You might be familiar with the term “hyper growth stocks,” often associated with major large-cap technology companies. While these firms certainly have a significant impact on the market, growth stocks aren’t limited to this pocket of the market. Rather, various small- to mid-cap tech stocks may be better-termed as growth stocks, as higher growth rates tend to correlate to companies with smaller market capitalizations.
That said, the companies I’ve decided to focus on in this hyper-growth stocks piece have shown an incredible historical track record of outsized growth. These are the hyper-growth stocks of the past, so to speak, which could see another burst higher moving forward. A second wind is always a great thing, and for long-term investors who have stuck with these companies, it’s clear that second winds are par for the course for certain mega-cap companies.
Let’s dive into why these three hyper-growth stocks should be on investors’ radar screens right now.
Upstart Holdings (UPST)
Upstart (NASDAQ:UPST), known for its use of advanced AI and efficient automation, appears poised for sustained growth. The company’s unique approach to determining a borrower’s creditworthiness (utilizing a myriad of factors and an AI-driven model) has led to intense interest in this company as a pure plan on AI. However, this proprietary model also has shown the ability to boost the experience of customers, particularly those who may be among the lower FICO score borrowers out there.
Upstart’s recent second-quarter results indicate as much. The company brought in $136 million of revenue and an unexpected positive earnings per share of 6 cents. This indicates strong interest from both borrowers and lenders and suggests Upstart’s model is one that could be as disruptive and revolutionary as many initially thought.
Upstart’s collaboration with Farmers Insurance Federal Credit Union reflects its dedication to innovation and teamwork. Q2 2023 earnings showed a revenue decline of 39% to $140.1 million, but an impressive 187.6% beat on the bottom line garnered attention. Though net income and operating figures were negative, a substantial 159% increase in net cash change hints at potential strategic opportunities.
Furthermore, Upstart’s venture into diverse lending products like auto retail loans, small-dollar relief loans, and home equity loans underscores its dedication to diversification. This broadens its borrower base and revenue streams, reducing risk concentration.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) has been on a tear lately, recently breaching yet another all-time record high, with its market cap surpassing $1.2 trillion. The surge followed a pullback, despite strong Q2 results. NVDA’s recent partnership with Alphabet (NASDAQ:GOOG) and analyst predictions hint at further growth in tech stocks for 2023.
Nvidia’s stock trades at about 33 times projected earnings for the next 12 months, down from 46 times last week. This follows higher earnings estimates after the company raised its forward guidance, anticipating a 170% Q3 revenue increase. Nvidia also plans a $25 billion share buyback, signaling confidence in its undervalued stock.
CEO Jensen Huang has noted the dawn of a new computing era marked by the transition to accelerated computing and generative AI across global companies. Nvidia’s optimistic guidance points to a Q3 revenue target of $16 billion, reflecting its strong growth trajectory.
SoFi Technologies (SOFI)
SoFi Technologies (NASDAQ:SOFI), a comprehensive financial solution provider, holds a significant share in the student loan market. It’s poised for growth as more borrowers refinance their loans. Despite trading at $8.15, SOFI stock, up 81% this year, and I think is one that could double yet again from current levels.
Strong financials underpin this potential, with sustained quarterly revenue growth and a 37% year-over-year increase. The company also reported a 47% rise in banking customers and a 6% increase in student loans.
SOFI stock’s value relies heavily on expected growth, which isn’t fully reflected in share prices yet. Anticipated GAAP profitability could boost shares. Over time, with substantial earnings increase, returning to former prices ($15 or $20 per share) may be feasible.
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.
