In the stock market, there is always a constant search for the next big opportunity that may uplift investments into substantial gains. The article lists three next-generation stocks where innovation is instrumental to gaining a market edge.
These stocks may redefine the investment space. Each represents a pillar of technological advancement in its respective fields. They are edging into IT, semiconductor technology, and infrastructure development.
The first one has ingenious user-monetization strategies. The second one has an extensive product portfolio catering to emerging market trends. The third one has solid backlog growth, signaling a moat in construction and engineering. These stocks stand as volcanoes of potential in an ever-changing market.
Read more to dissect the strategies and fundamentals of these next-gen stocks. Explore how they could transform an initial investment of $1,000 into a $10,000 windfall.
Opera (OPRA)
Opera’s (NASDAQ:OPRA) user base and related revenue are key fundamentals supporting the browser maker’s market valuations. For instance, increasing average revenue per user (ARPU) suggests it is leading in monetizing user engagement and extracting more value from its user base.
In Q3 2023, the 11% sequential growth in ARPU reflects the edge of Opera’s monetization strategies and the value proposition of its offerings. Through premium features, subscription plans and targeted advertising options, Opera may increase user spending and maximize revenue per user.
Additionally, expanding Western users within Opera’s user base suggests the company’s ability to penetrate and capitalize on progressive markets. These markets often have higher purchasing power and ARPU potential, making them attractive targets for top-line growth and market expansion. By boosting its presence and market share in Western regions, Opera can diversify its top line, reduce dependency on specific markets, and neutralize the risks associated with regional economic fluctuations.
Furthermore, Opera’s focus on attracting high-value users, such as gamers, boosts ARPU growth and revenue diversification. These users tend to be more engaged, loyal and willing to spend on premium features or services, resulting in a higher ARPU and lifetime value. Opera’s considerable growth in advertising revenue reflects its lead in attracting advertisers, monetizing its platform, and delivering targeted advertising solutions.
Here, the 24% year-over-year increase in advertising revenue suggests the edge of Opera’s advertising platform and its capability to derive advertiser demand and engagement. Through edgy ad formats, targeting options and performance analytics, Opera may continue to provide value to advertisers and boost their advertising return on investment.
Finally, the diversification of the top-line, with advertising revenue representing 39% of the overall revenue, reduces Opera’s dependency on any single revenue source. Hence, this boosts the company’s top-line stability and value growth potential.
ACM Research (ACMR)
ACM Research’s (NASDAQ:ACMR) product portfolio expansion is fundamentally favoring possible rapid valuation expansion. The company has expanded its product portfolio to meet diverse customer requirements and capitalize on emerging market trends. The company offers a range of solutions, including single wafer, Tahoe sulfuric peroxide and semi-critical cleaning; electrochemical plating; furnaces; and advanced packaging technology.
Specifically, for cleaning, ACM Research has experienced considerable growth. There was a 33% increase in Q3 2023 and 42% year-to-date growth. Additionally, introducing new cleaning tools and expanding existing product lines have driven sales growth and adoption.
Despite moderate growth of 4% in Q3, ACM Research has achieved a solid 24% year-to-date growth in electrochemical plating, furnaces and other technologies. The company’s high-temperature annealing and low-pressure chemical vapor deposition furnace products have delivered solid top-line growth with advancements in silicon nitride and atomic layer deposition furnace technology.
Furthermore, ACM Research has captured a 12% year-over-year growth in advanced packaging (excluding electrochemical plating) in Q3 and a massive 40% year-to-date growth. The company’s range of packaging tools, including coder, developer, squabber, and photoresist stripper, has met the increasing demand for packaging innovations such as 2.5D and 3D packaging.
Fundamentally, in addition to top-line growth, ACMR has attained rapid shipment growth indicating increasing demand for its offerings. The company has hit record shipments of $213 million in Q3, marking a 31% year-over-year increase. Lastly, ACM Research’s record shipments reflect considerable market demand and satisfaction with its products.
Sterling Infrastructure (STRL)
Sterling Infrastructure‘s (NASDAQ:STRL) strong backlog growth may continue to boost the construction and engineering firm’s valuations. The backlog represents the total value of contracts for projects that the company has secured but not yet completed. It provides a clear indication of the expected solid top-line growth.
At the end of Q3 2023, Sterling Infrastructure’s backlog reached $2.01 billion, marking a solid increase of $596 million from the beginning of 2023. This considerable growth suggests the company’s lead in securing new contracts and expanding its project portfolio. Sterling provides site development services for manufacturing, data centers, e-commerce distribution centers, warehousing, energy and more.
In addition to the growth in backlog value, Sterling Infrastructure also attained gross margin improvement of 15.2%, representing a less than one percent gain from 2023’s beginning. This improvement, though, reflects the company’s ability to optimize project profitability and boost operational efficiency. A higher gross margin within the backlog indicates Sterling Infrastructure is securing contracts with favorable terms and effectively managing project costs.
Moreover, the company’s unsigned awards totaled $375 million at the end of Q3. This further contributes to its strong backlog position. Unsigned awards represent contracts awarded to Sterling but which have yet to be finalized or included in the backlog. The considerable value of unsigned awards highlights the company’s lead in winning new projects. Hence, this positions Sterling Infrastructure for continued growth over the long term.
Finally, Sterling Infrastructure’s book-to-bill ratio remained strong at 1.5x for both backlog and combined backlog. The company’s book-to-bill ratio above 1 suggests it is securing more new contracts than it is completing. Therefore, the edge of Sterling Infrastructure’s book-to-bill ratio solidifies its ability to capitalize on growth trends.
As of this writing, Yiannis Zourmpanos held a long position in ACMR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
