It’s tempting to chase after the next big biotech breakthrough or speculate on businesses burning cash like there’s no tomorrow. However, that’s usually a fast track to disappointment – and a much lighter wallet.
Instead, I believe the road to turning $50,000 into a cool $1 million is paved with high-quality, financially sound businesses. Betting on companies with bright futures, growing revenues, and a clear line of sight to profitability provides exposure to businesses that have what it takes to keep growing and seeing their valuations climb over time.
If a company executes well quarter after quarter, its stock price almost has to head higher eventually. Notably, there are still plenty of great stocks that haven’t fully recovered from the post-Covid cooldown. They’ve been treading water even as the broader market has marched higher. Once these companies see their financials start to perk up again, these coiled springs could deliver significant gains.
Data Storage Corp. (DTST)
Data Storage Corp. (NASDAQ:DTST) has more than doubled since I first wrote about it, and it’s on its way to delivering multi-bagger returns. I’ll admit, I’m a bit nervous about this particular pick. That’s because the company is about to release their Q4 results just a day after I’m writing this. In fact, DTST stock recently declined 15% after the company said they broke even in Q4, which wasn’t satisfactory. But regardless, I believe this company has the ability to deliver significant long-term gains.
Data storage companies have been delivering stellar growth lately, and many of the large-cap players in this realm are seeing their cloud computing and data segments driving the lion’s share of their revenue growth. That’s why I think this startup can grab a lot of attention in the coming years, as it lands contracts with the big boys.
I’ve covered this stock many times already, but just as a refresher, Data Storage generated 2 cents in earnings per share and $6 million in revenue, up 35% year-over-year in Q3 2023. That sales growth is much better than some other growth companies trading at 10-times forward sales or higher right now. Not only is the growth better with a small-cap company like this, but the addressable market for data storage is massive compared to the company’s tiny size.
Personally, I see incredible potential here. The demand for secure, reliable data storage is only going to increase as businesses generate more data than ever before. And with Data Storage’s ability to be nimble due to its size and focused expertise, this company could be perfectly-positioned to capitalize on that growing demand. Of course, there are risks with any small-cap investment, but the potential rewards here are hard to ignore.
Ammo Inc. (POWW)
This is another company I’ve covered extensively, and is one that’s finally looking to break out of its sideways trading pattern. Catalysts are aligning in favor of Ammo Inc. (NASDAQ:POWW). The first and most obvious catalyst to focus on is the increasing demand for ammunition. The war in Eastern Europe has drained the ammunition stockpiles of many countries, and it will take years to restock. That’s why I believe POWW stock is primed to perform well in the long-run as that backlog grows.
Now, the company’s revenue has slumped recently, and Ammo Inc. did report a small 1-cent earrings per share miss. But that doesn’t mean the business doesn’t have legs to run higher. I’m bullish on the company’s GunBroker platform, which is still seeing sales growth. This platform has a huge moat, since most companies don’t want to engage in selling arms to civilians.
Ammo Inc. is also expecting a return to profitability next year, and analysts estimate revenue will surge 10%, reaching $158 million. In my view, that’s just the beginning of the growth path higher. With ammunition supplies remaining tight globally and consumer demand still robust in the U.S., Ammo Inc. could be positioned for an extended period of above-average growth.
HIVE Digital (HIVE)
HIVE Digital (NASDAQ:HIVE) hasn’t been the best bet in recent months, I’ll admit. Crypto mining companies have performed exceptionally well in previous cycles, often rising neck-and-neck with Bitcoin. They have even delivered higher returns during bull markets. But most of these crypto mining companies have been trading sideways lately, and some have even declined. That’s despite Bitcoin (BTC-USD) continuing to climb higher, reaching new highs.
Why is that? I believe it’s due to Bitcoin’s recent rally taking place before the upcoming halving event. This bull run was mainly triggered by a massive influx of money into Bitcoin through its recently-approved spot ETFs. But that doesn’t mean Bitcoin mining stocks are a bad bet going forward.
I believe crypto mining stocks will deliver multi-bagger returns once the halving happens, as these companies prove they can still deliver profits and generate revenue. Mining companies have been aggressively expanding their mining fleets, and Hive is no exception. Impressively, the company has expanded mining capacity by 10% from January to February 2024 and mined 200 Bitcoins in February alone. Hive now expects to be running at a 5.3 to 5.5 EH/s rate by June 2024.
So while the short-term outlook for this company has been rocky, I believe Hive’s mining fleet expansion will help the company bear the brunt of the halving’s impact. And let’s not forget, Hive still holds 2,131 BTC on their balance sheet, which means the company will likely benefit much more from the halving than it loses in revenue.
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.
