In the dynamic world of investing, high-growth stocks can have an attraction that obscures other potentially valuable opportunities. Here are three underappreciated stocks that have the potential to rise by a staggering 1,000% by 2027. Generally, Wall Street is abuzz with talk about the latest hot selections, but these silent players are quietly building up the potential for huge profits.
To begin with, the first one is notable for its strong financial performance, which includes increasing EBITDA, generating free cash flow, and showing a consistent increase in Funds Flow from Operations (FFO). In the meantime, the second one establishes itself as a dominant force in the advertising industry through technological advancements and a strategic diversification plan that derives top-line growth and profitability. Finally, the third one continuously grows robust revenue while diversifying its income streams to ensure long-term success. It shows resilience in the face of market instability.
Overall, by digging beyond the surface, one can find possibilities that have the potential to yield significant returns. This trio paves the way for wealth accumulation and portfolio growth.
Gran Tierra (GTE)
Gran Tierra (NYSEAMERICAN:GTE) announced a 24% year-over-year (YoY) boost in FFO from Q1 2023, hitting $74 million. This expansion shows the business can produce more cash flows from its ongoing operations. Additionally, Gran Tierra produced almost $19 million in free cash flow in the quarter, even with $55 million in capital expenditures. The company’s operating cash flows are sufficient to cover its capital expenditures. This leads to maintaining valuation growth based on positive free cash flow.
Moreover, after falling to $90 million in Q1 2023 and $93 million in Q4 2023, Gran Tierra’s adjusted EBITDA boosted to $95 million for Q1 2024. This constant rise in EBITDA reflects the company’s increasing operational edge and profitability. As of March 2024, Gran Tierra has $127 million in cash and $510 million in net debt. The business could control its debt levels even after issuing more senior notes. The twelve-month trailing net debt shows a sound debt profile to adjusted EBITDA ratio of 1.3 times.
Finally, during the quarter, the firm paid off the remaining $36 million in its credit facility, demonstrating responsible debt management and increasing financial flexibility.
Perion (PERI)
Perion (NASDAQ:PERI) had a solid rise in sales in 2023, up 16% YoY from 2022 to $743 million. In 2023, the company’s net income boosted by 18% YoY to over $117 million, indicating a solid bottom line. Indeed, the company’s ability to swiftly adjust to changes in the market was made possible by its diverse product mix. This is reflected in Retail Media’s 114% YoY sales rise to $49.7 million in 2023.
Further, Perion has progressively reduced the risks of relying on a single channel by diversifying its revenue streams. The high surge in revenue for retail media underscores the efficacy of venturing into novel channels and verticals and propels overall valuation expansion. In 2023, Perion’s CTV revenue increased by 56% YoY to $33.5 million, or 8% of the company’s income from display advertising. Similarly, quarterly search revenue reached $114.4 million in 2023, a 33% YoY boost.
Finally, the launch of Wave, a generative AI audio advertising solution, aided client acceptance and revenue development. Thus, purchasing HiveStack increased Perion’s reach across channels and geographies, opening the door for additional expansion in digital out-of-home (DOOH) advertising.
SoFi (SOFI)
In Q1 2024, SoFi (NASDAQ:SOFI) derived adjusted net sales of $581 million, a 26% increase over the previous year. SoFi continuously generated solid top-line growth despite macroeconomic variables and concerns about interest rate volatility. This indicates its adaptability and capacity to handle adverse macro situations. The Financial Services and Technology Platform sectors delivered 42% of adjusted net revenue in Q1. This is up from 33% a year earlier. This demonstrates a progressive change in the revenue mix towards a more balanced structure. This further demonstrates the company’s efforts towards diversification.
In Q1, the financial services division recorded record net sales of $151 million, up 86% from the previous year, and contributed a profit of $37 million at a 25% margin. With a 33% contribution margin, the Tech Platform division generated net sales of $94 million, up 21% from the previous year. Similarly, the Financial Services segment’s notable increase in revenue and enhanced margins indicate the effectiveness of acquisition and monetization tactics in conjunction with operational leverage.
Finally, the Tech Platform segment’s robust contribution margin and growing revenue indicate its capacity to leverage client relationships and product development. Overall, this enhances top-line diversity and profitability.
As of this writing, Yiannis Zourmpanos held a long position in SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.