Hypergrowth stocks are some of the most captivating, yet perilous, investments out there. On one hand, companies experiencing hypergrowth can deliver enormous returns for early investors. However, many of these high-flyers have slowed down or racked up substantial losses, forcing them to take dilutive measures like secondary offerings just to stay afloat. This can result in shareholder value being decimated.
Yet, there are still some diamonds in the rough. Many profitable hypergrowth companies continue to grow their revenue at breakneck speed. In the current environment, achieving any growth while remaining profitable is a remarkable feat worthy of attention. Though Wall Street has yet to catch on to these specific growth stocks, I believe it’s only a matter of time before these thriving businesses get their due rewards in the form of rich valuations.
Moreover, some former high-flyers seem to be getting their acts together as the economy recovers and risk appetites improve. With interest rates declining, these companies’ financials could substantially strengthen going forward. Now is an opportune time to grab these stocks before they return to the spotlight.
Atomera (ATOM)
Semiconductor technology firm Atomera (NASDAQ:ATOM) is finally poised to capitalize on its innovative Mears Silicon Technology (MST). MST enhances transistors, improving chip performance and efficiency through modifications at the atomic level, without requiring changes to manufacturing tools. This technology currently has broad applications across analog, logic, and memory-integrated circuits.
Despite proven benefits from customer engagements, Atomera struggled to generate sales as semiconductor firms carefully tested the new technology. However, a landmark deal with semiconductor giant STMicroelectronics (NYSE:STM) changes the narrative and validates MST’s production readiness.
STMicroelectronics has now licensed MST for multiple next-generation products. The technology’s benefits will likely become widely known across the industry soon.
Analysts expect revenues to reach $10 million in 2025, up from just $3 million in 2024. With MST’s potential finally being realized through this partnership, 2024 could mark the beginning of a huge growth wave for Atomera. Despite an 84% plunge from 2021 highs, ATOM stock now looks positioned to deliver significant upside for long-term investors as this key inflection point is reached.
Data Storage Corp. (DTST)
Data Storage Corp. (NASDAQ:DTST) has emerged as a top AI penny stock to watch. This overlooked data center operator provides vital infrastructure solutions meeting the exploding data storage needs of AI companies.
With models like OpenAI’s new Sora text-to-video AI being developed, AI-related applications will require massive amounts of data. Generative AI is incredibly data-hungry, and companies like Data Storage will be among the top beneficiaries of this trend.
Demand for data infrastructure will likely accelerate further as AI progresses. With room for geographic and product line expansion, Data Storage has barely scratched the surface of its potential. In my view, DTST stock remains a compelling buy.
Data Storage’s CloudFirst segment achieved triple-digit year-over-year growth recently, though this segment merged with Flagship Solutions Group last month for efficiency.
Impressively, Data Storage posted 35% year-over-year revenue growth last quarter to $6 million, while remaining solidly profitable with 2 cents in earnings per share. Notably, DTST stock has doubled since I first started writing about it, and I think further upside is ahead.
Civitas Resources (CIVI)
Civitas Resources (NYSE:CIVI) is an independent oil and gas producer developing premier assets in the Denver-Julesburg (DJ) and Permian basins.
This is one of the rare non-tech stocks that has been delivering significant growth recently. Civitas is expected to grow its earnings per share by 17% this year to $11 and 15% next year to $13. Moreover, revenue growth is expected to surge 57% to $5.5 billion in 2024.
With the stock trading at a forward price-earnings multiple of just 6-times and 1.3-times forward sales, I believe there is substantial upside ahead. Oil prices should remain high amid tight supply and robust demand growth.
Civitas also offers an attractive 8.5% dividend yield, paying out 50% of the company’s average free cash flow each quarter. If this company’s cash flow growth trend continues, there’s plenty more dividend income where that came from.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Omor Ibne Ehsan 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.
