2 growth stocks that could make you richer

Growth stocks have seen an incredible run since the end of the financial crisis in 2008. While the information technology sector has led the way, innovation-driven companies in various industries have attracted the attention of professional and retail investors. From defense to space exploration to biotechnology, dozens of early-stage companies in these industries have experienced parabolic growth over the past 15 years.

Including a small number of emerging growth stocks in your portfolio can be a smart move. But it is essential to balance their growth potential with their inherent risks. Let’s examine two companies that stand out as potential top buys for long-term investors: Primary medicine (PRME 2.55%) and Rocket Lab USA (RKLB 0.73%).

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A pioneer of gene editing

Prime Medicine is pioneering the frontier of genetic medicine with its innovative editing technology. This cutting-edge approach enables precise changes to DNA, potentially offering solutions to a wide range of genetic disorders that have long eluded effective treatment.

The company’s pipeline is ambitious, targeting high-impact diseases such as chronic granulomatous disease, cystic fibrosis and glycogen storage disease. Although technically still in the preclinical stage, with human trials scheduled to begin soon, initial results have shown promise, suggesting the transformative potential of Prime Medicine’s technology.

For investors looking to gain exposure to the revolutionary field of gene editing, Prime Medicine presents an intriguing opportunity. However, it is essential to approach this investment with a clear understanding of its long-term nature.

Given the company’s early-stage status and the long road to market typical in biotech, Prime Medicine is best viewed as a slow-build play. This is especially important to consider given the 215% upside potential of the Wall Street consensus for the stock over the next 12 months.

Simply put, it might be tempting to buy the stock out of hand in response to this bullish open stance from analysts, but the truth is that Prime Medicine stock probably won’t really start moving until the mid-stage study results become available. around 2029. It may seem disappointing, but long development timelines are the norm in biotech.

Another reason to consider Prime Medicine is its top shareholder base. AlphabetCathie Wood’s ARK Invest and life sciences hedge fund Baker Bros. Advisors owns all material amounts of the gene editing specialist’s stock, according to its most recent 13F filings with the Securities and Exchange Commission (SEC).

How to play this biotech? A prudent approach would be to allocate a small portion of the portfolio – under 1% – to Prime Medicine and use a dollar cost averaging approach over a five to 10 year period. This strategy allows investors to participate in the potential upside while managing the considerable risks associated with clinical trials and regulatory approvals.

It’s worth noting that Prime Medicine’s journey to becoming a commercial operation could span up to a decade. As such, this growth stock is ideal for patient investors looking to gradually build their position as the company’s clinical program moves forward.

A top space game

Rocket Lab USA is making waves in the commercial space industry with its small satellite launch services and spacecraft components. As demand for satellite-based services grows in industries such as telecommunications, Earth observation and navigation, Rocket Lab is poised to capture a significant share of this expanding market.

The company’s Electron rocket has proven its reliability through multiple successful launches. Based on its early success, Rocket Lab is now developing a larger rocket called the Neutron to address a wider range of mission profiles.

Rocket Lab’s vertical integration strategy, which includes manufacturing its space components, could increase profit margins and create unique competitive advantages. This approach can also unlock new market opportunities for the company as it innovates.

What is the risk? Although it offers enormous potential, the space industry is highly competitive and requires substantial capital investment. Rocket Lab’s future success depends on its ability to scale operations and maintain its technological edge in a rapidly evolving market.

Investors considering Rocket Lab should thus take a long-term view, potentially starting with a small position and increasing it as the company hits key operational milestones. However, shareholders should be prepared for significant volatility given the emerging nature of both the space industry and Rocket Lab’s platform.