Nvidia (NASDAQ:NVDA) has become the face of artificial intelligence and its stock has responded in kind. Shares are up 200% over the past year and over 800% since the release of ChatGPT, which sparked an AI tsunami. Yet there is a world of stocks that are outperforming Nvidia.
While the technology sector provides opportunity with companies like Super Micro Computer (NASDAQ:SMCI) far outstripping the chipmaker’s gains, investors should widen their lens even further.
Below are three fast-growing stocks that are outperforming Nvidia. They are not household names yet but could be a place to begin your search for long-term potential. Let’s see whether these rocket ships are worth investing in today.
Vital Farms (VITL)
Who knew raising chickens for eggs could be a monster growth market? Vital Farms (NASDAQ:VITL) proves it though, with its stock that are outperforming Nvidia in 2024. VITL stock is up 198% this year compared to a 149% gain by the AI chipmaker.
Be careful where you get your data from though as Investor’s Business Daily indicated Vital Farms rocketed over 1,800% last year. The egg producer, however, actually was up just 5% in 2023. The site, though, correctly notes the volatility Vital and other egg, poultry and meat producers face due to widespread illness outbreaks like avian flu. Vital suffered flock losses in 2022 and 2023 but says it can mitigate the damage because it has a network of 300 family farms it uses to supply its eggs.
Vital Farms is faring far better than industry giant Cal-Maine Foods (NASDAQ:CALM), which is the country’s largest egg producer, producing 587,700 dozen eggs per hour at 43 different facilities. Its stock is up just 6% this year. In contrast, Vital sells over 8,000 dozen eggs per week at its retail partners.
The difference with Vital is it is an ethically sourced egg producer selling pasture-raised eggs. While there is a public misperception about what free-range, pasture-raised or cage-free really means, chickens are more humanely treated today than they were in the past when hens were crammed wing-to-beak in factories. Vital sells its eggs in 24,000 stores, a quarter of which are Whole Foods locations.
Yet it’s hard to see Vital Farms holding onto its stock gains. It trades at 54 times trailing earnings, 4 times sales and 33x free cash flow (FCF), which is pricey for a commodities producer however ethical its practices.
Novavax (NVAX)
When you fall as far as biotech Novavax (NASDAQ:NVAX) did there is little place to go but up. But the producer of Covid vaccines is soaring in 2024, with its stock outperforming Nividia with a 163% return. Virtually all of it came beginning in May when Novavax signed a partnership agreement with Sanofi (NASDAQ:SNY) to market its coronavirus vaccines.
Under terms of the deal, Sanofi will pay Novavax $500 million upfront plus milestone payments of $700 million that value the total agreement at $1.2 billion. Sanofi will also take a less than 5% minority ownership stake in the biotech.
While that significantly de-risks an investment in Novavax, the problem is the market for Covid vaccines has greatly diminished. Growth has flatlined and Novavax has just a small percentage of the total.
According to data from Oxford University and Y Combinator, some 917 million doses (including boosters) have been administered worldwide. That’s only a few million more than in 2022. Of that number, Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) account for 73% while Moderna (NASDAQ:MRNA) has another 17%. Novavax barely even registers with 310,000 doses administered. Barring another Covid outbreak, there doesn’t appear to be much of a growth market here.
Redwire (RDW)
The third stock outperforming Nvidia this year is Redwire (NYSE:RDW), a leading manufacturer of space infrastructure for NASA, U.S. Space Force, the European Space Agency and space launch services company Rocket Lab USA (NASDAQ:RKLB). Its stock is up 152% so far this year.
Redwire provides mission critical avionics, sensors, power generation, structures and more. It was recently selected by Rocket Labs to provide antennas and RF hardware for the Space Development Agency’s constellation of satellites providing warfighters with unjammable communications. It also provided the cameras used by Intuitive Machine’s (NASDAQ:LUNR) lunar lander.
The space stock went public in 2021 via a merger with a special purpose acquisition company (SPAC) but splash landed hard afterward. It wasn’t until last year that it was able to gain altitude again. It has been growing since, especially this year. Just last month it was awarded a contract from the Defense Advanced Research Projects Agency (DARPA) for its SabreSat very-low-earth-orbit satellite.
Although still producing losses on a GAAP basis, Redwire looks positioned for long-term profitability. As it just produced positive FCF for the first time, it is a foundation upon which to grow.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, Rich Duprey 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.
