Because cult has many different meanings, if you must use the term, we urge you first define exactly what you mean by the word, in order to avoid confusion. It is safer to avoid the word entirely, because it will be interpreted by various people in very different ways. We would recommend substituting the term New Religious Movement, Alternative Religious Movement or Emergent Religion. These terms are more precise and have not (yet) been burdened by so many negative connotations as has cult.
A Denomination is an established religious group, which has usually been in existence for many years and has geographically widespread membership.
A Sect is a small religious group which is an offshoot of an established religion. It holds most beliefs in common with its religion of origin, but has a number of novel concepts which differentiate them from that religion.
Most religions started as Sects. One well known example was the Nazarenes. This was an offshoot of Judaism formed by the apostles after the execution of Jesus circa 32 CE They were dispersed or killed some four decades later when the Romans attacked Jerusalem and destroyed the temple.
Perhaps the most obvious North American example of a sect which evolved into a denomination is the Church of Jesus Christ of Latter Day Saints, the Mormons. Their founder, Joseph Smith, had a revelation from God that the ministry of Jesus Christ continued after His crucifixion, as described in what is now called the Book of Mormon. The Mormon sect has since evolved into the Mormon denomination of Christianity with the passage of time and the gathering of increasing numbers of followers. When statehood was being considered for Utah, a major impediment was the beliefs and practices in the Church regarding polygamy. Shortly after a new revelation from God banned the practice, statehood was granted. This caused a number of small sects to break away from the established church, in order to allow their male followers to continue to have multiple wives. Some of these sects continue to this day in the United States and Canada. A similar crisis occurred in the 1970's when the United States government was considering revoking the Mormon's tax exempt status because of its policy restricting blacks from advancement in the church. A new revelation from God abolished the institutionalized discrimination. This time, the membership accepted the new ruling; there were no breakaway sects.
Sects can therefore be considered a normal mechanism by which new religious movements are generated. Most sects die out quickly; others linger; still others grow and evolve in to a new established religious movement and are properly called denominations.