In the grand theater of investment, where the spotlight often dazzles upon flashy tech unicorns and high-profile financial giants, lies a clandestine league of wealthy architects stealthily crafting millionaires’ fortunes. As Wall Street echoes with the tales of soaring stocks, these three millionaire-maker stocks wield resilience, innovation and market finesse, magnetizing wealth with a whisper rather than a roar.
Think of them as the undercover agents of wealth creation, diligently operating in the shadows while transforming investments into riches. The first one is the stealthy titan quietly dominating the real estate landscape with a portfolio spanning 19 states. Meanwhile, the second is the technological juggernaut wielding its AI platform as a silent force across industries. Lastly, the third is the unsung hero of mortgage insurance, quietly securing record-high volumes.
Innovative Industrial Properties (IIPR)
One of the key pillars of Innovative Industrial Properties’ (NYSE:IIPR) strength is its conservative and flexible balance sheet. The company demonstrates exceptional financial prudence and stability with a debt-to-total-gross-assets ratio of 12% (as of Q3 2023). Also, all of its debt is at a fixed rate, providing insulation against interest rate fluctuations and reducing short-term financial risks.
Moreover, the debt maturity profile is favorable, with a significant portion maturing in May 2026. This long-term debt structure allows the company to focus on growth initiatives without immediate refinancing concerns.
Fundamentally, Innovative Industrial Properties’ proactive approach to enhancing liquidity by securing a $30 million three-year revolving credit facility further underscores its focus on maintaining financial flexibility. As a result, this additional liquidity avenue gives the company access to capital for potential strategic investments or operational requirements.
Most importantly, the strength of Innovative Industrial Properties’ portfolio lies in its quality and diversification. The company owns 108 properties across 19 states, totaling 8.9 million rentable square feet. Importantly, no single tenant contributes more than 16% of annualized base rent, mitigating the risk associated with dependency on a specific lessee. Similarly, no state represents more than 15% of annualized base rent, showcasing geographical diversification.
Further, the capital invested per square foot in properties is $274, significantly below replacement cost. This indicates potential asset appreciation and solid asset value. Thus, the company’s strategic investments in high-quality properties position it favorably for value creation.
Finally, Innovative Industrial Properties’ tenant base comprises 29 operators, with 90% of its operating portfolio leased to multistate operators and 62% to public company tenants. Therefore, these strategic partnerships with established operators mitigate tenant risk, ensure a stable revenue stream, and drive long-term growth.
Palantir (PLTR)
Palantir (NYSE:PLTR) has exhibited a fundamental strength in its Advanced Intelligence Platform (AIP). The company’s success and exponential growth across various industries stem from the unique value propositions and focused execution enabled by AIP.
Looking at numbers, Palantir’s AIP has significantly accelerated deal closures. It is evident from 80 deals of $1 million or more across 30 industries, 29 deals of $5 million or more across 16 industries, and 12 deals of $10 million or more across 11 industries in Q3 2023 alone.
Notably, the U.S. commercial business grew 33% year-over-year, excluding strategic commercial contracts and witnessed a 52% year-over-year growth, indicating AIP’s instrumental role in business acceleration. Remarkably, three-fourths of the quarter-over-quarter growth came from customers who initiated Palantir in 2023. This showcases AIP’s ability to drive sustained expansion within the customer base.
Fundamentally, Palantir’s go-to-market strategy shifted towards AIP boot camps, where customers experience real workflows on their actual data in five days or less compared to traditional pilots, which take one to three months. AIP boot camps led to improved unit economics, accelerated new customer negotiations, and drove contract expansions. Over 140 organizations were expected to undergo boot camps, illustrating their effectiveness in rapidly engaging customers.
Moreover, AIP’s applications span various industries, such as healthcare, procurement, workforce scaling, supply chain optimization and online grocery order accuracy. It is showcasing its versatility and wide-ranging impact. Customers like Tampa General, HCA and Cleveland Clinic use AIP for dynamic scheduling in healthcare. Hence, this highlights the platform’s transformational role in turning software into operational leverage.
Lastly, Palantir nearly tripled the number of AIP users in Q3. It is engaging nearly 300 distinct organizations within just five months of its launch, underscoring Palantir’s rapid growth through scalability.
NMI Holdings (NMIH)
NMI Holdings’ (NASDAQ:NMIH) ability to consistently generate substantial NIW volume and grow its insurance-in-force (IIF) is a key indicator of its operational strength and market presence. For instance, in Q3 2023, the New Insurance Written (NIW) volume was $11.3 billion, and the record-high IIF was $194.8 billion. This underscores the company’s ability to attract new business and maintain a substantial portfolio.
NMI Holdings’ consistent performance in generating NIW reflects its strong position in providing mortgage insurance solutions to lenders and borrowers. Also, the sequential stability in NIW demonstrates the confidence lenders and borrowers have in NMI Holdings’ ability to provide critical down payment support. The company’s achievement of a record IIF highlights its steady expansion in insuring mortgage loans.
The IIF’s growth, rising by 2% from the prior quarter and 9% year-on-year, signifies the company’s capacity to retain existing business and acquire new insured loans. NMI Holdings’ capability to maintain and expand its IIF indicates market trust and the effectiveness of its mortgage insurance offerings.
NMI Holdings’ high-quality insured portfolio is also pivotal in maintaining financial stability and enhancing investor confidence. The consistent growth in insurance-in-force, combined with a persistency rate of 86.2%, highlights the company’s ability to retain customers and sustain a high-quality portfolio. The persistence rate is a crucial driver for portfolio growth and embedded value. This signifies customer loyalty and satisfaction with NMI Holdings’ offerings.
Looking at credit performance, the default rate of 0.74% at quarter-end underscores the company’s effective risk management and stringent underwriting standards. This low default rate reflects the quality of borrowers and loans in the insured portfolio. It contributes to lower claims expenses and reinforces the company’s overall growth potential.
As of this writing, Yiannis Zourmpanos held long positions in IIPR and PLTR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
