Many startups are forming in very hot sectors and keeping an eye on these stocks can generate multibagger gains in the coming years. It doesn’t take much for stocks in the right industries to deliver 500%-plus returns in just a couple of years. However, finding the right ones can take a great deal research.
The current market environment is solid for high-growth stocks and many have already seen triple-digit appreciations in just the past couple of months. Of course, this also means that these same stocks have a significant amount of downside risk to them and if the hype around AI and software stocks in general starts to cool down, it could doom these moonshot stocks even more.
24/7 Wall St. Key Points:
- These stocks can deliver exponential returns (e.g., 500% or more) but also carry a high probability of failure.
- Such “moonshot” gains are possible due to their small sizes, but this small size also means a lot more volatility.
- Startups in fast-growing sectors — like AI — are solid bets if you’re looking to beat the market by significant margins. If you’re looking for a safer way to do so, consider this report: Discover “The Next NVIDIA”
Serve Robotics (SERV)
Companies are trying to automate as much work as they can beyond just software. It has quickly spilled over into many other physical jobs, and I believe delivery jobs are going to be increasingly automated in the coming years. This includes drone deliveries, but something that has already been in place for a long time in many other countries — like Estonia, the UK, and Russia — are delivery robots like the one shown in the above picture.
They aren’t very commonplace in the U.S. right now, but Serve Robotics is trying to change that. There’s a good chance it will be successful since human delivery is getting more and more expensive by the day and people won’t have to tip robots. Others losing their jobs is not a fun thing to discuss, but AI is changing the labor market in a way that can no longer be ignored.
The company’s latest third-generation robots are pretty impressive. They can move twice as fast as previous versions and travel twice as far on a single charge. Plus, they can carry more cargo – up to four 16-inch pizzas at once. The robots also feature enhanced safety measures like automatic emergency braking and collision avoidance systems. It plans to deploy up to 2,000 robots by the end of 2025, which could generate $60-80 million in annual revenue at full utilization.
But there are some challenges ahead. The regulatory landscape for delivery robots varies significantly by state. While 23 states have laws governing these robots, the rules aren’t consistent. For example, Georgia allows robots up to 500 pounds at 4 mph, while New Hampshire limits them to 80 pounds at 10 mph.
The market opportunity is substantial, however. The global delivery robots market is expected to grow from $398.6 million in 2024 to $3.2 billion by 2032. I think there’s a real possibility of further multibagger gains down the line.
Exodus (EXOD)
Cryptocurrencies have delivered explosive growth over the past few months and Bitcoin (CRYPTO:BTC) broke above $100,000 for the first time before declining again. The price action of BTC has been above and beyond what crypto bulls could have anticipated since the current bull market was expected to be over after the April highs, but the new price action has reinforced the idea that Bitcoin could indeed be on an exponential trajectory. Crypto-related stocks like MicroStrategy (NASDAQ: MSTR) have since exploded, but mining stocks have fared quite worse. I think one stock you could look into that is neither an over-leveraged bet like MSTR, nor a crypto miner, is Exodus: a crypto wallet.
Exodus supports 369 types of cryptocurrencies in just one crypto wallet. The primary revenue driver here comes from its exchange aggregation service; it accounts for about 90% of operating revenue and allows users to swap cryptocurrencies directly within the platform. In Q3 2024, Exodus reported revenue of $20.1 million, up 68% year-over-year, and the company achieved profitability with net income of $0.8 million compared to a loss in the previous year. The user base has been expanding rapidly, with monthly active users at 1.6 million in Q3 2024, up from 1.1 million a year earlier.
If the crypto market continues to trend up and follow the exponential growth pattern in the next cycle as well, there’s a good chance that EXOD stock could deliver solid returns from here.
Airship AI Holdings (AISP)
Airship AI Holdings specializes “in ingesting all available metadata from edge-based sensors used by government and law enforcement agencies around the world, including surveillance cameras (video), audio, telemetry, acoustic, seismic, and autonomous devices, along with large commercial corporations with fundamentally similar capabilities and requirements.”
In essence, this is a surveillance company working with the government.
Airship AI isn’t Palantir (NASDAQ: PLTR)-level profitable yet, but it has been landing some solid contracts that could turn into a pipeline of decade-long partnerships. Government contracts are some of the stickiest sources of revenue a company can get and the margins can also be very high.
Airship AI has already secured a $4 million DHS contract and a $1.2 million support contract with a Fortune 100 company. It won a $2.35 million contract with the DoJ in April 2024.
It has also “completed a pilot opportunity to replace failing capabilities within critical infrastructure on the U.S. southern border… This initial award is in support of our single-largest opportunity, valued at more than $50 million over the next four (4) years.” The pipeline of contracts coming in is definitely impressive for a company with a $153 million market capitalization.
Regardless, a quick glance at AISP’s chart should give you an idea of how erratic it is. But if you think that these contracts are going to be expanded upon, there’s a chance AISP turns out to be moonshot stock.
flyExclusive (FLYX)
flyExclusive (NYSEAMERICAN: FLYX) is a private aviation company that operates one of the largest private jet fleets. I believe there’s huge growth potential in the sector this company is in. Most domestic airlines do not have a luxury option available for high-end customers, and even if they do, you can hardly call it luxury. This is why flying private has gained a lot of momentum in the past few years. Specifically, the charter services segment is projected to reach $29.30 billion by 2029, growing at a CAGR of 13.92%. This is where flyExclusive operates.
This company isn’t the only one operating here, but I think the rising tide in this sector will lift all the boats. Most aviation-related companies have seen a huge increase in demand in the post-COVID era, and I believe it will only continue as flying becomes more popular than ever. In fact, private jet flights are up 32.1% compared to 2019 levels.
The surge in demand has translated into solid financials for flyExclusive: it posted revenue of $76.9 million in Q3 2024.
Analysts now expect flyExclusive to generate full-year revenue of $330.7 million in 2024, with a projected swing to profitability in 2025. The forecast calls for revenue to grow to $427.9 million in 2025, along with an EBITDA profit of $18.1 million. In my opinion, there’s a solid growth runway ahead for this company to possibly deliver multibagger returns in the coming years, especially as FLYX stock has been trading at a discount.
Solitron Devices (SODI)
Solitron Devices makes semiconductors. It is a very small company with 43 employees, but I think there’s good potential here as investors are hungry for public tech startups to invest in before they land any major contracts. As for Solitron, they make power semiconductors for the aerospace and industrial sectors. It handles everything from design and manufacturing, all the way to testing.
The company has shown very impressive growth trends and SODI stock has been rewarded accordingly. And because all that upside so far has been organic, SODI stock still trades at an earnings multiple of just five times. It has a net margin of 40.7% as well, and you’re unlikely to find many small-cap tech companies with positive margins right now, let alone 40.7%. The margins here are why I believe that if Solitron Devices manages to land a big contract in the coming years, it could deliver multibagger returns.
Solitron Devices currently has a backlog of $12.3 million and reported $8 million in Q3 bookings. The company also said that a $5 million order is “coming soon.”
Safe Pro Group (SPAI)
Safe Pro Group just recently went public through an IPO on August 28, 2024. This is a drone company, but it also makes personal protective gear and ballistic protection products.
Ukraine in particular is where Safe Pro’s products have gained some recognition, as it managed to identify over 16,000 mines and “explosive items.”
It just went public, so this is quite a high-risk high-reward investment, especially if you take into account that it is trading at 37 times sales and 14.7 times book. The PS ratio is nearly in the top 2 percentile of companies. In exchange, you’re getting a 130% (projected) revenue growth this year, which likely comes with even more losses since the net profit margin here is at -671.2%. Whether or not that is worth it is for you to decide, but I personally think that there’s a good chance that if it manages to land some defense contracts, it could make the stock trade even higher.
Palladyne AI (PDYN)
Palladyne AI is likely the most speculative AI investment you can make at the moment and it’s primarily why I’ve put it at the caboose of this article. It has a market cap of $229 million with quarterly sales at just $871,000.
However, there’s good reason for all the hype behind it. This company makes AI and machine learning software for robots. This includes two platforms: Palladyne Pilot, an AI software platform for UAVs, and Palladyne IQ, a software platform for industrial robots.
Both of those are expected to launch in the future. And while that does make it very speculative if these platforms gain popularity, PDYN could be a moonshot multibagger stock. The company just completed its first autonomous tracking flight using the Palladyne Pilot AI software platform, and that enabled a third-party drone to track terrestrial targets. Palladyne expects to launch its Pilot platform by the end of Q1 2025.
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