Every investor is a phenomenal stock picker with hindsight. If investors could go back five years and buy stocks with today’s hindsight, they would pick companies like Tesla (NASDAQ:TSLA) and Nvidia (NASDAQ:NVDA). Those two stocks grabbed many headlines and generated substantial returns for shareholders.
Some investors like to allocate a portion of their portfolios toward stocks they believe can soar, like Tesla and Nvidia. Picking a moonshot stock is risky business, but it can go extremely well if you choose the right companies.
While many of these stocks have high revenue growth and significant losses, other companies are profitable and grow sustainably. Investors may benefit from accumulating shares in these three companies.
Shopify (SHOP)
Shopify (NYSE:SHOP) seemed unstoppable from 2016 to 2021 and marked up over 6,000%. Shopify was a top pick among many Wall Street analysts, but shares collapsed by over 70% in 2022.
A high valuation finally caught up with the company. Even now, shares are up by 30% year-to-date, but the stock’s valuation is in the spotlight yet again. Shares have dropped by roughly 30% since September.
The recent rough patches have caused many investors to forget about Shopify’s long-term potential. The company still has exceptional top-line financials. For instance, revenue grew by 30.8% year-over-year in the second quarter.
Shopify’s subscriptions and software are sticky and make it difficult for business owners to switch. Many companies are happy with the company’s product and have no issue with making the monthly payments. It also helps that 81% of Shopify’s merchants make a profit within the first two years of opening a Shopify store.
Shopify’s shares remain elevated with a 57-forward P/E ratio. I am long with a deep in-the-money covered call. Now isn’t the best time to invest in Shopify for people who can only hang on for a few months. However, this stock can become a gem with a 10-year time horizon.
Celsius (CELH)
Celsius (NASDAQ:CELH) isn’t a tech company. The corporation offers sports beverages that have been soaring in popularity. Many consumers view Celsius as one of the healthiest sports drinks on the market.
Shares have gained 59% year-to-date and are up by 3,900% over the past five years. While investors may believe they missed the opportunity, the company only has a $12 billion market cap. The company has many opportunities to expand its market share and reward long-term investors.
While Celsius has a less than appealing 61 forward P/E ratio, the company makes up for it with exceptional financials. As of June 30, 2023, the company had $1.07 billion in total current assets compared to $269.23 million in total current liabilities. The company can effectively manage its debt, and soaring profits will continue that trend.
In the second quarter, Celsius grew its net income from $9.2 million to $51.2 million. It comes to a 462.5% year-over-year increase. That significant growth makes the high valuation more doable. Revenue surged by 111.6% year-over-year and represents an acceleration compared to the previous three quarters.
Supermicro (SMCI)
Some investors prefer to sell shovels instead of digging for gold. Shovels are safer, and anyone digging for gold will need a shovel. Supermicro (NASDAQ:SMCI) follows the same logic for the artificial intelligence (AI) industry.
Artificial intelligence tools need hardware solutions and servers to operate. Without this critical infrastructure, artificial intelligence cannot make advancements. Supermicro has storage solutions that enable AI tools.
Growth in the AI industry will translate into growth for Supermicro. Shares have already gained 187% year-to-date and are up by 1,655% over the past five years. Despite the incredible growth, Supermicro only trades at a 21 P/E ratio and is profitable. That combination is rare for a company with those gains within five years.
Supermicro continued to chug along during the fourth quarter of fiscal year 2023. The company grew its revenue by 34% year-over-year. Although the company projects a slow Q1 FY 2024 that ranges from 3%-19% year-over-year revenue growth, FY 2024 paints a better picture. The company anticipates 33%-47% year-over-year revenue growth throughout the fiscal year.
Supermicro recently expanded operations in San Jose and Taiwan, and the company has its sights on Malaysia as well. This expansion will help Supermicro serve more businesses that want to use artificial intelligence. Supermicro is emerging as a leader in a rapidly growing industry.
On this date of publication, Marc Guberti held long positions in SHOP, CELH, and SMCI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
