While the stock market shifts like tides and trends come and go, one constant remains: the pursuit of wealth. While the path to financial success varies from investor to investor, an age-old adage rings true: follow the money. Right now, the money is flowing into some unexpected places.
In a landscape often dominated by technology giants and established conglomerates, the most intriguing opportunities often lie in the shadows (beyond hype!) waiting to be discovered. This article delves into the fundamentals of these gems in today’s dark, which will become tomorrow’s next big thing.
With its impressive year-over-year growth, the first stock has harnessed the power of AI and infrastructure innovation. The second in the line stands as a beacon of stability in the ever-fluctuating energy sector, thanks to its contracted order book and strategic cost management. Meanwhile, the third one has mastered the art of monetizing intellectual property (IP) across diverse industries while actively shaping the future of wireless technology.
Keep reading to learn the next big thing in the market for millionaires who dare to venture beyond the beaten path in the quest for wealth and success.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) has achieved remarkable annual revenue growth, a substantial 37% year-over-year for fiscal 2023. The growth has been even more prominent for Q4 fiscal 2023, with a 34% year-over-year increase and a staggering 70% quarter-on-quarter growth. These figures represent the company’s ability to capture market demand effectively.
Fundamentally, the company’s engineering capabilities are a core strength. It has delivered optimized AI products and solutions, particularly in large language model (LLM)-optimized AI solutions based on Nvidia (NASDAQ:NVDA) HGX. This has enabled Super Micro Computer to outperform competitors and gain significant market share.
On the other hand, Super Micro Computer’s logistics and production teams have executed well, ensuring they maintain a time-to-market advantage. The company’s investment in a state-of-the-art validation and production facility in Silicon Valley, with a capacity of 4K racks per month, has been a major factor in delivering high-performance AI racks quicker than competitors.
Notably, Super Micro Computer is a leader in AI infrastructure. Its building block server architecture has successfully addressed the demand for AI infrastructure. Their broad range of application-optimized GPU solutions, such as the MGX platforms, positions them well in the AI market. Their partnerships with industry giants like Nvidia and Intel (NASDAQ:INTC) also enhance their credibility and reach.
Lastly, Super Micro Computer has strategically diversified its customer base. The company serves a broad spectrum of clients, including major AI innovators, super-large cloud service providers, Tier 1 data centers, Tier 2 cloud providers, and the general enterprise market. Therefore, this diversification mitigates risk and allows Super Micro Computer to leverage various growth opportunities within the AI and IT solutions space.
Alliance Resource Partners (ARLP)
A critical factor behind Alliance Resource Partners’ (NASDAQ:ARLP) consistent year-over-year revenue growth and stability is its contracted order book. For instance, for 2024, the company has already secured the sale of 26.9 million metric tons of coal (as of Q2 2023). These contracts provide a predictable revenue stream, reduce exposure to market volatility, and offer a degree of financial security. It indicates the company’s ability to maintain and grow its customer base while locking in sales at favorable prices.
Additionally, Alliance Resource Partners has demonstrated the ability to increase coal production, a fundamental strength supporting its growth potential. For instance, in Q2 2023, coal production increased by 5.8% year-over-year. While coal sales volumes were stable year-over-year, this production growth has led to a build in coal inventories of 500K tons during Q2. Furthermore, coal sales volumes increased by 5.1% sequentially due to higher sales volumes in Appalachia.
Despite the challenges posed by inflationary pressures and cost increases, Alliance Resource Partners has proactively managed costs. In Q2, the company achieved a 4.6% reduction in cost per ton sequentially. This cost control is significant, as it contributes to improved profitability and enables the company to maintain competitive pricing for its products.
Finally, a specific strength of Alliance Resource Partners is its approach to debt management. During Q2 2023, the company actively repurchased $34.2 million of senior notes, and in July 2023, it redeemed another $50 million of senior notes. As a result, this strategy to execute additional purchases and redemptions of senior notes with available cash flows over the next several quarters is prudent.
InterDigital (IDCC)
InterDigital’s (NASDAQ:IDCC) capacity to capitalize on opportunities in multiple verticals is a fundamental strength. In H1 2023, the company experienced almost 20% year-over-year growth in recurring revenue from consumer electronics and the Internet of Things (IoT), including automotive.
On the other hand, InterDigital has consistently secured valuable licensing agreements with key industry players. It is a clear indicator of its strong IP portfolio. Also, the company signed a new licensing agreement with Alps Alpine (OTCMKTS:APELY), a specialist in IoT and automotive technologies. A new licensee was added from the consumer electronics sector in the early third quarter.
InterDigital’s licensing agreements span various sectors, showcasing its ability to monetize its IP in diverse markets. Notably, InterDigital’s ongoing arbitration with Samsung holds significant value. Samsung (OTCMKTS:SSNLF) has agreed to take a license to InterDigital’s portfolio, where the arbitration process will determine the monetary terms, underscoring the monetary value of InterDigital’s IP portfolio.
Further, InterDigital’s legal victories, such as the favorable ruling from the UK High Court, exemplify the company’s capability to protect its IP. This ruling increased the amount Lenovo (OTCMKTS:LNVGY) must pay for licensing InterDigital’s 3G, 4G, and 5G patents. Lenovo was ordered to pay just under $185 million for licensing InterDigital’s cellular patents.
The court’s ruling emphasizes the company’s commitment to receiving fair returns for its technology used in devices. The victory sets a precedent discouraging licensees from holding out on taking up-front licenses, strengthening the company’s bargaining position in future negotiations.
Finally, InterDigital’s partnership with the University of Surrey in the UK for 6G-focused research is strategic. This partnership signifies the company’s forward-looking approach and involvement in shaping the future of wireless technology. Therefore, the collaboration strengthens InterDigital’s position in future technology standards.
On the date of publication, Yiannis Zourmpanos 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.
