A popular investment strategy among savvy investors is to diversify their portfolio by investing in growth stocks with strong fundamentals from various industries. Growth stocks in burgeoning industries are typically in their early stages, some possessing great long-term prospects. Here, we have two such growth stocks that have received a consensus "strong buy" rating from Wall Street analysts.

The first one is Skye Bioscience (SKYE), whose stock has soared 427.2% year-to-date, massively outperforming the S&P 500 Index’s ($SPX) gain of 10.6%. It is a biopharmaceutical company exploring the potential of cannabinoid-based therapeutics.

With changing digital payment trends, Intuit (INTU) is a fintech player on an upward swing. The company’s strong second-quarter fiscal 2024 results and bold dividend hikes have analysts optimistic about its future.

Wall Street expects upside in the range of 40% and 20%, respectively, for these growth stocks this year. Let’s find out why. 

Growth Stock No. 1: Skye Bioscience

Founded in 2014, Skye Bioscience (SKYE) focuses on the therapeutic potential of cannabinoids, which are derived from the cannabis plant.

What makes Skye Bioscience particularly intriguing is its involvement in cannabis, which is currently a burgeoning industry. While tetrahydrocannabinol (THC) is the psychoactive component of cannabis, used mostly on a recreational basis, Skye Bioscience focuses on cannabidiol (CBD) and other non-psychoactive cannabinoids to develop treatments for glaucoma, fibrotic, inflammatory, and metabolic diseases.

CBD has been shown in clinical studies to have potential therapeutic effects on a variety of medical conditions, including pain management, inflammation, and neurological disorders.

The company currently has no approved products that are generating revenue. It does, however, have a strong pipeline of candidates. The company recently completed the Phase 2a clinical trial for SBI-100 Ophthalmic Emulsion, which is being developed to treat glaucoma and ocular hypertension. The top-line results of the trial will be out in the second quarter.

Prior to this, Skye also received approval from the U.S. Food and Drug Administration (FDA) for a Phase 2 clinical trial with nimacimab, which will be tested on patients with obesity and chronic kidney disease. The company intends to begin the trial by the middle of this year.

In March, Skye announced plans to raise $40 million in gross proceeds from a private placement equity financing of 4,000,000 shares of its common stock priced at $10.00 each.

As Skye Bioscience advances its drug development programs and expands its pipeline of cannabinoid-based therapies, investors are becoming more optimistic about the company's future prospects. This explains the massive gains made so far.

Furthermore, the growing acceptance of medical cannabis, as well as the prospect of legalization of cannabis-related products in various states in the U.S. and other countries, support Skye Bioscience's long-term growth prospects.

While Skye Bioscience is an intriguing investment opportunity in biotech and cannabis, these sectors also carry risks. The company has no approved products and remains unprofitable. Regulatory challenges, clinical trial outcomes, and the highly competitive biotech and cannabis markets are potential factors that could impact the company's finances and stock performance.

A small stake in Skye Bioscience stock, alongside a diversified portfolio of stable stocks, would be a wise move now.

Turning to Wall Street, at the moment, only one analyst covers Skye Bioscience stock and rates it a “strong buy” with a target price of $20, which implies an upside potential of 39.5%. 

Growth Stock No. 2: Intuit

The COVID-19 pandemic highlighted the need for digital financial solutions. Intuit (INTU) strives to simplify financial management work for individuals, small businesses, and accounting professionals alike. The company's diverse portfolio of popular financial software, including QuickBooks, TurboTax, Credit Karma, and Mint, caters to a variety of market segments.

With the integration of artificial intelligence (AI) into all of its flagship products, the company's suite of offerings have become more efficient, which is reflected in its strong financials.

Valued at $181 billion, the stock has gained 3.8% YTD, underperforming compared to the broader market.

In the second quarter of fiscal 2024, Intuit’s revenue of $3.38 billion grew 11% year-over-year. At the same time, adjusted earnings per share (EPS) increased 20% year-over-year to $2.63 in the quarter.

CEO Sasan Goodarzi highlighted in the earnings call, “We have 500,000 customer and financial attributes per small business, and 60,000 financial and tax attributes per consumer, which fuels what’s possible with AI. And with our GenAI Operating System, GenOS, we empower Intuit technologists to create breakthrough GenAI experiences across our platform.”

This growth stock also pays dividends, which is an appealing feature. Intuit raises dividends aggressively, demonstrating its commitment to returning money to shareholders.

Along with its earnings, the company announced a quarterly dividend hike of 15% year-over-year to $0.90 per share. Furthermore, it repurchased $536 million worth of its shares in the second quarter.

INTU offers a dividend yield of 0.55%, which is less than the sector average of 1.37%. While the yield is not particularly high, its forward dividend payout ratio of 18.9% provides plenty of room for dividend growth as the company works to boost earnings.

Furthermore, consistency in dividend payments and increases reveals a lot about a good dividend stock. In Intuit's case, the company has increased its dividend for the past 12 years in a row.

Management believes the company is on track to meet its full-year revenue growth guidance of 11% to 12%. The company also expects earnings growth of 12% to 14% in fiscal 2024. For comparison, analysts predict an 11.7% increase in revenue to $16.05 billion, with earnings improving by 14.0%.

Furthermore, analysts expect Intuit’s revenue and earnings to increase by 12.4% and 14.8%, respectively, in fiscal 2025. The stock trades at 33 times forward 2025 projected earnings and nine times forward projected sales. 

Despite its high valuation, Intuit remains a compelling investment opportunity in the fintech sector. Its stable revenue and earnings growth trajectory, driven by its innovative portfolio, combined with a commitment to return to shareholders, present a compelling risk-reward scenario. 

Overall, Wall Street rates Intuit stock a "strong buy.” Of the 26 analysts covering INTU, 22 have rated it a “strong buy,” and four have rated it a “hold.” 

Intuit stock has room to rise just over 2% to its mean target price of $664.35. Its high target price of $775, however, implies an upside potential of 19.5% in the next 12 months.

On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.