In the stock market, certain hidden treasures often escape the spotlight and are overshadowed by industry giants. These companies harbor immense potential to become stocks to double your money. Delving into their financial prowess, strategic positioning and market adaptability unveils a narrative of promising stocks primed for a breakout in 2025. As the curtain rises on these three underestimated stocks to double your money, their potential becomes evident, promising a lucrative opportunity for investors seeking the next big breakout stars.
ACM Research (ACMR)
ACM Research (NASDAQ:ACMR) has demonstrated a consistent pattern of revenue growth. For example, the company’s quarterly revenue surged by 26% in Q3 2023. This growth momentum was further highlighted by a remarkable 38% year-over-year increase in revenue for the first nine months of 2023. Such sustained revenue growth signifies the company’s ability to capitalize on market opportunities, innovate products and effectively cater to customer demands.
Moreover, ACMR achieved a record high in shipments, marking a substantial 31% increase. This milestone underscores the company’s operational efficiency, strong market demand for its products and effective supply chain management.
Additionally, ACM Research strategically positioned itself in China’s thriving semiconductor industry, capitalizing on the country’s substantial investment in technology for the burgeoning electric vehicle market. China’s efforts to bridge the gap between domestic semiconductor capacity and market consumption of semiconductor chips offer promising growth for ACMR.
Fundamentally, the rise in EV production in China catalyzes semiconductor capacity investments, particularly in power and other cutting-edge devices, generating a favorable market environment for ACMR. The company is strategically aligned with China’s semiconductor capacity expansion plan, positioning itself to benefit from market growth drivers.
Sanmina (SANM)
Sanmina (NASDAQ:SANM) demonstrated consistent revenue growth, a crucial indicator of a company’s health and market traction. Fiscal year 2023 showcased impressive growth, increasing revenue by 13% year-over-year to $8.9 billion. Fundamentally, the annual revenue growth indicates the company’s ability to capitalize on its market relevance and adaptability.
Financially, Sanmina boasts a strong balance sheet, with $668 million in cash and cash equivalents at the end of the quarter. This substantial cash reserve gives the company liquidity and financial flexibility to pursue growth opportunities. Regarding liquidity, Sanmina has consistent cash flow generation, with $77 million in Q4 and $235 million from operations for fiscal 2023. Thus, this demonstrates the company’s efficient operational performance and ability to convert sales into cash.
The company has also taken a proactive approach to share repurchases, totaling 1.58 million shares for approximately $84 million during fiscal 2023. The repurchasing shows SANM is confidence in its valuation and focus on enhancing shareholder value. SANM is showing the indicators of being one of the stocks with potential to double your money.
Enact (ACT)
Enact’s (NASDAQ:ACT) insurance-in-force saw an 8% year-over-year increase during Q3 2023. Additionally, the company achieves a persistency rate of 84%, a key metric indicating the retention of insurance policies. This suggests Enact’s policyholders maintain their policies, contributing to a stable and consistent revenue stream. The sustained persistency rate, despite market fluctuations, is a positive sign for the company’s long-term business sustainability.
Furthermore, the persistency rate is a hedge against lower production resulting from higher mortgage rates. This aspect becomes crucial in a dynamic market environment, emphasizing the resilience of Enact’s portfolio against adverse market conditions. Moreover, Enact’s investment income saw a significant increase of 39% year-over-year, driven by rising interest rates. There is a new money yield of over 5% and a portfolio book yield of 3.5%. These yields demonstrate the company’s ability to generate attractive returns from its investment portfolio.
On the other hand, Enact credit performance also remains robust despite seasonal upticks in delinquencies and the seasoning of newer large books. The 2% delinquency rate, consistent with pre-pandemic levels, indicates prudent risk management practices.
Finally, the loss ratio of 7% and the release of $55 million in reserves indicate an emerging moat in Enact’s risk mitigation efforts. Prudent provisioning for potential losses while releasing reserves demonstrates the company’s understanding of credit risks. This allows the company to weather adverse situations without compromising value growth.
As of this writing, Yiannis Zourmpanos held a long position in ACMR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.