And that’s what makes picking multibagger stocks difficult. Generally, you need one of two persuasions. You’ll need to be truly visionary, picking small-cap stocks from the ether before anyone hears of the company, product, or service. Or you’ll need to have enough conviction and confidence in your pick to weather volatility and uncertainty while waiting for the stock’s day to come.
IonQ Inc (IONQ)
IonQ Inc (NYSE:IONQ) is probably the best-known player in the quantum computing space, but its industry clout doesn’t stifle its multibagger potential. The company’s customers include heavy hitters like Hyundai Motor Company (OTCMKTS:HYMTF) and Airbus (OTCMKTS:EADSY), showing that the firm isn’t just spinning its wheels with conjecture tech. Instead, IonQ is bringing a viable future tech to bear on today’s most pressing problems. What’s more, the company stands to gain as the artificial intelligence race escalates and computing demand goes exponential.
The company recently posted $6.1 million in quarterly revenue, which is decent considering the firm’s primary R&D (rather than productization) focus. Management also touted its $100 million cumulative booking stat. I’d caution against relying on the figure as a sign of financial stability though.
While it indicates interest, bookings take time to turn interest into cash and could just as easily dissipate if customers pull out of the agreement. Still, that degree of commercial interest is encouraging and could mean big things ahead for the multibagger prospect.
Rocket Lab (RKLB)
Rocket Lab (NASDAQ:RKLB) is positioned to capture some of the future space market’s whopping $1 trillion value. That makes this space stock a multibagger play, but Rocket Lab is particularly unique within the sector. First, it’s a small-cap stock. The company competes with big aerospace players, true. Still, there’s tons of upside on the horizon as the company’s growth trajectory climbs.
Likewise, the smaller startup-style culture breeds innovation that top-heavy bureaucratic structures in the sector can’t touch. Second, RKLB has a proven operational strategy that’s not smoke and mirrors like other well-known small-cap space stocks like Virgin Galactic (NYSE:SPCE).
Rocket Lab is prepping for its 10th flight of the year. It also has plans to send a spacecraft to Venus in 2024. While that’s great for scientific interest, the company is also proving commercially viable. The company has scheduled 22 flights for 2024 on behalf of commercial and government customers, reaching their (current) maximum capacity. As more companies like Amazon (NASDAQ:AMZN) pivot into space-based operations, Rocket Lab stands to gain as one of the few reliable payload delivery companies in the world.
ChargePoint Holdings (CHPT)
ChargePoint Holdings (NYSE:CHPT) took a beating in record weeks after a downward guidance adjustment for December 6th’s imminent earnings report. That spooked investors, and sent shares tumbling more than 20%. Detractors point to two core issues with CHPT’s operational model. Developing electric charging infrastructure is a costly endeavor. Increased debt costs have weighed on the firm’s ability to keep expanding and cut deeply into its bottom line. At the same time, there’s practically no moat for electric charging infrastructure. The only barrier to entry is capital and the ability to negotiate for space alongside gas stations and on major traffic routes. People don’t usually travel to find their preferred gas station and ChargePoint faces a similar conundrum. But to both, I say: it doesn’t matter.
ChargePoint had a first-mover advantage in the charging space. That establishes a huge advantage. They’ve already deeply penetrated the market, including 76% of the Fortune 50’s electric vehicle fleet needs. That creates an uphill battle for new entrants, even if they have plenty of cash to spend. At the same time, ChargePoint is tackling the second objection by focusing on building an app-based ecosystem for charge management. Recurring revenue is a goldmine for companies, and CHPT expects up to 31% of its future revenue to be recurring.
CHPT is a gamble. If some big player with deep pockets dedicates a whole lot of effort to displacing them, they could easily lose market share and become yet another small-cap stock struggling to get by. But I think, in light of recent stock suppression and significant upside potential, ChargePoint is the best multibagger stock today.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.