Many investors actively seek breakout stocks to buy with the potential for substantial returns. Three businesses in the information technology sector stand out as opportunities, offering a promising potential for substantial returns. These businesses provide viable growth prospects by combining financial stability, innovation and strategic positioning.
These businesses are more than just ticker symbols, they are forward-thinking tactics, flexibility and resilience in a constantly changing environment. These stocks provide excellent potential to optimize rewards while lowering risks. In short, these breakout stocks to buy are attractive options to take advantage of the stock market’s volatility. A well-timed investment may turn a small sum of money into significant returns.
Radcom (RDCM)
With its strategic research investment, Radcom (NASDAQ:RDCM) hopes to establish its lead in the telecom industry. Radcom successfully maintained its R&D expenditures while increasing investment in the field, obtaining funding from the Israel Innovation Authority to foster innovation while preserving profitability.
Moreover, Radcom extended multi-year agreements with a US telecom operator and Rakuten Mobile (OTCMKTS:RKUNY), among other important partners. These expansions provide a steady income stream and the chance to offer further services while highlighting the loyalty and confidence of important clients.
Additionally, Radcom has demonstrated its focus on innovation and adaptation to market developments, notably the transition towards cloud-based solutions. Especially, through its collaboration with Rakuten Mobile and the integration of Radcom ACE with Amazon (NASDAQ:AMZN) Web Services.
Further, in Q1 2024, Radcom’s $85.3 million cash, free of debt, represented an all-time high. This shows sound financial standing and leaves room for growth. Lastly, strong business fundamentals and a favorable outlook are reflected in the company’s confidence in delivering a fifth consecutive year of sales growth, boosting profitability, and raising revenue projections for 2024.
Cirrus Logic (CRUS)
Cirrus Logic (NASDAQ:CRUS) demonstrated disciplined execution against sales headwinds, leading to a year-over-year increase in non-GAAP EPS. This improvement in operational edge is based on increased supply chain efficiencies and decreased operating costs. Moreover, by repurchasing shares, the company returned $186 million in cash to its stockholders in the 2024 fiscal year. Programs for repurchasing shares can raise values and demonstrate the company’s confidence in its finances and prospects.
Further, at the end of fiscal 2024, Cirrus Logic had around $700 million in cash. This demonstrates the strength of its balance sheet. Furthermore, the corporation had $300 million in undrawn revolvers and no outstanding debt. These financial measures show consistency and offer room for expansion and future investment plans. The non-GAAP free cash flow margin increased to around 21% for the 12 months ending Q4 fiscal 2024, indicating improvements in the company’s cash flow management. Hence, this enhancement highlights successful operating procedures and economical capital utilization.
Finally, for Q1 2025, the business forecasts revenue from $290 million to $350 million. This is against decreased smartphone units and seasonal weakness in general market goods sales.
Sanmina (SANM)
Sanmina (NASDAQ:SANM) has a substantial top-line diversity, leading across several end markets, including industrial, medical, defense, aerospace, automotive, communication networks and cloud infrastructure.
Additionally, no customer contributed more than 10% of sales during Q2 2024, suggesting a well-diversified clientele. Due to its diverse income sources from several sectors, Sanmina is less vulnerable to the dangers of focusing on just one market area. Further, the lack of a significant revenue-generating consumer guarantees that Sanmina’s financial performance is not unduly dependent on any one individual.
Moreover, the company held $651 million in cash during Q2 2024. Inventory turnover came in at 4.8%, up slightly from the previous quarter. And inventory is $1.38 billion, down slightly from the previous week. This results in a non-GAAP pretax return on invested capital of 22%, much higher than the weighted average capital cost.
Finally, a low leverage ratio of 0.57 times shows a robust balance sheet. High inventory turnover and excellent inventory management indicate good working capital management. Overall, this enables Sanmina to allocate capital optimally and keep levels of liquidity in check. Keep your eye on SANM, for it is definitely among breakout stocks you will want to buy.
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.
