These overlooked breakout stocks may not grab headlines, but they can deliver stellar returns.
Investors must diversify their portfolios with lesser-known companies from time to time. While major players dominate the stock market conversation, it’s worth remembering that many of these giants remained unnoticed for a significant time before gaining recognition. Investing wisely in under-the-radar businesses can lead to substantial gains as they climb to the top. This shift in perspective could be a game-changer for investors willing to explore beyond the usual suspects.
So, how did I select these companies? All three are innovative and have an amazing growth outlook, but they are mostly ignored, perhaps due to the current artificial intelligence (AI) craze and other ongoing trends. Therefore, if you’re ready to make a mark, look no further and consider these three overlooked breakout stocks that demand your attention.
Trupanion (TRUP)
People’s love for their pets is truly remarkable. In fact, pet ownership in the U.S. has surged impressively over the last three decades. In 2024, 66% of U.S. households have pets. This growing trend of pet ownership is a goldmine for Trupanion (NASDAQ:TRUP), which provides medical insurance for cats and dogs.
Speaking of goldmines, let’s talk about financials, and it’s clear Trupanion is reaping the rewards. In the first quarter of 2024, its net loss narrowed to $6.9 million from $24.8 million a year ago, and operating cash flow turned positive at $2.4 million compared to a negative $6.9 million last year. Although profits are still catching up, these improvements demonstrate a healthier financial position.
Moreover, with a projected 13.7% top-line growth this year and a forward price-to-sales (P/S) ratio of just 1.2 times, way below the sector’s 2.91 times, Trupanion is surely a bargain in the making.
Sterling Infrastructure (STRL)
Two years after the $1 trillion infrastructure bill became law, the U.S. administration rolled out a massive initiative with 40,000 projects to rebuild America. Sterling Infrastructure (NASDAQ:STRL) is set to thrive amid this boom. Known for its expertise in heavy civil construction, transportation and e-infrastructure, Sterling’s superb track record in completing complex projects is fueling the demand for its services.
The surge in demand is paying off big time. In Q1 2024, Sterling’s revenue jumped 9.1% year-over-year (YOY) to $440.36 million. Net income also soared to $31 million, or $1.00 per diluted share, marking increases of 58% and 56%, respectively. Sterling’s E-Infrastructure Solutions are also pulling in numerous clients, driving a 12% growth in operating profit as they shift toward large, mission-critical projects.
Furthermore, a whopping $2.35 billion backlog promises sustained expansion and stability as we progress towards 2025.
With this strong financial position and growth potential, Sterling emerges as a standout investment opportunity.
Viking Therapeutics (VKTX)
Last year, the weight loss drug industry witnessed an outstanding boost, led by skyrocketing sales of prescription GLP-1 weight loss drugs from Eli Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO). Many investors are skeptical about jumping in, with these giants now carrying higher valuations. However, Viking Therapeutics (NASDAQ:VKTX) has emerged as a potential prospect for investors looking to profit from this thriving market.
VKTX’s stock price has increased by 254% year to date (YTD), primarily driven by the positive results of their weight loss drug, VK2735. Meanwhile, the business has accelerated development, pushing VK2735 directly into Phase 3 trials. This move can generate significant revenues earlier than expected, which is critical for reducing cash burn and limiting the risk of dilution for current shareholders.
At the end of Q2, Viking held a robust $942 million in cash and equivalents. This ensures it has the financial muscle to see VK2735 through its Phase 3 trials and beyond.
Therefore, considering the circumstances, Viking has a bright future ahead of it.
On the date of publication, Nabeel Bukhari did not have (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.
