Every investor is always on the lookout for the next big growth stock to buy. Not every stock has what it takes to make huge profits, but some do. In this Motley Fool Live Video recorded on February 9, 2021, The wrap Host Jason Hall and Fool.com Keith Speights discuss two fantastic growth stocks to buy right now that are poised to become big winners.
Jason Hall: Yes, now let’s think about the investment opportunities in healthcare. I know you wanted to talk about a couple of stocks. What do you have to tell us?
Keith Speights: These have nothing to do with COVID-19. Well, maybe kind, kind of. But one of the stocks that I think is basically a no-brainer right now is a stock called Cresco Labs (OTC: CRLBF). It is an American cannabis operator that operates in several states.
You can’t currently buy it on the major US exchanges because marijuana is still illegal at the federal level. But the ticker, their CRLBF, is available over the counter in the US.
Cresco Labs is just a solid company. They are one of the largest multi-state cannabis operators out there. The market capitalization is currently around three and a half billion dollars. I think what really stands out about this market cap is that it is much lower than Cresco’s. Many of these competitors have earnings on the same scale as Cresco Labs, so Cresco is by no means a value stock – none of the marijuana stocks – but Cresco Labs actually has a pretty attractive valuation compared to its peers.
As I said, they’re in several states, including their home state of Illinois, which has a rapidly growing recreational marijuana market. Cresco recently obtained a license to sell recreational marijuana in Arizona, where it is already in the medical market there. Arizona voted to legalize recreational marijuana in November so the market will open up and Cresco has a great growth opportunity there. New Jersey also recently voted to legalize recreational marijuana. I think you will see Cresco penetrate this market. New York is rioting about maybe legalizing recreational marijuana as well, so I think Cresco’s options are really great.
Add to this the real prospect that Congress will decriminalize marijuana this year. When that happens there are a couple of things to keep in mind: Number 1, Cresco is currently over-the-counter, as mentioned earlier, decriminalization would open the door for Cresco to list its shares on one of the major stock exchanges, the NASDAQ (NASDAQ: NDAQ) or the New York Stock Exchange, that would make life easier for many investors. For example, the Robinhood platform doesn’t offer many of these over-the-counter stocks, you cannot currently buy Cresco Labs on Robinhood. If that happened, Cresco …
Hall: That alone is roughly 10 times market capitalization.
Speights: Yes. Yes exactly. [laughs]
Hall: Well, for a couple of weeks anyway.
Speights: Yes. Yes. But it would make a significant difference, aside from the 10x phenomena we’ve seen with some of these Robinhood stocks. But that would be a great catalyst for the stock.
I think when you compare US marijuana stocks to their Canadian competitors, US marijuana stocks are valued a lot lower based on the income they generate. I think that would be a great catalyst for Cresco Labs. I also think that access to financial services only – right now there are some federal laws preventing access to traditional banking services for cannabis companies that could change this year or go into effect next year.
Assuming all of this goes through Congress and I think it will, and I think you may see 2021 as the greatest year for US marijuana stocks ever, and Cresco Labs is one of the stocks who, in my opinion, are best placed to benefit from it. If you’re an investor open to investing in marijuana stocks, then you should check out Cresco Labs.
Another one I like a lot is Guardian of Health (NASDAQ: GH), Ticker there is GH. Guardant Health is a pioneer in liquid biopsy.
If You Don’t Know What Liquid Biopsy Is: When thinking of a biopsy, think about cutting, a doctor will cut into the patient to send a tissue biopsy for an analysis to see if they have cancer. But what a liquid biopsy is is a blood test (usually blood, it can be other body fluids, but it’s usually blood). What they do is analyze the blood and they can detect the DNA from tumor cells or DNA fragments from tumor cells in the bloodstream and they analyze the DNA to see if cancer is present and has a big chance.
Guardant Health is a pioneer in this area, they already have three products on the market, their flagship is the Guardant360 companion diagnostic test for some cancer immunotherapies and sales are booming. But their big opportunity is to get into cancer relapse surveillance and cancer screening. In the relapse surveillance space, Guardant Health is launching their first product called Guardant Reveal, they launch it in the first quarter, I think it has a big chance, and then they do clinical trials on another liquid biopsy that detect can cancer in the very early stages. I think you will see more news later this year.
The total market for this type of product is well over $ 50 billion per year. Guardant Health currently has a market cap of around $ 16 billion, so I really like it. Motley Fool co-founder David Gardner talks about investing in companies that create the future you believe in. I paraphrase what he says. But Guardant Health is the kind of stock that does that for me. You could change the dynamics of cancer diagnosis with your work and make a lot of money doing it, and that’s the kind of stocks I like to invest in.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.
