The search for top hyper-growth stocks may be less of a priority for many investors. Indeed, while today’s dynamic and fast-paced economy demands that investors always seek opportunities to maximize their returns, these hyper-growth stocks can be more fickle to assess. That’s because while these companies have higher growth rates than the market, they also carry higher risk. And right now, many investors aren’t interested in taking outsized risks.
That said, these companies are often at the forefront of innovation. The disruption of traditional industries and creation of new markets is something that shouldn’t be avoided.
This article will look at three hyper-growth stocks with the potential for incredible upside. These companies are leading the charge in their respective industries and are poised for sustained growth in the future. From cutting-edge technology to innovative e-commerce platforms, these companies are changing the game and are worth a closer look for investors who are seeking high-growth opportunities.
Accordingly, let’s dive in!
Nvidia (NASDAQ:NVDA), which has been around since 1993, is one of the oldest hyper-growth stocks to make this list. This company is best known as a top producer of advanced microprocessors and hardware products. It has established a strong reputation as one of the most desirable chip manufacturers in the world. This is because when it comes to tackling intricate computing assignments like artificial intelligence and machine learning, Nvidia chips are typically the preferred choice.
Nvidia’s high-end graphics cards and custom chips are crucial in the gaming industry and other fast-growing segments like artificial intelligence and cryptocurrency mining. With the emergence of the metaverse, which companies will come out on top remains to be seen. However, regardless of the outcome, Nvidia is a promising investment opportunity with potential significant returns.
Nvidia has recently released its financial results for the fourth quarter and full year. Notably, these results were stronger during the height of the pandemic. The previous year, the company posted a record-setting quarter with revenue of $7.64 billion, $3 billion of which was pure profit. However, in its fiscal 2023 Q4 earnings report, Nvidia projected an income of $6 billion, which is almost exactly where it landed with $6.05 billion in revenue. Finally, the company’s full-year revenue was almost the same as the previous year, at $26.92 billion, but its profit was down substantially.
Shopify (NYSE:SHOP) has revolutionized the e-commerce industry. This company empowers small and medium-sized businesses to establish online stores quickly through its comprehensive software solutions.
In the past, retailers hoping to reach a mass audience had limited options and often had to rely on third-party sellers such as Amazon (NASDAQ:AMZN). However, Shopify’s technology enables these businesses to take a direct-to-consumer approach. This is a strategy that has gained significant traction since the onset of the pandemic.
Shopify’s exceptional performance during the pandemic resulted in a significant increase in sales, making it challenging to surpass those figures. However, the company’s recent financial results could have been more impressive, causing a drop of more than 70% in its stock price since late 2021. Many investors may have factored in unrealistically high growth rates into Shopify’s valuation, anticipating continued rapid expansion indefinitely.
While Shopify’s future remains promising, its main issue is its valuation. At its current price of $40 per share, the company has an enterprise value of $51.6 billion, or eight times the projected revenue for 2023. In contrast, Amazon valuation is only two times its expected sales this year, and BigCommerce’s (NASDAQ:BIGC) is three times its projected revenue for 2023.
Shopify’s current premium valuation is due to its reputation as a groundbreaking growth stock. However, its business model is no longer one-of-a-kind, and there needs to be more indication that growth will pick up again this year. While Shopify’s prospects remain bright, investors will only hesitate to invest if there is a sudden uptick in development or the company’s valuations drop significantly. Given these uncertainties, they should anticipate Shopify’s stock will remain stagnant and underperform the broader market for at least the following year.
Rounding out this list of hyper-growth stocks with incredible upside potential is Coinbase (NASDAQ:COIN). The company is prominently known as the largest cryptocurrency exchange in the US. Notably, Coinbase has kicked off 2023 positively, posting impressive results. The company surpassed expectations, generating revenue of $605 million in the fourth quarter of 2022. This exceeded predictions that it would only bring in $588 million. Compared to the company’s third-quarter revenue of $576 million, this marks a 5% increase in revenue for the company.
Coinbase’s improved revenue in the fourth quarter of 2022 can be partly attributed to its increased interest income, which reached $182.2 million. This is a significant increase from the $101.8 million reported in the previous quarter. Most of this growth in interest income is derived from the company’s USDC interest income, totaling $146 million. Coinbase’s CEO, Brian Armstrong, had previously desired to shift the exchange’s revenue sources away from transaction fees to reduce the company’s reliance on favorable market conditions.
Regarding its projections for 2023, Coinbase announced it was ready to handle various transaction revenue situations in the upcoming year, which could involve fluctuations or stability in cryptocurrency market capitalization and asset volatility compared to the levels observed at the end of 2022.
On the date of publication, Chris MacDonald did not have (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.