At the last Federal Open Market Committee (FOMC) meeting, Fed Chair Jerome Powell expressed that he was confident that even a mild recession was unlikely. This sentiment came as the labor market and household savings remained strong.
Furthermore, inflation eased to its lowest level in the last two years to 4.9%. These developments, combined with the strain on the financial sector, mean that the Fed is likely to ease interest rates. That will benefit many hyper-growth stocks.
Below are three explosive hyper-growth stocks that are poised to take advantage of this macroeconomic tailwind.
AppHarvest (APPH)
AppHarvest (NASDAQ:APPH) is an applied agricultural technology company that operates indoor farms. The farms use artificial intelligence (AI) and robotics to reduce energy use and greatly increase crop yield.
Located in Appalachia, its facilities are within a one-day drive to about 70% of all American consumers, allowing for quick delivery of their products. This greatly reduces transportation fuel by 80% compared to produce from Mexico or the Southwest. With a value of $18.12 billion in 2021 and a compound annual growth rate (CAGR) of 10.2%, the agricultural technology market is expected to reach $43.37 billion by 2030.
The company beat projections in Q4 2022, reporting total revenue of about $4.55 million, which showed 45% year-over-year (YOY) growth. For FY 2023, management predicts net sales of $40-$50 million, compared to $14.6 million for FY 2022.
However, the company faced some financial troubles, such as less cash and cash equivalents and more total liabilities in FY 2022. This can be attributed to the recent expansion of facilities and farming systems, which requires large investments. Still, if these expansions prove to be successful, management predicted in its earnings call positive gross profit in 2024 and nearly triple net sales YOY in 2023.
The stock has fallen by over 66% in the past six months and trades at just a 3.59x price-to-sales (P/S) ratio. If its expansion plans work out, there will be plenty of upside for investors to enjoy. AppHarvest represents a high risk-to-reward play and is a valuable stock for investors to watch.
Palo Alto Networks (PANW)
Palo Alto Networks (NASDAQ:PANW) is a cybersecurity company that offers network security solutions to businesses and government organizations. The cybersecurity industry is currently valued at $193 billion and expected to reach $534 billion by 2030 — growing at an 11% CAGR.
PANW grew revenue at an impressive 25.43% CAGR over the past five years, significantly higher than many popular competitors. Management projects revenue of about $6.9 billion in 2023, a 22.58% increase YOY.
The prevalence of SaaS, Web 2.0, Web 3.0, social media, and cloud-based apps has made traditional security methods obsolete. One of the key components of its infrastructure is its Next-Generation Firewall System, which stops 40% more DNS attacks. It also boasts 30% higher performance than competitors.
Though cybersecurity is a competitive industry, PANW’s 700+ cybersecurity patents gives it an unmatched range of solutions and products that cannot be found elsewhere. PANW is a leading cybersecurity company with promising market trends, making it a “buy” for growth investors.
Opera (OPRA)
Opera (NASDAQ:OPRA) is a Norwegian company that operates a multi-platform Chromium-based browser.
In Q1, Opera revenue grew by 22% YOY, marking its ninth consecutive quarter of 20%+ revenue growth. Margins were 18%, representing an increase of 36% YoY. Operating profit was $14 million, compared to $1.3 million in the same period last year. The company also announced a collaboration with OpenAI, launching the first browser with integrated generative AI services.
Opera brands itself as a “gaming browser” that captures a more niche group of customers. Opera GX is popular among gamers because it allows them to have control over their computer’s resource usage. The browser offers convenient features for players, such as easy access to social media platforms, streaming content, and finding game deals and recommendations. With more than 1 billion PC gamers worldwide, Opera has significant potential for further expansion.
It is no surprise then that four Wall Street analysts put a strong buy rating on the stock. With strong momentum and lots of space to expand into, Opera is an exciting company that is likely to outperform the market.
On the date of publication, Michael Que 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.
