With Christmas decorations all boxed up and New Year’s diets underway, December is a fading memory. But investors in these two growth stocks will be hoping for last month’s momentum to carry through into 2024.
Those stocks are Baltic Classifieds (LSE:BCG) and PureTech Health (LSE:PRTC), both listed on the FTSE 250. Let’s dive into what these companies do and why they’re capturing market attention.
Listings with a Baltic twist
Baltic Classifieds owns rapidly growing online marketplaces for various goods and services. Think of those marketplaces as being like eBay or Craigslist, but specifically for Lithuania, Latvia, and Estonia.
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In December 2023, the stock rose by 12% off the back of the company’s strong financial performance.
The firm’s revenue reached €60.8m, marking a 19% increase from the previous year. Notably, its net income soared to €23.2m, a massive leap from the previous year, with a profit margin jumping to 38%. This profitability is mainly attributed to reduced expenses.
Meanwhile, analysts are projecting a bright future, anticipating revenue growth of 9.2% per annum over the next three years, outpacing the industry average in the UK. That optimism is reflected in the sky-high price-to-earnings (P/E) ratio of 50.
With a diversified portfolio of 14 websites across Estonia, Latvia, and Lithuania, I think the company could be a good way to get exposure to the Baltic region.
I would add Baltic Classifieds if it pulled back to 210p, where it was at the start of December 2023. Usually, I try to avoid getting caught up in momentum-driven plays, as I don’t want to pay a premium due to short-term market euphoria.
Health is wealth
PureTech Health operates in the biotech sphere, focusing on developing therapies for serious diseases.
Its stock jumped a whopping 30% in December, likely buoyed by several positive developments.
Puretech reported significant strategic and clinical progress in 2023, including successful clinical trials in treatments acute anxiety and solid tumours, along with a lucrative Royalty Pharma deal worth up to $500m.
With a robust balance sheet showing about $320m in cash, PureTech is well-funded for future endeavours. Notably, the company’s board has said it will consider special dividends or share buybacks, adding to investor appeal.
One of its promising drugs, LYT-100, aims to treat idiopathic pulmonary fibrosis, a rare and fatal disease. It shows potential for better tolerability and efficacy compared to existing treatments. PureTech is also developing LYT-300 and LYT-310 for neuropsychiatric and neurological conditions, including anxiety and epilepsy. Additionally, the pharma firm’s new therapeutic candidate LYT-320 aims at treating anxiety and mood disorders.
In December 2023, Bristol Myers Squibb paid $14bn for the PureTech-founded entity Karuna Therapeutics.
This acquisition underscores the value and potential of PureTech’s innovative approach in biotechnology.
Regardless, I won’t be buying shares in PureTech. In general, I avoid speculative early-stage biotech stocks, as I have no special insights into the science that drives their results.
