned in this piece.
A lot of the stocks have surged well ahead of what’s deemed realistic by some analysts, but even so, the growth offered by many of the underlying companies may be unfathomable to many. As such, their multiples may never fall to a level where they’re deemed “value investments,” unless of course, there’s a nasty market-wide pullback.
Without further ado, here are three aggressive growth stocks starting with the least to most risky:
Stars Group Inc. (TSX:TSGI)(NYSE:TSG)
At just ~14 times trailing earnings, you’d think Stars Group was a boring stalwart and not an explosive growth stock that could emerge as one of the dominant forces in its industry over the next decade.
Despite the modest price tag, Stars Group stock has essentially doubled over the last year, and as the floodgates get ready to open in the U.S. sports betting market, the company has a rare opportunity to capture a new market by storm.
Although the poker assets are magnificent, the growth story will be all about sports betting over the medium-term, so investors comfortable with sin stocks should really consider placing a bet in the online gambling firm today, as the sports betting segment is likely to fuel market-beating gains for years to come.
Valeant Pharmaceuticals Intl Inc. (TSX:VRX)(NYSE:VRX)
Come July, Valeant will officially be renamed to Bausch Health Companies after the company’s prized eye-care subsidiary, Bausch and Lomb.
I’ve been a raging bull on Valeant’s turnaround and its new CEO Joe Papa for quite some time now. Although the ~$26 billion in debt is still the number one concern for many investors, I think Papa’s progress and the new growth plan ought to inject a surge of confidence for investors.
While still risky, I think the stock is no longer speculative and may actually have a favourable risk/reward trade-off for aggressive investors seeking year-ahead upside. As the company returns to growth mode with new drugs set for launch (including Duobrii, Bryhali and Altreno), I think you’ll want to be in the stock, as all it will take is one “blockbuster” that could send shares exponentially higher. After that, nobody will be talking about the massive debt-load or the scandal that happened nearly three years ago under old management.
Canopy Growth Corp. (TSX: WEED)(NYSE:CGC)
With The Cannabis Act finally getting approval by the Senate, Canada is on the verge of becoming the first G7 nation to officially legalize marijuana for both medical and recreational use. It’s an exciting time for Canadians, but pot stocks remain a highly speculative investment that could blow up in an investors face should any unforeseen events trigger an industry-wide meltdown in the post-legalization era.
One could easily quadruple-up over the next year, but on the flipside, investors must also understand that the possibility of a deep correction is an equally likely scenario. As such, any pot stock should only be invested with disposable income from a retirement portfolio.
For those comfortable with the associated risks, Canopy remains my preferred choice in the marijuana space. Management has been smart with its acquisitions and has not severely diluted its shareholders in order to scoop up smaller competitors at what can only be described as absurd multiples.
Moreover, I’m a big fan of Canopy’s branding prowess and the positive implications should the government decide to ease up and allow branded cannabis products after the industry has matured.
Stay hungry. Stay Foolish.
