Due to the consistent decline of broader indices like the S&P 500 this year, it has become apparent that the results for companies in 2024 will be more uncertain than ever. In order to fight against this decline, investing in extraordinary startups may give investors the leg up they need to beat the market, thus leading to this list of startups to watch.
The companies discussed in this article all represent great value and have strong upside catalysts. Due to their small market caps and bullish expectations, they may break the glass ceiling of a bear market, which seems likely to eventuate sometime during next year.
So, here are the best startups to watch for in 2024 for potentially stellar returns.
Arm Holdings (ARM)
Arm Holdings (NASDAQ:ARM) is a prominent U.K. chip designer and is one of the most significant IPOs since 2021. Its chips are prevalent in consumer products, including smartphones and digital televisions.
Recently, there has been some good news for ARM, which could have led to a more buoyant share price. Shares of the company increased by 3% after receiving multiple Buy ratings from Wall Street analysts, post the end of the quiet period following its IPO. Analysts believe in Arm’s potential growth in the smartphone and data center sectors. The average rating for Arm is Buy, with a median price target of $63.50.
Ahead of its IPO, Arm reported a 1% decline in annual revenue, with sales dropping to $2.68 billion due to a decrease in global smartphone shipments. The company’s quarterly sales for June 30 also fell by 2.5% to $675 million.
Still, despite these weaknesses, the consensus is that ARM is one of those startups to watch for a stellar 2024.
Surf Air Mobility (SRFM)
Surf Air Mobility (NYSE:SRFM) is an electric aviation and regional air travel company. The company aims to develop powertrain technology with commercial partners to electrify existing fleets.
It also provides an air mobility platform featuring scheduled routes and charter flights managed by external operators, along with air cargo services. There are other interesting developments too. The company aims to offer commuter airline-type services with small turboprop aircraft and has provisional plans to merge with larger airliners.
In short, it’s addressing a niche market with specific technologies and types of aircraft that aren’t catered to by traditional airlines. If Surf Air’s goal of a merger or buyout is completed, shareholders could also get a substantial windfall.
One of the things I look for in startups to watch is whether the founders have skin in the game. In regards to SRFM stock, there’s some evidence this could be the case. The company’s co-founder Sudhin Shahani and chairman Carl Albert bought 140,145 and 75,585 shares, respectively, showing their commitment.
These signs all point toward SRFM stock as one of those interesting startups to watch next year.
Better.com (BETR)
Better.com (NASDAQ:BETR), whose parent company is known as Better Home & Finance, is an online mortgage lender. The company experienced robust growth during the Covid-19 pandemic, driven by surging demand and ultra-low mortgage rates.
BETR stock is part of a broader shift of decentralizing the power structures that underpin banking and mortgages. That decentralization gives consumers more choice and also puts pressure on traditional banks to offer more competitive products and equally diversified options.
Interest rates may remain higher for longer, but they are expected to revert to their long-term averages eventually. With this prediction in mind, BETR may have a more attractive backdrop as time moves forward.
However, BETR has not been without its challenges. Its shares plummeted over 90% after its public debut following a merger with SPAC Aurora Acquisition. The company’s IPO was previously delayed due to an SEC investigation, which later cleared Better of any violations.
In addition to the massive slide in its share price, BETR’s parent company also reported largely negative results last quarter. Better’s mortgage platform revenue decreased less year-over-year (YoY) due to increased revenue per loan, with a gain on sale margin of 2.34%. Operating expenses also dropped 80% YoY to $183.9 million due to lower loan volume and restructuring.
Nonetheless, it will be interesting to see if BETR’s stock price can recover and if it can put some more positive numbers on its books. That helps make it one of those startups to watch for next year.
On the date of publication, Matthew Farley did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
