As the stock market is showing an unexpected pattern, investors are on the hunt for hidden-gem stocks that hold the potential to break free from the pack and deliver substantial gains.
Amidst the noise of popular market giants, a select group of under-the-radar companies is quietly positioning themselves for exceptional growth in the coming years.
They are becoming the next industry leader. These hidden-gem stocks span across diverse sectors—entertainment, finance, and technology. Interestingly, they have one thing in common: they’re primed to ride the next big wave.
As the economy navigates uncertainty, these stocks may not be the loudest names in the market. However, they hold the potential for substantial long-term value growth.
Paramount (PARA)
By focusing on high-quality content creation, Paramount (NASDAQ:PARA) has maintained its position as a leading provider of engaging entertainment across various platforms.
It has a vast library of over 200,000 TV episodes and 4,000 movies. Robust production capabilities allow the company to create and extend enduring franchises and formats. As a result, it ensures a broad appeal to audiences.
Notably, Paramount’s strategic shift to a direct-to-consumer (D2C) business model has enabled it to scale its streaming services. It includes Paramount+ and Pluto TV, driving increased revenue and engagement.
Focusing strongly on subscriber growth and enhanced average revenue per user through price increases and improved ad monetization, Paramount expects substantial growth in 2024.
The company’s ability to efficiently monetize its content across multiple platforms and revenue streams further enhances its long-term potential. Paramount’s digital advertising capabilities, exemplified by its EyeQ platform, have propelled its ad revenue.
Finally, partnerships with third-party platforms and linear TV broadcasting contribute to diversifying revenue sources. This is one of the hidden-gem stocks that can’t seem to miss.
Citigroup (C)
Citigroup (NYSE:C) stands to benefit in the long term through its diversified business model, strong balance sheet, and strategic initiatives.
Despite challenging global macroeconomic conditions, Citigroup’s robust and broad-based services have shown healthy revenue growth and market share gains. These services include Treasury and Trade Solutions, Security Services, and Card Businesses.
Citigroup’s focus on modernizing its infrastructure and enhancing client experiences through technology investments aligns with industry trends, ensuring long-term competitiveness.
The bank’s efforts to simplify its operations, exit non-core markets, and optimize its balance sheet contribute to improved efficiency and reduced costs. These initiatives position Citigroup to navigate changing economic landscapes effectively.
Citigroup’s focus on capital return and shareholder value, demonstrated by dividend increases and stock repurchases, reinforces investor confidence.
The bank’s strategic emphasis on managing capital allocation and efforts to enhance profitability supports its sustainable growth and financial stability over the long run, making it one of the better long-term hidden-gem stocks.
Roblox (RBLX)
Roblox’s (NYSE:RBLX) long-term benefits are founded on its impressive growth metrics and strategic initiatives. Fundamentally, the company’s consistent increase in metrics. This includes daily active users (DAUs), bookings, and engagement hours, which showcase a strong user base and demand for its platform. Expanding internationally, particularly in high-growth markets like Germany, Korea, Brazil, India, and Japan, will highlight its global appeal.
Roblox’s multi-age appeal and the 5x larger 13-and-over cohort further solidify its positioning across demographics.
Also, the company’s efforts to promote safety and enhance communication through technologies like voice and facial animation enhance the user experience and retention.
Further, the robust developer ecosystem is instrumental in driving content diversity and creator earnings. Developer payouts signify a thriving community and a broader distribution of wealth.
The introduction of immersive advertising and advancements in AI demonstrate Roblox’s adaptability and innovation.
Also, the focus on AI has many applications. From safety to content generation, it is setting the stage for efficient growth and an improved user experience, making it one of the hidden-gem stocks to watch in tech.
Upstart (UPST)
Upstart (NASDAQ:UPST) stands to benefit fundamentally in the long term due to several key factors. Its focus on developing superior AI-enabled risk models and innovative techniques like parallel timing curve calibration accelerates model development. It is giving the company a competitive edge in the lending industry. Also, it positions Upstart to lead the way in the AI-enabled future of lending, offering an improved credit access for a wide range of borrowers.
Secondly, the company’s focus on automation and efficiency reduces operating costs and enhances the customer experience. This is evident in its high rate of fully automated loan approvals (88% in Q2 2023). Fundamentally, this efficiency scales originations and creates a unique selling point for consumers.
Thirdly, Upstart’s ability to optimize costs and achieve a record % contribution margin of 67% in Q2 2023, demonstrates strong financial management. This resilience allows Upstart to weather economic cycles and provides a foundation for profitable growth.
Finally, the company has expanded into different lending products. For instance, auto retail lending and small-dollar relief loans diversify its revenue streams and widen its customer base.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) stands to benefit significantly in the long term based on its recent performance and strategic initiatives. The company’s impressive revenue growth and expanding income from operations margin in various geographies and segments underscore its resilient business model and scalability.
The robust growth in Gross Merchandise Volume (GMV) in key markets like Brazil and Mexico, along with the strong momentum in the Advertising business, underlines its leadership position and potential for further expansion.
Mercado Pago, the company’s fintech arm, is strategically positioned to tap into Mexico’s growing digital payments and financial services market. By leveraging its brand trust and user relationships from its commerce business, Mercado Pago is well-positioned to drive the digitalization of cash, offer convenient financial products, and encourage the use of its digital accounts for transactions. Also, the expansion into credit cards and insurance products further solidifies its holistic financial services ecosystem.
Remarkably, the company’s diversified growth vectors, focus on technology enhancement, and strategic investments in various segments demonstrate its commitment to capturing market share. Simultaneously, it is balancing short-term margin expansion with long-term scalability.
Sea (SE)
Sea (NYSE:SE) may benefit fundamentally from its diversified business segments in the long term.
In e-commerce, their focus on enhancing user experiences, expanding logistics capabilities, and deepening AI integration will attract more buyers and sellers, strengthening their competitive moat.
For digital entertainment, the positive trends in active user base and strong performance of games like Free Fire and Arena of Valor indicate a potential for sustained engagement and monetization.
Regarding digital financial services, SeaMoney’s growth in revenue and improved EBITDA highlights their efforts in risk management and diversification of funding sources.
Sea’s ability to adapt swiftly, invest strategically, and optimize costs ensures market resilience and efficiency. They may capture underserved opportunities supported by a commitment to innovation, partnerships, and community building.
Finally, as the company maintains a balanced approach to investment and profitability, it’s likely to capitalize on the expanding digital landscape, generating value for stakeholders over the long term.
Crowdstrike (CRWD)
CrowdStrike (NASDAQ:CRWD) is positioned for long-term success through its strategic focus on leveraging AI technology and its unique data advantage.
The company’s innovative use of AI has not only led to industry-leading detection and rapid remediation for customers, it has also lowered costs and increased margins for the business.
Introducing Charlotte AI, a generative AI security analyst, showcases CrowdStrike’s commitment to bridging human and machine-generated data, resulting in better security outcomes and operational cost reductions.
This proprietary data advantage, combined with a comprehensive set of correlated human and machine-generated data, establishes a competitive moat that yields superior models, automation, and results.
Last but not least, CrowdStrike’s ability to anticipate the adoption of generative AI and its partnerships, such as the collaboration with AWS, further solidify its leadership position in the evolving cybersecurity landscape.
The company’s track record of success, expanding customer base, and continuous innovation position it favorably for sustained growth and value creation.
As of this writing, Yiannis Zourmpanos was long PARA, and C. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Artificial Intelligence, Bank, Cloud, Communications, Cybersecurity, E-Commerce, Financial, Fintech, Media, Consumer Discretionary, Retail, Software, Streaming, Technology
