Early-stage companies spend many years planning for the day when
everything clicks. For a number of them, 2012 could be the year
when all their hard work pays off. So I decided to look at
companies set to see sales rise more than 200% next year.
Most of the companies in the table below each already sport market
values of more than $400 million, so they're no mere wallflowers.
Clearly, they already hold great promise for some investors. If
they can actually deliver on the strong growth expected of them,
Stay away from these stocks...
Of course, you should take some of these forecasts with a grain of
Alimera Sciences (Nasdaq:
has a promising device (an insertable tube that delivers steroids
directly into the eye for those suffering from diabetes-related
blindness), but the Food and Drug Administration (FDA) has been
dragging its feet on approval.
Some think the company's product, Illuvien, may never get the green
light and those lofty sales forecasts will never come to fruition.
Still others think Illuvien will be approved and see annual sales
approach $300 million in coming years. If that happens, shares
would likely double or triple from today's levels.
In a similar vein,
Tesla Motors (Nasdaq:
will have to sell a lot of cars in 2012 to meet expectations of
scorching sales growth. Yet competition in the electric car market
is getting awfully crowded. Privately-held Fisker Automotive is
aiming directly for Tesla at the high end of the market with a new
model to be released this month, and firms such as Porsche, BMW and
Mercedes-Benz are ramping up electric offerings in coming years as
well. I'm in the camp that feels Tesla will be unable to sell
enough cars to become profitable.
And legal wrangling may impede sales growth in 2011 for
SIGA Technologies (Nasdaq:
, which as I recently noted, may be forced to share a large
government contract with
Consider these stocks instead...
Yet a pair of companies in the health field clearly have the
makings of robust growth in 2012 -- and beyond.
Pacific Biosciences (Nasdaq:
has developed a technology platform that can rapidly sequence
strands of DNA at a lower cost than rivals. That was the promise
held by rival
, which is now worth more than $8 billion, more than eight times
the value placed on Pacific Biosciences. To be sure, Illumina spent
the first half of the past decade falling short of sales forecasts
before sales finally took off in recent years. So there's still a
chance Pacific Biosciences struggles to meet aggressive growth
expectations in the near-term.
Pacific Biosciences has secured pre-orders for $24 million worth of
equipment and has a decent shot of hitting 2011 sales forecasts of
$38 million. But to meet the 2012 sales forecast of $139 million,
the sales force needs to start moving at a more rapid clip.
Longer-term, annual sales could exceed $500 million (rival Illumina
had $666 million in sales last year), at which point, per-share
profits could exceed $3 or $4 and shares would be twice as high as
they are now. When that happens, though, is an open question.
In a similar vein,
Savient Pharma (Nasdaq:
may be looking at a very large market opportunity with its gout
drug, Krystexxa, which helps alleviate gout-related pain and
inflammation in patients who don't respond to other forms of
treatment. Savient would have preferred to be acquired. When the
company announced in late October that no takers were found, shares
quickly plunged from $21 to $12 and now sit around $10.
Yet it's too soon to write Savient off. The company's team of 60
sales people just started selling Krystexxa at the end of February,
and investors will start to more clearly see the drug's demand in
The real promise for Savient lays in the nature of gout. Cases of
the arthritic condition have been rising quickly, particularly
among U.S. males, likely due to a corresponding increase in the
current spikes in diabetes and obesity in America. Once a patient
starts suffering from gout, the disease can wield painful, but
short-lived episodes. However, gout attacks have a tendency to
become more frequent and painful with time and it is considered to
be an irreversible condition once it reaches later stages.
Savient's Krystexxa has proven more effective in treating extreme
gout pain than any other drug on the market, leading analysts at
Global Hunter Securities to predict annual sales may eventually
exceed $500 million. (As a note of caution, there are other
promising gout treatments undergoing clinical testing, and if they
reach the market, Krystexxa's potential opportunity would shrink.)
Savient is unlikely to be profitable before 2013, so patience will
be required. Then again, the company still may end up in the hands
of a suitor long before then and deliver big share price gains in
Action to Take -->
The key for high-growth stocks is to avoid hiccups. Rare is the
company that can deliver an uninterrupted string of rising
quarterly sales. [Andy Obermueller, editor of
, is diligent to remind his readers about this when looking for
All of the names in the above-cited table are great companies to
put on your watch list. If they stumble and shares take a beating,
then investors will be treated with a nice entry point before
growth resumes. Of the stocks in this column, Pacific Biosciences
and Savient Pharma present especially large long-term opportunities
-- David Sterman
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Disclosure: Neither David Sterman nor StreetAuthority, LLC hold
positions in any securities mentioned in this article.
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