While making investments, the quest for the next big opportunity will continue. Let’s explore three stocks that create a possible scenario where investments multiply fivefold within this decade. This could propel portfolio returns to unprecedented heights. Such prospects are not mere figments of optimism but realities in the finance and technology sectors.
With its expansive reach and unwavering performance, the first one is leading a niche in the digital payments ecosystem. The second one embodies the strategic edge in the tech space. Finally, the third one is a titan in financial technology, orchestrating bottom-line growth through operational edge and revenue maximization.
Let’s delve into these potential money-makers.
PagSeguro (PAGS)
Brazilian-based PagSeguro’s (NYSE:PAGS) client base expansion and solid payment performance may greatly uplift its valuations. For instance, its base grew considerably in 2023. By the year’s end, it will surpass 31 million clients, representing a 12% year-over-year (YOY) increase.
Moreover, PagSeguro experienced solid growth in transaction volume (TPV) in 2023, with TPV hitting 114 billion Reals in Q4-23, representing a 21% YOY increase. This growth was observed across all merchant segments, signaling the company’s capability to capture market share and process more transactions.
Furthermore, PagSeguro’s strategy to diversify its payment methods led to solid performance in the payments segment. The company offers a range of payment options, including cards, boletos, and PIX. As a result, the company can derive growth in its cash flow, reaching 217 billion Reals in 2023, reflecting a considerable 59% YOY increase.
Finally, at the bottom line, PagSeguro attained a record gross profit of 1.7 billion Reals in Q4-23, reflecting 19% YOY growth. This growth was driven by PIX QR Code growth and an increase in total deposits.
Radcom (RDCM)
Radcom (NASDAQ:RDCM) has delivered constant top-line growth, a fundamental boost to its valuation potential. Last year, it reached a considerable milestone. Revenues hit $51.6 million, representing a 12% YOY growth against $46.1 million in 2022.
A constant upward trend in revenue indicates solid demand for the company’s products and services. Similarly, Radcom delivered Q4 revenue of $14.0 million in 2023, reflecting a 14% YOY growth compared to $12.3 million in Q4 2022.
Toward the bottom line, RDCM has achieved record profitability based on sharp cost management and operational sharpness. In 2023, the company delivered a non-GAAP net income of $10.2 million, a considerable increase from $2.9 million in 2022.
On the other hand, Radcom’s solid financial standing, characterized by high cash reserves and no debt, provides the company with massive resources to support growth. Radcom ended 2023 with liquidity totaling $82.2 million, its highest level of cash.
Looking forward, Radcom plans to expand its sales and marketing activities to meet the growing demand for 5G assurance solutions. This is particularly true in regions like Europe, where 5G adoption accelerates. The company has invested in sales and marketing, including a 20% to 30% increase in team size.
StoneCo (STNE)
StoneCo’s (NASDAQ:STNE) bottom-line growth is a core valuation expansion basis. For instance, adjusted EBITDA in Q3 2023 amounted to R$1.6 billion, reflecting a considerable increase of 43.4% YOY. This acceleration in adjusted EBITDA underscores the company’s operational efficiency and solid performance.
Similarly, StoneCo attained growth in adjusted earnings before taxes (EBT) in Q3, totaling R$544.8 million, representing a surge of 227.5% YOY. This exceptional growth in adjusted EBT indicates the company’s improved operating efficiency, expanded revenue base, and sharp cost management strategies.
Toward the bottom, StoneCo’s adjusted net income surged considerably in Q3, hitting R$435.1 million, an increase of 301.6% YOY. This underscores STNE’S fundamental capability to convert top-line growth into considerable bottom-line profits. Furthermore, StoneCo’s adjusted net cash position experienced solid growth in Q3 2023, hitting R$4,857.5 million and reflecting a considerable increase of 56.5% YoY.
Finally, the sequential increase of R$530.3 million in adjusted net cash position underscores StoneCo’s fundamental capability to derive constant cash flows and solidify its financial standing. Therefore, these developments may lead to a solid uplift in valuations.
On the date of publication, Yiannis Zourmpanos did not hold (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.
