These companies could see their stock prices rise dramatically over the next few years
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In his book 100 Baggers, investor Christopher Mayer describes rare stocks that return $100 to shareholders for every $1 of invested capital. These types of multibagger stocks, or heavy compounders, are so rare that they are often referred to as “unicorns” on Wall Street. However, investors only need to put their money into one unicorn stock to succeed in their investing career.
The term “unicorn” also refers to startups with pre-public valuations of more than $1 billion. This phrase, often used in venture capital circles, also refers to rare companies and stocks. While most unicorn stocks already appear to be widely known, especially among mega-cap tech companies, some recently listed companies and lesser-known stocks have the potential to become 100 baggers. There are still some hidden brands. Silicon Valley's next unicorns are: Here are three tech disruptors to buy based on their weaknesses.
Astera Research Institute (ALAB)
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Astera Research Institute (NASDAQ:ALAB) only went public on March 20, but the stock price is already promising. In the month since its initial public offering, Astera Labs' stock price has increased 14%. The company avoided a spike in its stock price in the first few days of trading, but suffered a sharp decline as investors took profits and fled. Astera Labs went public at a valuation of $5.5 billion and currently has a market cap of $17.5 billion.
Beyond the IPO success, other reasons to like ALAB stock include the fact that the company makes semiconductor-based connectivity products and operates in the AI infrastructure market. Astera Labs customers include: Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) among other notable names. Astera Labs has not yet reported earnings as a publicly traded company, but its financials are trending in the right direction.
The company posted a net loss of $26.3 million in 2023, an improvement from a loss of $58.3 million in 2022. Revenues are growing rapidly, reaching $115.8 million in 2023, an increase of 45% from the previous year.
Arm Holdings (ARM)
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Here's another chip stock that recently IPOed and is worth considering. arm holdings (NASDAQ:arm). The company went public last September, and some analysts are already saying the British microchip and semiconductor company could become a second Nvidia. While comparisons to Nvidia may be premature, there's no doubting the growth trajectory ARM stock has taken in recent months. Year-to-date, the stock is up 39%. The stock is up 50% since its IPO a little more than six months ago.
ARM stock has been on an upward trend since the company announced its first financial results as a publicly traded company. Arm announced earnings for the fourth quarter of 2023 and gave a bullish outlook. The company reported earnings per share of 29 cents, compared to expectations of 25 cents. Sales were $824 million, compared to expectations of $761 million. Arm, whose chips are used in nearly all smartphones, said it expects to make a profit of 32 cents in the first quarter of this year on revenue of $900 million.
The guidance beat Wall Street's expectations for earnings of 21 cents and revenue of $780 million.
Palantir Technologies (PLTR)
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Palantir Technologies (New York Stock Exchange:PLTR) became a listed company in October 2020, but the stock price has only really risen since last spring, when the data analysis company returned to profitability. Since May 2023, PLTR stock has increased by 185%. The stock price will rise nearly 30% in 2024. Strong financial results and expanded AI initiatives contributed to the gains. In February, Palantir stock rose 19% after the company announced strong Q4 2023 results.
For the final three months of last year, Palantir reported EPS of 8 cents, which was in line with Wall Street expectations. Sales were $608.4 million, exceeding the sales forecast of $602.4 million. The company's sales increased 20% compared to the previous year. Management attributes this growth to demand for AI. Palantir has been cascading his AI across its products and services and reducing its reliance on government contracts, even as it grows its number of commercial clients.
On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing Guidelines.
