Many investors steer clear of limelight stocks. These ideas might already be overvalued and often aren’t the breakout stocks that can deliver significant returns.
On the other hand, stocks that are undiscovered seem attractive. These are typically companies with little or no analyst coverage. Therefore, investors give minimal attention. Of course, deeper analysis on the business and valuations are needed before arriving at a conclusion.
The following stocks represent companies that have good fundamentals or a big addressable market for growth. My initial investment horizon for these ideas is 12 to 18 months. During this period, I believe that these stocks can deliver 100% to 200% returns. Let’s discuss the reasons to be bullish on these potential breakout stocks.
Ibotta (IBTA)
Ibotta (NYSE:IBTA) stock is a relatively new listing and has remained sideways in the last one month. A big breakout on the upside may be impending as the company catches Wall Street’s attention.
The company offers their Ibotta Performance Network that allows consumer packaged goods brands to deliver digital promotions. Currently, IBTA offers digital promotions to over 200 million consumers. Importantly, has over 850 clients in the U.S. With a total addressable market of $200 billion, Ibotta has ample headroom for growth.
For 2023, the company reported revenue growth of 52% year-over-year (YOY) to $320 million. For the same period, adjusted EBITDA margin was healthy at 26%. Considering the market size, it’s likely that stellar growth will sustain in the coming years.
At the same time, the company has presence only in the U.S. While no near-term international expansion is planned, it’s likely in the next few years. That’s another catalyst for sustained growth and cash flow upside.
Leonardo DRS (DRS)
Leonardo DRS (NASDAQ:DRS) has been gradually trending higher in the last 12 months. However, the stock is far from being in the limelight. Once that happens, a massive rally seems to be in the cards for this emerging defense player.
For Q1 of 2024, Leonardo DRS reported 21% revenue growth YOY to $688 million. For the same period, adjusted EBITDA swelled by 43% to $70 million. Healthy growth has been on the back of a strong order backlog of $7.8 billion as of Q1. Notably, the company’s backlog has swelled by 84% YOY.
Recently, Leonardo DRS was awarded a contract from NAVSEA to provide AN/SPQ-9B radar design agent and engineering services. Also, DRS received an order from Boeing Defense to provide the upgraded Aerial Refueling Operator Station. So, the order intake remains robust. This will ensure healthy revenue and cash flow visibility. And, as global geopolitical tensions remain high, industry tailwinds will support growth.
CARGO Therapeutics (CRGX)
CARGO Therapeutics (NASDAQ:CRGX) is a clinical stage biotechnology company. It is heavily involved in the development of chimeric antigen receptor (CAR) T-cell therapies for cancer patients. Listed in November 2023, CRGX trades 20% higher as compared to the IPO pricing. A strong rally may be impending on the back of positive business developments.
Recently, the company announced a $110 million private placement that includes fund infusion from existing and new investors. With this, CRGX has extended its cash runway through 2026.
Interestingly, the company has already initiated phase two studies for firi-cel (CRG-022). The latter is an autologous CD22 chimeric antigen receptor T-cell therapy candidate that has promising market potential. With interim results for phase two expected in 2025, it’s likely that the stock will witness price-action. In addition to this, CRG-023 is in the pre-clinical stage and is targeted towards B-cell malignancies.
On the date of publication, Faisal Humayun 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.
