Innovation is a key component of most huge stock gains. Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), and Apple (NASDAQ:AAPL) all produced successful innovations that enabled their stocks to soar. Amazon developed its user-friendly online store, Apple created its iPhone, and Alphabet produced its wildly successful search engine.
Innovative companies have been great long-term bets, but Wall Street has been reluctant to buy these types of stocks due to elevated interest rates. But I agree with former Federal Deposit Insurance Chair Sheila Bair who wrote on October 2nd that “Truly promising innovations will attract capital. They always do.”
Consequently, I believe that the vast majority of companies’ great initiatives will receive funding from investors and banks. Here are three stocks to buy that are poised to climb a great deal over the long term.
Elbit Systems (ESLT)
Israel’s Elbit (NASDAQ:ESLT) is a pioneer when it comes to developing high-tech products for militaries. For example, in January, the company agreed to provide NATO with anti-missile systems for the alliance’s tanker transport plane fleet.
Moreover, ESLT will sell NATO its autonomous laser-based system which protects planes “against sophisticated heat-seeking ground-to-air missiles,” JNS reported. Anti-missile lasers are generally much cheaper to utilize than missiles that are used to shoot down the enemy’s missiles. For that reason, I expect Elbit to sell many more of its laser-based anti-missile products. Moreover, I believe that the company will greatly improve the product down the road.
Last summer, ESLT unveiled a new electronic, aircraft-based product that detects drones and enemy soldiers.
Over the long term, Elbit is likely to develop additional anti-drone offerings. Given the extensive use of drones in recent conflicts in Ukraine and Gaza, I expect the demand for Elbit’s offerings in this area to soar.
Xpeng (XPEV)
Last June, Chinese electric vehicle maker Xpeng (NYSE:XPEV) deployed its “ City Navigation Guided Pilot (NGP) advanced driver assistance system (ADAS)” to a test group in Beijing. The system was already available in three other major Chinese cities.
NGP utilizes a “deep learning neural network,” which is a form of artificial intelligence. Consequently, the system should improve as it obtains more data from being utilized on roads.
Indeed, in May, Xpeng reported that NGP was able to drive by itself as well as “a novice driver.” As the system gets more data, both from being used and undergoing “training,” the system’s “driver experience” level will advance by one year each quarter, Xpeng explained in May.
Sometime this month, the automaker is slated to roll out its next software update which will enable XGNP to work in unmapped areas in a number of cities. Additionally, the company has said that it will add unspecified “new features” to XGNP.
The fact that Volkswagen (OTC:VWAGY) has established an extensive partnership with Xpeng helps to validate and derisk the Chinese company and its technology.
Plug Power (PLUG)
Two startups —ZeroAvia and Universal Hydrogen –are developing small, hydrogen-powered planes that they expect to be ready to fly in 2025. Both companies have tested their planes this year.
Last March, Universal Hydrogen conducted a test flight that was powered by one of Plug Power’s (NASDAQ:PLUG) fuel cells. Consequently, I expect the startup to utilize PLUG’s fuel cells when it begins commercial operations.
PLUG is well on its way to becoming one of America’s largest producers of green hydrogen. Consequently, ZeroAvia will likely want to use zero-emission fuel. Good synergies exist and can suggest that ZeroAvia will use PLUG’s fuel cells in the future.
Moreover, PLUG has collaborated with the giant European airplane maker Airbus (OTCMKTS:EADSY), which is looking to sell hydrogen-powered airplanes by 2035. Over the long term, I expect PLUG stock to get a big boost from its partnership with Airbus.
On the date of publication, Larry Ramer held long positions in ESLT, XPEV, and PLUG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
