Artificial intelligence is still all the rage with investors, but the hype has pushed many stocks to unsustainable heights. Now that the irrational frenzy is cooling off, some compelling opportunities are emerging away from the hot spotlight. Savvy investors should check out these hidden gems this Fall, rather than chasing the wildly popular names.
The AI companies I’ll highlight here have huge runways ahead, even as others plateau. They’re operating quietly out of the public eye. But make no mistake, these firms wield disruptive tech, top talent, and aggressive strategies to dominate their corners of the industry. Instead of publicity stunts and lofty valuations, they’re wisely pouring resources into R&D and bringing products to market.
By steadily building within AI’s most important sectors, they’re laying the foundations that will power tomorrow’s innovations. From revolutionizing healthcare to optimizing business operations, their ambitions target massive multi-billion dollar markets. Sure, they’re at an earlier stage many of the more well-known AI stocks are. However, their foundations grow stronger by the day.
With initial commercial success already validating their tech, rapid scaling is on the horizon. Additionally, their rational valuations offer a great entry point before the crowd catches on. As AI transforms every industry in the coming years, these stocks deserve a spot on investors’ watchlists.
Terran Orbital (LLAP)
As space commercialization accelerates, satellites power essential services from broadband to Earth observation. Terran Orbital (NYSE:LLAP) is going where few can follow, developing complex systems for the most demanding customers. Its backlog now exceeds $2.6 billion, including a massive $2.4 billion contract from Rivada Networks for a 300-satellite constellation.
The company expects 80% of its total backlog ($2 billion) to be turned into revenue by 2025. The entire market capitalization of this company is at $250 million right now.
With over 370 satellites over 30 programs and $20 billion worth of opportunities in its pipeline, Terran Orbital is firing on all cylinders. The Rivada deal alone represents its largest commercial award ever, and third-largest overall. As CEO Marc Bell noted, “We have been very busy. We have 11 proposals currently outstanding within total value of $1.6 billion today. In addition, we have 27 RFIs or ROMs active valued over $900 million of additional potential revenue.”
This sleepy aerospace manufacturer is quietly gearing up to be a space tech powerhouse. Its swelling project pipeline lays the groundwork for immense growth in the years ahead.
While new competitors like Astra stumble out of the gate, Terran Orbital reliably delivers for marquee customers like Lockheed Martin (NYSE:LMT) and SpaceX. The company just opened a new 50,000-square-foot facility that doubles production capacity to 20 satellites per month. Another 94,000-square-foot site is underway and will support over 42 satellites monthly by 2024.
In my opinion, Terran Orbital is positioning itself as an indispensable partner for the most demanding aerospace customers. As satellite networks become critical infrastructure, the company cements its role in this high-growth market. Its proven track record and rock-solid backlog signal smooth sailing for Terran Orbital’s ambitious growth story ahead. For forward-looking space investors, this hidden gem offers a compelling value proposition. The consensus price target of $4.7 implies a 223% one-year upside potential.
UiPath (PATH)
While many AI stocks start to plateau, savvy investors should maintain perspective. This robotics process automation leader offers a highly-attractive entry point, while many of its peers are overvalued. I prefer UiPath (NYSE:PATH) over many other “AI” software stocks due to its link with industrial companies. C3.ai (NYSE:AI), for example, is very reliant on Baker Hughes (NASDAQ:BKR), and the company seems more worried about its marketing than bona fide operations.
After surging adoption during the pandemic, UiPath is reaccelerating with product innovation and go-to-market enhancements. The company’s Q2 revenue grew 18.2% to $290 million as operating margins hit 17%, demonstrating UiPath’s efficient scaling. However, UiPath’s ambitions go beyond cost-cutting. A strategic focus on banking, manufacturing, and tech galvanizes top-line growth and forges partnerships with industry titans. Its recent partnerships with the likes of SAP (NYSE:SAP) enable UiPath to scale automation across Fortune 500s.
For example, Generative AI from leaders like Google can now generate autonomous automation scripts, unlocking huge productivity gains when combined with UiPath’s platform strengths. Regardless, industrial firms urgently need to digitize operations and supply chains. UiPath’s industry solutions perfectly suit these digital transformation initiatives. With automation becoming mission-critical amid economic uncertainties, UiPath provides an instant ROI boost.
Despite the growth hiccup in recent quarters, UiPath’s long-term prospects are still compelling. With analysts expecting revenue & earnings per share to double as early as 2028, UiPath presents a great opportunity for investors comfortable holding through volatility. As AI permeates the enterprise landscape, this category leader should deliver multi-bagger returns over the next decade.
Lantheus (LNTH)
With cutting-edge isotope technology, Lantheus (NASDAQ:LNTH) provides radiopharmaceutical imaging agents to diagnose and treat cancer and other diseases. Its products illuminate diseased tissue to empower personalized, targeted care. While the stock is down 35% from its 2023 peak, the company’s strong execution continues. With immuno-oncology driving nuclear medicine adoption, Lantheus deserves a spot on investors’ watchlists.
As the leader in imaging agents, Lantheus is well-positioned to capitalize on growing demand. Its flagship PyLarify product for prostate cancer has seized around 70% market share since launch. With $210 million in PyLarify sales this quarter, up 62% year-over-year, this blockbuster drug powers Lantheus’ growth.
Beyond imaging, Lantheus is progressing radiopharmaceutical treatments through its pipeline. Its lead candidate PNT2002, was granted FDA’s Fast Track designation for treating metastatic castration-resistant prostate cancer.
Despite the recent stock correction, Lantheus continues executing at a high level. With revenue growing over 44% year-over-year on the back of its blockbuster PyLarify franchise, the company still has an enviable growth profile. You are paying just 11.4-times forward earnings for that growth. That sort of growth wont last forever, and inflation and supply chain issues may cause short-term turbulence, but the long-term tailwinds propelling nuclear medicine adoption remain firmly intact.
Lantheus deserves patience from investors comfortable with some volatility. As pipeline assets like PNT2002 hit the market over the coming years, Lantheus’ leadership in radiopharmaceuticals should drive tremendous investor returns over the next decade. Still, the consensus price target of $121.4 for LNTH stock implies 87%-plus upside potential in one year.
On the date of publication, Omor Ibne Ehsan 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.
