Growth stocks aren’t getting the same positive attention from investors that they did even a year ago, but that could be an opportunity for a moment. For investors with a healthy risk tolerance level, you need look no further than the crypto markets to find investments that deliver favorable financial and shareholder returns in compelling ways.
Here are three such stocks that have more potential than any cryptocurrency to make investors rich over the next decade and beyond.
1. Intuitive surgical
Intuitive surgical (ISRG: 0.76%) has a simple yet powerful business model that has enabled it to achieve astounding growth and deliver incredible returns to shareholders over the years. The company has more than doubled its annual revenue and earnings in the past 10 years alone, delivering a total return of nearly 371% to shareholders. The company manufactures and sells surgical robotic systems used in various minimally invasive surgeries.
It also sells services, software, accessories and tools essential to the smooth operation of these systems in the operating rooms of hospitals and other medical providers around the world. In short, Intuitive Surgical not only generates revenue from the initial systems, but also ongoing revenue from the services and products these systems require. With the Da Vinci Surgical Suite and the Ion Surgical System, it controls more than three-quarters of the entire global surgical robotics market.
Revenue and earnings growth have been less impressive in recent quarters due to unpredictable procedure volumes in nascent COVID-19 markets. Revenue rose 11% to $1.6 billion in the third quarter, while its net income was down year-over-year but still came in at $324 million. But the company is profitable and steadily increasing its installed base of surgical systems worldwide.
Intuitive Surgical’s Q2 2022 revenue was up nearly 50% compared to the same quarter in 2019, while the surgical systems installed base grew roughly 40% over the three-year period.
With great growth opportunities ahead as the adoption of robotic surgical systems increases, Intuitive Surgical can continue to deliver strong financial and shareholder returns for years to come.
Teladoc: (TDOC: 3.42%) recently hasn’t delivered the same level of growth that investors were used to in the early days of the pandemic, but that doesn’t mean the story is over for this company. Its leadership in the telehealth market should help it generate favorable results and shareholder returns in the coming years, even if lackluster growth has dampened investor enthusiasm for the stock.
Recently, Teladoc’s share price and its core value have been hurt by impairment charges of about $10 billion in the first half of 2022. The posts, which raised eyebrows, were the result of an overcharge for digital health management company Livongo. Teladoc paid about $20 billion for Livongo in 2020.
However, it looks like the fog may finally be starting to lift for Teladoc, and investors may well take note. The company’s third quarter report showed a sharp slowdown in quarterly losses. Teladoc reported revenue of $611 million, a 17% year-over-year improvement, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $51 million.
Meanwhile, management just announced it is raising its revenue guidance for the fourth quarter and full year 2022. Almost half of the company’s 2022 revenue was expected to come from its fast-growing BetterHelp mental health business, which saw revenue grow 35% year over year. year-on-year in the third quarter of 2022.
From chronic care to primary care to virtual consultation solutions, Teladoc’s platform serves a wide range of consumers, while patients can access quality care within their needs and physical location. With the rapid adoption of digital technology, an aging population, and an increasingly distributed population in an era of remote and flexible work, telehealth provides a convenient, affordable solution for people in the US and around the world.
This creates a golden long-term opportunity for Teladoc as it continues to build market share and return to profitability. For long-term investors, now might be a great time to take a second look at this stock.
3. Industrial innovation features
Industrial innovative features (IIPR: 1.25%) is an unexpected play for marijuana investors who want to gain exposure to the industry without risking capital in a cannabis grower or distributor. The company operates as a real estate investment trust (REIT). It acquires and operates industrial facilities that it leases to state-licensed medical cannabis operators under a triple-net lease structure.
The innovative industrial ownership structure has many advantages. First of all, medical cannabis has been legalized in many more states than recreational cannabis, so it carries some risks for its business. And using a triple-net lease structure means its tenants, not the REIT itself, are responsible for most of the costs of operating and maintaining the industrial facilities, greenhouses and other facilities it owns. According to its most recent earnings report, Innovative Industrial Properties owned 111 properties totaling nearly 9 million square feet of rentable space in 19 U.S. states.
Because Innovative Industrial Properties is a REIT, it must pay out at least 90% of its taxable income to shareholders as dividends. Because the company has an enviable record of both top-line and bottom-line growth, its payouts to investors have grown accordingly. Its dividend yield is nearly 7%, and the company recently announced a 24% sequential increase in its dividend for the fourth quarter of 2022 to $7.10 per share, payable on January 13th.
Over the past five years, Innovative Industrial Properties’ revenue has grown nearly 1,300%, while its earnings and funds from operations (FFO) have grown nearly 1,500%. The stock has delivered a total return of more than 300% during that period.
Meanwhile, even as the broader cannabis industry grapples with short-term headwinds from declining sales and sluggish legislation, rental collections remain high at 97% in the latest quarter, with 100% of the company’s operating properties leased. The average lease term for Innovative Industrial Properties is 15.5 years.
For investors looking for a stable dividend-payer in a fast-growing industry with a broad growth path ahead, especially as medical cannabis legislation expands, Innovative Industrial Properties looks like a no-brainer long-term buy.