Artificial intelligence has propelled Nvidia (NASDAQ:NVDA) to the forefront, but there are hidden gems out there surpassing its performance.
The Rise of Super Micro Computer
In the dynamic world of technology, companies like Super Micro Computer (NASDAQ:SMCI) have left Nvidia in their wake, showcasing exponential growth that investors cannot afford to overlook.
The Unseen Triumphs
Delving beyond the usual suspects, here are three under-the-radar stocks shining brighter than Nvidia. These stocks may not be on everyone’s radar yet, but they hold promise for those seeking long-term investment opportunities. Let’s dive in to determine if these emerging stars warrant your investment.
Unpacking Vital Farms (VITL)
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Who would have thought that the humble business of chicken egg production could yield staggering growth? Vital Farms (NASDAQ:VITL) has proven just that, outshining Nvidia in 2024 with a remarkable 198% surge in its stock price compared to Nvidia’s 149% increase.
However, a word of caution is warranted as per Investor’s Business Daily, where they noted that Vital Farms had surged over 1,800% the previous year. Contrary to the perception, the actual increase in 2023 was a mere 5%. The company, like others in the egg, poultry, and meat industry, faces volatility due to disease outbreaks like avian flu. Despite facing challenges, Vital Farms has a network of 300 family farms to buffer the supply of eggs.
Setting itself apart from industry giant Cal-Maine Foods (NASDAQ:CALM), known for producing a whopping 587,700 dozen eggs per hour across 43 facilities, Vital Farms boasts a unique retail strategy, selling over 8,000 dozen eggs weekly through its partners.
Vital Farms prides itself on ethical practices, offering pasture-raised eggs to consumers. While the definitions of terms like “free-range” and “pasture-raised” may be misconstrued, today’s chickens are undoubtedly treated better than in the past. With products available in 24,000 stores, a quarter of which are Whole Foods locations, Vital Farms has carved a niche for itself.
Despite its recent success, Vital Farms faces challenges due to its high valuation multiples, trading at 54 times earnings, 4 times sales, and 33 times free cash flow, making it a costly play in the commodities market even with its ethical stance.
Unveiling Novavax (NVAX)
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When you hit rock bottom in the biotech industry like Novavax (NASDAQ:NVAX) did, the only way is up. In 2024, the Covid vaccine manufacturer has seen an impressive 163% surge in its stock price, outshining Nvidia. The bulk of this growth stemmed from Novavax’s partnership agreement with Sanofi (NASDAQ:SNY) for Covid vaccine marketing, a move that injected new life into the company.
As per the agreement terms, Sanofi has agreed to an upfront payment of $500 million to Novavax, with further milestone payments of $700 million, valuing the deal at a substantial $1.2 billion. Additionally, Sanofi will acquire a minority ownership stake of less than 5% in Novavax, reducing risks associated with the investment.
Despite the significant boost from the deal, Novavax faces challenges in a Covid vaccine market that has plateaued. With over 917 million doses administered globally, of which Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) account for 73%, and Moderna (NASDAQ:MRNA) an additional 17%, Novavax’s share is minuscule with just 310,000 doses. Unless there is another Covid crisis, the growth prospects for Novavax seem limited.
The Meteoric Rise of Redwire (RDW): A Space Stock Shooting for the Stars
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Redwire (NYSE:RDW) is a space stock on a trajectory unmatched by many, outperforming even the likes of Nvidia this year. Specializing in space infrastructure for renowned entities like NASA, U.S. Space Force, the European Space Agency, and Rocket Lab USA (NASDAQ:RKLB), Redwire has seen its stock soar by an impressive 152% so far in the current fiscal year.
Space Innovations Fueling Growth
In the vast expanse of space, Redwire is a standout provider of mission-critical avionics, sensors, power generation systems, structures, and more. Noteworthy collaborations include being chosen by Rocket Lab to supply antennas and RF hardware for the Space Development Agency’s satellite constellation, ensuring seamless communications for warfighters. Additionally, Redwire’s cutting-edge camera technology was utilized by Intuitive Machine’s (NASDAQ:LUNR) lunar lander, marking yet another feather in its cosmic cap.
Flight Path to Success
Breaking into the final frontier of the stock market in 2021 via a merger with a special purpose acquisition company (SPAC), Redwire’s initial landing was rough, reminiscent of a spacecraft making a turbulent re-entry. However, reminiscent of a phoenix rising from the ashes, the company regained its momentum last year. The ascent has been steady, with the stock gaining significant altitude, culminating in the recent DARPA contract for its SabreSat satellite orbiting in very low Earth space, indicating a promising trajectory.
Financial Prospects and Future Growth Trajectory
Although still incurring losses on a GAAP basis, Redwire’s strategic positioning within the burgeoning space industry insights confidence in its long-term profitability prospects. The recent achievement of generating positive Free Cash Flow for the first time serves as a launchpad for further growth and expansion, positioning the company favorably for the cosmic challenges and opportunities that lie ahead.
As Redwire continues to push the boundaries of innovation and carve its path through the galactic market landscape, investors are eagerly watching for signs of sustained growth and profitability in the ever-expanding universe of space-related investments.
