Stocks that are expected to significantly grow their profitability in the future can add meaningful upside to your portfolio. Essex Bio-Technology and Xiabuxiabu Catering Management (China) Holdings are examples of many high-growth stocks that the market believe will be upcoming outperformers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them a good investment if you believe the growth has not already been reflected in the share price.
Essex Bio-Technology Limited (SEHK:1061)
Essex Bio-Technology Limited, an investment holding company, develops, manufactures, markets, distributes, and sells biopharmaceutical products in the People’s Republic of China. Founded in 2000, and headed by CEO Haizhou Fang, the company now has 1,056 employees and has a market cap of HKD HK$3.24B, putting it in the mid-cap category.
1061’s forecasted bottom line growth is an optimistic 20.57%, driven by the underlying double-digit sales growth of 46.43% over the next few years. Although reduction in cost is not the most sustainable operational activity, the expanding top-line growth, on the other hand, is encouraging. Furthermore, the 21.01% growth in operating cash flows indicates that a good portion of this earnings increase is high-quality, day-to-day cash generated by the business, rather than one-offs. 1061 ticks the boxes for robust growth generation on all levels of line items, which makes it an appealing stock to dig into deeper. Considering 1061 as a potential investment? Other fundamental factors you should also consider can be found here.
Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (SEHK:520)
Xiabuxiabu Catering Management (China) Holdings Co., Ltd., an investment holding company, operates Chinese hotpot restaurants primarily under the Xiabuxiabu brand name in China. Formed in 1998, and headed by CEO Shuling Yang, the company employs 16,888 people and with the stock’s market cap sitting at HKD HK$17.29B, it comes under the large-cap category.
520’s forecasted bottom line growth is an optimistic double-digit 22.71%, driven by the underlying 50.02% sales growth over the next few years. Profit growth, coupled with top-line expansion, is a positive indication. This is because net income isn’t artificially inflated by unsustainable activities such as one-off cost-reductions expected in the future. This prospective profitability should trickle down to shareholders, with analysts expecting the company to generate a high double-digit return on equity of 25.25%. 520 ticks the boxes for high-growth generation on all levels of line items, which makes it an appealing stock to dig into deeper. Interested to learn more about 520? I recommend researching its fundamentals here.