In today’s rapidly-evolving technological landscape, investors have an exciting opportunity to get in early on revolutionary tech stocks that have the potential to deliver outsized returns. As these innovative companies disrupt traditional industries and expand into new markets, their growth trajectories can quickly turn into skyrocketing share prices. Indeed, these stocks have the potential to turn early shareholders into millionaires. However, identifying these diamonds in the rough requires diligent research and a willingness to take calculated risks.
The good news is that there are several tech sectors primed for massive growth in the coming years. For example, electric vehicle stocks continue to benefit from surging consumer demand and favorable regulatory conditions. Quantum computing firms are unlocking unprecedented processing power that will transform everything from drug discovery to financial modeling.
Thus, getting in during the early stages of a structural technological shift can provide big gains. As these revolutionary companies scale up and capture market share from legacy players, revenues and valuations will skyrocket. Here are three such companies I think are worth looking into.
Luminar Technologies (LAZR)
Luminar Technologies (NASDAQ:LAZR) develops lidar sensors and software for autonomous vehicles. Lidar (light detection and ranging) technology utilizes laser beams to detect surrounding objects and enable autonomous driving capabilities. The company went public via SPAC and saw its share price spike to nearly $40 in early 2021 on excitement about the autonomous driving opportunity. However, LAZR stock has since pulled back sharply, now trading around $4 per share.
While lidar technology still has a long road ahead to gain widespread adoption, Luminar remains one of the top innovators in the industry. A key challenge for lidar players is bringing down costs enough to make the technology commercially viable for automakers. Luminar aims to do just that, aiming to make its products “better, smaller, [and] cheaper” and get automakers to adopt this technology.
In Q2 2023, the company noted strong progress on its next-generation lidar, which it expects to unveil by year-end. This product roadmap keeps Luminar on track to hit an ambitious $60 billion dollar order book by the end of the decade.
As for its financials, Luminar delivered 63% year-over-year revenue growth in Q2 2023. Analysts project the company will end the year with an even more impressive 106% growth rate. In my opinion, the risk-reward looks compelling for long-term investors willing to ride out what could remain a bumpy journey. If Luminar succeeds in making lidar technology commercially viable, today’s price will look like a bargain in hindsight. Wall Street’s consensus price target at near $10 per share puts the stock’s current upside potential at 125%.
Terran Orbital (LLAP)
Terran Orbital (NYSE:LLAP) manufactures and operates small satellites primarily serving the U.S. aerospace and defense industry. The stock rode the hype around new space names to above $10 per share, before crashing back below $1 recently.
However, Terran Orbital has quietly built an impressive $2.6 billion backlog, which is equivalent to around 20-times its current market capitalization. The company anticipates converting 80% of this backlog to revenue over the coming years, as it scales up production. Its new advanced manufacturing facilities will enable Terran Orbital to produce upwards of 1,000 satellites annually by 2025.
Obviously, this is a stock with dilution risk and thin margins. However, other innovative space companies like SpaceX and Virgin Galactic (NYSE:SPCE) are trading at nosebleed valuations despite no profits. Analysts expect the company to turn the corner to become EBITDA positive in 2025. With shares trading near all-time lows, Terran Orbital offers a compelling risk-reward profile for investors comfortable with early-stage execution risk. The consensus price target at $4.70 puts the stock’s one-year upside potential at 526%.
ChargePoint (CHPT)
ChargePoint (NYSE:CHPT) operates an EV charging network spanning North America and Europe. This is yet another tech stock that has tumbled quite a lot recently, and much of ChargePoint’s slide is due to disappointing quarterly results this year, particularly with respect to the company’s decelerating revenue growth. However, the significant mismatch between EV sales growth and the buildout of charging infrastructure makes ChargePoint a long-term buy at today’s depressed levels. Electric vehicle adoption is still in its infancy, with EVs comprising just 1% of the vehicles on the road in the U.S..
Meanwhile, McKinsey estimates that America alone will need 1.2 million public EV charging ports by 2030, a 20x increase over today’s levels. As the clear charging infrastructure leader with more than 65% U.S. market share, ChargePoint stands to capitalize on this enormous growth for years to come. Accordingly, short-term disappointments have already been digested with the recent correction in the stock market, and analysts have a consensus price target of $11 per share, implying 148% upside.
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.
