Are These Three Stocks the Hidden Gems of 2024?

TipsForTraders | June 10, 2024

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Super Micro Computer (Nasdaq: SMCI) has recently found its niche with a significant role in the burgeoning AI industry, primarily due to its specialty in data center servers. This pivot has notably propelled the company into the spotlight, landing it on the Forbes 500 at position 498. With a robust market cap of $49.6 billion and an expected revenue nearing $15 billion for fiscal 2024, Super Micro’s shares have more than doubled this past year. This growth trajectory is further supported by its strategic collaborations with leading chipmakers like Nvidia (NASDAQ: NVDA) and AMD (Nasdaq: AMD).

Despite Super Micro’s impressive performance, three other stocks have eclipsed its gains, achieving even higher share growth over the past twelve months. These stocks—Root (Nasdaq: ROOT), Carvana (NYSE: CVNA), and Soleno Therapeutics (Nasdaq: SLNO)—have not only soared in valuation but have also done so outside the AI sector, demonstrating the diversity of investment opportunities available.

Root’s Remarkable Rally

Root, a prominent figure in the auto insurance tech space, has seen its shares skyrocket by 975% over the last year. With its innovative approach that integrates mobile technology and data science, Root has redefined pricing models for drivers, significantly benefiting those with good driving records. In its most recent quarterly report, the company announced a 264% increase in year-over-year revenue, reaching nearly $255 million, and marking its transition to profitability with a $5 million operating income. The forecast suggests a 25% annual growth in revenue over the next three years, surpassing the industry average of 5.9%. Root’s market cap now stands at $733.5 million, with a bullish Wall Street setting a price target of roughly $78 per share, indicating a potential 50% upside.

Carvana’s Competitive Comeback

Carvana has re-emerged as a dominant force in the online auto sales industry, particularly after enduring initial pandemic-related challenges. The company has recorded a staggering 600% increase in its stock price over the past twelve months. Its recent financial disclosures reveal a 17% increase in total revenue year-over-year, amounting to more than $3 billion, driven by the sale of nearly 92,000 retail units. With a net income of $49 million and a 1.6% net income margin, Carvana has not only set new financial records but also outpaced the industry’s average EBITDA margin. Analysts, including those from Evercore ISI, have recognized Carvana’s potential, adding the stock to their tactical outperform list.

Soleno Therapeutics’ Stellar Growth

Soleno Therapeutics, specializing in rare disease treatments, has witnessed a remarkable 647% surge in its stock value over the past year. The company, which is poised to join the Russell 3000 Index, continues to attract significant interest from institutional investors. Soleno’s market cap has grown to $1.6 billion, bolstered by innovative drug developments and a recent Breakthrough Therapy Designation from the U.S. FDA for its diazoxide choline controlled-release treatment. Wall Street remains optimistic about Soleno, with a unanimous buy rating and an average price target of $70 per share, forecasting a potential 60% increase in stock value.

Conclusion: Broadening the Investment Horizon

These three stocks demonstrate that significant market opportunities exist beyond the AI sector. Investors seeking substantial returns might consider diversifying their portfolios to include high-performing companies across various industries. With each company poised for further growth, the landscape for investment continues to evolve, offering promising prospects in sectors as varied as insurtech, e-commerce, and biopharmaceuticals. This diversified approach not only mitigates risk but also enhances the potential for exceptional returns, affirming that innovation and strategic positioning remain key drivers of stock performance.