Investors seeking higher returns on their capital often turn to hypergrowth stocks. These assets have great potential and can comfortably exceed the returns of the S&P 500 if the companies continue to grow at high rates.
Finding hypergrowth stocks with substantial potential takes some work. Investors have to look for a healthy combination of high revenue growth and a sustainable business model. Some of these aren’t profitable yet, but narrowing losses can suggest profitability is around the corner.
Investing in high-return stocks like these three and consistently building your positions can become a winning recipe for those wanting to join the millionaires’ club.
InMode (INMD)
InMode (NASDAQ:INMD) is an Israeli-based company that provides innovative medical technology to optimize surgical procedures and enhance existing treatments. The company’s technology is used for plastic surgery, gynecology, dermatology, otolaryngology and ophthalmology.
The company operates at high-profit margins and combines high revenue growth with a low valuation. The company’s P/E ratio is a tad below 20 which looks like a steal. Revenue grew 23.5% year-over-year in the first quarter and net income jumped by 30.8% year-over-year.
Yair Malca, the Chief Financial Officer of InMode, mentioned that international sales were up again in the quarter and that European sales hit a new record. The company reported strong growth numbers in a relatively slow quarter for the aesthetics space.
The company’s $574.5 million cash position further supports itself as one of the top millionaire maker stocks to consider. A company that can grow profitably without incurring debt has great potential already and a low valuation makes it even more enticing.
Fortinet (FTNT)
Fortinet (NASDAQ:FTNT) is a cybersecurity company that has several security solutions for small businesses and corporations. The hypergrowth stock is up roughly 60% year-to-date and has a forward P/E ratio in the low 50s.
The high-growth company has double-digit revenue growth and healthy profit margins. Unlike other cybersecurity companies that feature high growth at the expense of profits, Fortinet has been GAAP profitable and free cash flow positive every year since its IPO in 2009.
Fortinet posted a 2025 revenue target of $8 billion, a number that implies a 3-year compounded annual growth rate (CAGR) of 22%. Fortinet also projected that operating margins will exceed 25% as the company continues on its growth path.
The cybersecurity industry is projected to reach $424.97 billion in 2030, implying a 13.8% CAGR. Cyber hackers aren’t going anywhere and companies need cybersecurity software to increase their defenses. Fortinet fills this void and can reward shareholders who want to reach the millionaires’ club by investing in hypergrowth stocks.
ServiceNow (NOW)
ServiceNow (NYSE:NOW) offers software that helps companies manage digital workflows. The cloud computing company recently exceeded expectations and raised guidance for 2023. ServiceNow reported 24% year-over-year revenue growth and doubled its net income.
ServiceNow has over 7,700 global enterprise customers and 1,682 of those customers have annual contract values that exceed $1 million. Those 7,700 enterprise customers include 85% of the Fortune 500 companies.
In the Q1 press release, CEO Bill McDermott mentioned that enterprise clients are using ServiceNow for various purposes, such as “cost-takeout and innovation to drive growth.” The software’s versatility has helped the company remain a top choice. Leadership offered guidance for service revenue to increase by 23%-23.5% in 2023.
The company’s growth and opportunities haven’t gone unnoticed. ServiceNow stock is up by almost 50% year-to-date and has nearly tripled over the past five years. The stock’s all-time high is $701.73 which it reached on November 4, 2021. A return to this all-time high would represent a 24% gain. ServiceNow holds a high P/E ratio that is hovering near 300, but its 60 forward P/E looks more enticing and reflects the company’s potential.
On this date of publication, Marc Guberti held long positions in INMD and FTNT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
