Many investors are looking for companies that can deliver outsized returns. That’s why hypergrowth stocks remain attractive, especially ones with the potential to double your investment.
When I look for hypergrowth stocks, I’m targeting businesses with massive addressable markets and competitive advantages that support rapid expansion. These companies are still early in their growth cycle, yet generate tremendous revenue growth annually. As they scale efficiently, profitability often follows.
Tech stocks tend to fit this mold, leveraging innovation and strong network effects. We’ve witnessed many tech leaders generate life-changing wealth creation in recent decades. With digital transformation accelerating across industries, I expect new market leaders to emerge this decade.
However, one must be prudent, as dilution can erode returns on hypergrowth stocks’ funding expansion. I prefer businesses nearing or achieving profitability through organic growth alone. The healthiest ones increase value for shareholders while self-funding growth initiatives. Let’s have a look!
ACM Research (ACMR)
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ACM Research (NASDAQ:ACMR) is a semiconductor equipment manufacturer that provides innovative solutions for cleaning and improving product yield in fabricating integrated circuits or chips. As I’ve written previously, I would usually remain cautious about the overhyped semiconductor sector. However, ACMR has lagged other semiconductor stocks until its recent breakout.
I highlighted ACMR’s strong upside potential despite trading below most semiconductor peers in my June, July and August coverage. This conviction has paid off handsomely for those who followed my buy recommendations (up 120%-plus). ACMR recently surged 40% more on a big earnings beat, with EPS topping estimates by 150% and revenue beating by over 14%. With numbers like these, I expect more upside in the coming quarters.
ACMR’s specialty is enhancing the worldwide manufacturing process and yield for integrated chips. Their single-wafer wet cleaning equipment drives superior performance and efficiency. As chips become more complex, the need for innovative cleaning solutions only grows. ACMR is poised to capture share in this essential market.
DraftKings (DKNG)
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While the travel rebound has cooled and gambling stocks draw less attention outside events like the Super Bowl, I remain bullish on the long-term potential of sports betting names like DraftKings (NASDAQ:DKNG). Megatrends point to gambling’s rising popularity, especially among younger demographics.
Moreover, expanded state legalization efforts continue gaining momentum with successful lobbying from gambling entities. The more states that legalize sports betting, the bigger DraftKings’ addressable market becomes. This momentum shows no signs of slowing.
DraftKings grew Q4 revenue by 44% as it marches toward future profitability. Consensus predicts EPS reaching $2.90 in 2027, meaning DKNG trades at just 14x 2027 earnings — very inexpensive for the amount of growth. Buying before this EPS hypergrowth seems like a good idea.
P10 (PX)
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P10 is a leading private markets solutions provider in alternative asset management. Their mission provides differentiated access to investment solutions addressing diverse needs within private markets. P10’s revenue comprises solely management fees.
The strong rally in equity markets over the last few months should give an improved outlook for P10’s new private equity fundraising. With the stock so inexpensive, many analysts predict triple-digit upside potential before year’s end.
Buying P10 at these levels offers a chance to capitalize on the rebound in private markets ahead. I believe substantial upside lies ahead.
Smartsheet (SMAR)
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Smartsheet (NYSE:SMAR) is a leading cloud-based work execution platform connecting teams and organizations. Its no-code solution enables anyone to create customized workflows, automating processes and reporting. Although off 47% from peaks, Smartsheet still trades at a premium typical of high-growth SaaS firms.
However, substantial upside remains as Smartsheet counts 80%+ of the Fortune 500 as customers. These sticky enterprise clients will likely expand Smartsheet usage considerably in the coming years as the product portfolio matures.
Smartsheet already boasts 90% of the Fortune 100 with plenty of room to grow in massive addressable markets. Consensus predicts surging profitability ahead, with EPS potentially skyrocketing from an estimated 70 cents in FY2024 (ended January) to $5.7 in FY2033. Paired with ~15% annual expected revenue growth, Smartsheet at 6x forward sales seems attractively priced for a SaaS firm.
With blue-chip customers and tremendous market opportunities ahead in digitizing work execution, I believe Smartsheet can double within 2-3 years. The growth story remains intact.
Spire (SPIR)
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SpireGlobal (NYSE:SPIR) operates a constellation of over 110 nanosatellites, tracking maritime, aviation, weather and other global datasets. I’m bullish on space companies amidst a potential military space race between China, and the U.S. Satellite technology has become essential for communications, GPS targeting and more.
At 2.5x forward sales with 30%-plus annual growth, Spire holds long-term promise. Its federal business offering satellite data insights to defense groups should see demand rise with geopolitical tensions. Spire’s satellite fleet is the second largest commercially.
Though speculative, space sector tailwinds and Spire’s ramping growth make it an attractive bet on the expanding space economy. I believe substantial upside lies ahead. Its bleeding has slowed dramatically, and a first-of-its-kind space data platform still seems early in monetization. Potential seems enormous if execution steadies.
Riot Platforms (RIOT)
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I’ve consistently highlighted Riot Platforms (NASDAQ:RIOT) despite crypto market volatility, given multiple 2024 catalysts and sentiment lags. Bitcoin (BTC-USD) has rebounded nicely while miners like Riot remained depressed.
While lower mining rewards post-Bitcoin halving loom, Riot rapidly expands operations ahead of it while stockpiling Bitcoin before appreciation. Riot held 7,648 BTC as of January and recently ordered 31,500 next-gen miners from MicroBT for $97.4M.
Riot’s early positioning for sector recovery provides upside while Wall Street fixation on halving headwinds persists. If Bitcoin runs higher, miners will follow. With mines rapidly expanding as Riot’s balance sheet gains leverage to crypto, substantial upside exists for this option in hypergrowth stocks.
Betterware (BWMX)
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Though lacking the top-line hypergrowth of other picks, Betterware’s (NASDAQ:BWMX) home/kitchen organization offerings and dividend make it worthwhile. This choice in hypergrowth stocks trades at $17 with visible upside drivers.
Betterware beat Q4 EPS estimates by 103% and revenue by 11%, with 34% more EPS growth expected in 2024. Once rates eventually relax, profits could achieve better-than-expected upside. Its 7% dividend yield also seems easily sustainable given present growth and leading industry positioning.
Plus, it has a 4% Mexico market share, so Betterware has ample runway for expansion here. The 65% decline from its peak also means there’s significant potential for recovery once Betterware returns to form.
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.
