Growth stocks might take some encouragement from Alphabet and Microsoft‘s earnings reports on Tuesday. There had been some concerns about the resilience of tech companies, but Alphabet search advert revenue remained strong.
Despite this, growth and tech stocks, on the whole, have performed poorly throughout 2022. And for me, this represents a buying opportunity.
So, here are two growth stocks I’m looking at buying before the market recovers.
Twilio
Twilio (NYSE:TWLO) shares have extended losses over the past five days. The stock is down 14% over the past week and 79% over the past year. However, it still has a market value of $14bn. That just reinforces quite how big this stock got in 2021.
The firm provides programmable communication tools for making and receiving phone calls, as well as sending and receiving text messages and app operations. It allows your smartphone apps to seamlessly connect with one another, and given the growth in app usage over the past few years, there is clearly a huge amount of potential here.
It’s recent performance has not been as bad as the falling share price suggests. In fact, in its last reported quarter, Twilio’s organic revenue rose 35%, above expectations. However, Twilio is still a loss-making company. Net losses for the last quarter were $221m.
So, it might be a while be Twilio becomes a truly profitable firm.
However, Twilio is on an impressive growth curve. Revenues have increased from $49.9m in 2014, to $2.8bn in 2021. Revenue from 2020 to 2021 increased by $1.1bn.
Broker ratings are hugely split on Twilio. Scotiabank issued an “outperform” rating and a $215 price target for the company in June, implying a $140 upside on today’s price. But, last week, Jefferies lowered their price target on the stock from $130 to $110.
Personally, I see this as an area of the market where there is considerable potential, and Twilio’s growth curve reflects that. For me, Twilio is a buy at $78.
Ceres Power
Ceres Power (LSE:CWR) is a British firm developing fuel cell technology. This is an area of immense potential as fuel cells could be used to power everything from cars to factories and even homes.
2022 could be a big year for Ceres. It has lucrative partnerships with Bosch and Doosan Fuel Cell, and the latter is working on a soft launch its 10kW SOFC product this year.
The fuel cell and electrochemical technology innovator also recently teamed up with Shell to deliver a megawatt-scale solid oxide electrolyser demonstrator. The product will be used to power R&D facilities in India.
Doosan Fuel Cell is also looking to scale up production of the 10kW SOFC product with the opening of a 79,200 sq m plant in 2024.
Another positive is that Ceres does not have any debt. In fact, it had £245m in cash and has only burned £32m over the trailing 12 months, meaning it has a cash runway of about 7.6 years.
The Ceres share price has nearly halved over the past year. But the company now trades with a price-to-sales ratio of around 33.
It’s certainly going to be a competitive market, and there’s no guarantee that this technology will take off. But I’m willing to take that risk on Ceres. I’d add this stock to my portfolio today.
