Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
October will be a big month for those preparing for volatility stemming from the U.S. Presidential Election. The elections are anticipated to heavily influence financial markets. Even if investors are banking on the markets shifting based on the outcome of the election, nothing is guaranteed during a pandemic.
The key difference concerning investor behavior is related to the particular sectors that are being traded. For example, those who believe Biden will win are growing their positions in green energy stocks. In other words, as always, the policy choices of either candidate are affecting trading behavior.
Volatility in the market is inevitable during and after a presidential election. Given this, there is plenty of opportunity for an investor to make the most out of the wild market swings. And this is why we consider growth stocks worth examining, as they tend to react to volatility more strongly. There is ample opportunity for the smart trader here.
This will be the subject of our discussion today. We give you a quick overview of what growth stocks are, and one for your consideration.
What is a Growth Stock and How is it Different?
We’ve talked about growth stocks before and how it is important for all investors to hold at least a few of them. After all, they have some of the best returns among all types of stocks. The lucrative opportunities they provide for investors behove at least a look.
The term growth stock is not quite clear in what it describes. Essentially, it means that the particular stock appreciates faster than the market average or its competitors. Of course, this banks on the fact that these are good stocks in the first place.
What then makes a particular growth stock worth considering? There are several telltale signs of a good growth stock. Some of these properties include being in a good market, a decent record of sales, and a strong target demographic. There are other signs as well, but by and large, these matter significantly. Lastly, it’s also worth mentioning that growth stocks typically don’t pay dividends.
As it turns out, there are several growth stocks worth looking into at the moment. But this particular stock might be a good bet.
Best Growth Stock to Consider in October 2020
Sectors such as the healthcare industry have shown signs of strong growth in recent months, as we have noted previously. The growth stock that is in focus belongs to a related category, and it is called Regeneron.
Regeneron is a US-based biotechnology company whose stock has grown nearly 40% in 2020. This has largely been the result of its work on a COVID-19 vaccine. The company has also gained the wider attention of the public as a result of the fact that President Trump used the company’s medication for treatment.
Besides developing a COVID-19 vaccine, the company also develops treatments for cancer, arthritis, dermatitis, cardiovascular conditions, and more. Revenue has steadily been increasing over the years, with over $7.8 billion reported in 2019.
While it is $1.49 billion in debt, it also has $3.14 billion in cash. The balance sheet, on the whole, looks quite clean. What’s really impressive, however, is the growth potential.
In January, Regeneron’s share price was hovering around $375 — and the months after, it outperformed the markets handsomely. It is expected to do so in Q4 as well, especially following the $450 million deal with the US government. The combination of positive developments, a good balance sheet, and an edge over its competitors is encouraging. It puts it in a position for greater growth going forward, especially if vaccine development takes off.
Bear in mind that this requires a reliable stomach for volatility — if you’re more conservative, consider dividend stocks. Stocks based on sectoral performance are also good, particularly tech and healthcare stocks. In any case, even in less volatile times, growth stocks are worth considering — many investors make a decent profit out of it.
What do you think of Regeneron and its potential for growth? Do you have any recommendations of your own? Let us know in the comments below.
Disclosure:Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions.