While the market has no shortage of speculative biotech and tech names vying for your attention, many of these high-flyers are unlikely to see much upside going forward as they rapidly dilute shareholders. Instead, I prefer to focus on fundamentally sound companies trading at bargain valuations that are well-positioned to benefit from shifting economic trends and potentially lower interest rates. That’s because, sometimes, these companies can offer moonshot stocks.

Yes, chasing quadruple-digit gains comes with substantial risk. But putting a small portion of your portfolio in select high-risk, high-reward plays could really pay off. It might be worth sticking with these moonshot stocks through the storm as many of them are turning their financials around already, and stock prices could soon follow suit.

SoundThinking (SSTI)

SoundThinking (NASDAQ:SSTI) sells AI and data-based software services to law enforcement agencies, including its well-known gunshot detection system.

Recently, the company has seen impressive revenue growth, with a 23.2% increase in the first quarter (Q1) of 2024 to $25.4 million. However, the company is still unprofitable, reporting a net loss of $2.9 million. Despite this, I believe that with rising crime rates in certain areas, SoundThinking could secure even more contracts in the coming years.

The stock is down by 31% over the past year, but I believe an inflection point could be close. In fact, it might have already been reached, considering the stock is up 32.4% in the past month. I wouldn’t be surprised to see the company achieve profitability within the next two to three years.

DLocal (DLO)

DLocal (NASDAQ:DLO) is a fintech company that provides cross-border payment solutions connecting global merchants to emerging markets. The company has faced significant challenges in recent months. The stock price plummeted amid controversy and disappointing financial results.

In Q1 2024, DLocal reported a 49% year-over-year increase in total payment volume to $5.3 billion, but profits declined 32% due to reduced take rates from a major client renegotiation. The stock was crushed, falling 24% after the earnings release. Analysts have mixed opinions, with some cautioning about increased competition in the fintech sector.

However, there may be a silver lining. DLocal’s shares have already fallen 49% over the past year, and the downside could be limited from here.

Analysts expect profitability and revenue metrics to improve starting next year. While the risk of further disappointment remains, if you are targeting 10x gains, this level of risk isn’t out of the ordinary among moonshot stocks.

Sprout Social (SPT)

Sprout Social (NASDAQ:SPT) provides social media management and analytics software to over 30,000 brands worldwide. The company has been on a recovery rally lately, with its stock price up around 14% since plunging in early May.

I have to admit, I’m a bit nervous writing this, with Sprout’s stock price still declining after an earnings beat. However, I’m optimistic that management can keep the momentum going in the long run. Analysts seem to agree, with Barclays maintaining their buy rating despite a lowered price target of $48 (was $50 before).

In Q2, Sprout reported $99.4 million in revenue, up 25% year-over-year. Non-GAAP operating income was $5.3 million, with non-GAAP net income at $4.9 million. With social media companies thriving and these strong fundamentals, I believe Sprout’s stock has room for a much higher valuation. Just keep in mind that a 10x return will likely take many years to materialize.

Li Auto (LI)

It’s hard not to feel let down by Li Auto’s (NASDAQ:LI) performance over the past year. The stock has plummeted more than 55% as the company struggled to meet expectations. Li Auto was once a shining star in the EV industry, delivering stellar reports that made it stand out from the competition. However, things have taken a turn for the worse, with missed delivery numbers and earnings falling well short of estimates.

Despite these setbacks, I believe Li Auto could still be a moonshot worth considering for risk-tolerant investors. If management can right the ship, this stock has the potential to soar to $100 or even $200 within a couple of years. The popularity of hybrid EVs in China gives Li Auto a strong domestic market to tap into, even without significant international expansion. In fact, the company has outperformed rivals like BYD (OTCMKTS:BYDDF) and Tesla (NASDAQ:TSLA) on several key metrics in its home market.

Of course, a rebound in Li Auto’s stock price will require a broader recovery in the EV sector and the Chinese economy as a whole. But as we move into a new economic cycle (yes, China included), the pieces could fall into place for this beaten-down EV maker to stage a dramatic comeback.

JinkoSolar (JKS)

JinkoSolar (NYSE:JKS) is a leading solar module manufacturer based in China. The company has been facing some challenges lately, with U.S. Customs blocking imports over forced labor concerns and a recent raid on its Florida offices by federal agents. However, there are also positives, as JinkoSolar topped PV Tech’s latest bankability report with an AAA rating and is targeting a big increase in wafer shipments this year.

Yes, JinkoSolar is yet another Chinese company on this list, but I believe the stock looks very cheap right now and could rebound significantly in the long run as interest rates decline and clean energy comes back into focus. The company does face tariff issues, but its manufacturing footprint in the U.S. and Southeast Asia helps mitigate that. Debt is a concern, but JinkoSolar is still delivering solid profits and slowly deleveraging. With global rates coming down, I don’t see the debt as a dealbreaker.

Ouster (OUST)

Ouster (NYSE:OUST) is a lidar technology company that builds high-resolution 3D sensors for autonomous vehicles, robotics, and more. It has been one of the most solid lidar companies and reported revenue of $26 million for Q1 2024, up 50.6%.

I think Ouster could be a great moonshot play on the growth of lidar and autonomous technologies. Lidar adoption is surging in 2024, driven by falling costs and increased interest from automakers and robotics companies.

However, it’s not all sunshine and rainbows. Lidar still faces hurdles in terms of cost and reliability compared to cameras. Ouster’s stock is also still down over 86% over the past five years.

That said, I believe the potential rewards outweigh the risks. If Ouster can continue to scale while improving margins, this $13 stock could potentially be 10x in the years ahead like other moonshot stocks.

Flywire (FLYW)

Flywire (NASDAQ:FLYW) is a global payments enablement and software company that simplifies complex payments across education, healthcare, travel, and B2B industries. The stock has struggled over the past year, down nearly 50% as the company continues to post losses, with a net loss of $6.2 million in Q1 2024.

However, I believe Flywire has significant long-term potential among these moonshot stocks. The company is benefiting from strong trends in international migration to the U.S., with foreign-born workers now making up nearly 20% of the labor force. As these workers send money back home, Flywire’s cross-border payment solutions should see increased demand.

Despite the stock’s underperformance, many analysts remain bullish. Goldman Sachs recently reiterated their buy rating, while RBC Capital’s Daniel Perlin sees a 128% upside to his $41 price target.

On the date of publication, Omor Ibne Ehsan 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.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.