In this article, we will discuss the 10 Stocks That Could 10X Over the Next 5 Years.
Despite ongoing concerns related to the durability of growth and interest rate policy, Deloitte believes that the broader US economy is fundamentally strong. While real GDP growth witnessed some slowness in Q1 2024, growth rebounded to 3.0% in Q2 2024. All the available evidence demonstrates that policymakers have managed to bring inflation under control without a recession.
Market experts opine that the boom in factory construction is expected to boost the economy’s potential over the upcoming years. Deloitte expects that, in the short term, a faster pace of interest rate cuts by the US Fed is expected to allow households to take on more debt and support continued consumer spending growth. This, together with the elevated government consumption, will help the US economy to grow by 2.7% this year.
Pathway for Rate Cuts
S&P Global expects that the global policy rate easing cycle remains in full swing after the 50-bps cut by the US Fed in mid-September. The US has been outperforming as growth remains above potential, amidst relatively higher policy and market rates. This above-trend growth stems from services and private investment, new business formation, and productivity.
The firm believes that the US Fed is on a path to a steady series of interest-rate cuts, and the company is expecting policy rates to reach the terminal rate of 3.00%-3.25% by 2025 end, with risks in both directions. It has kept its probability of a recession starting in the upcoming 12 months unchanged at 25%. With healthy consumption, the company expects that fears of a recession in the near term are overblown.
Amidst Noise, What Are Investment Implications?
EY believes that the US economy is expected to slow into 2025, with restrictive monetary policy and elevated costs curbing the private sector activity. On the positive side, it expects that the recession risks are contained. Households are expected to spend more cautiously, with labor market conditions and income growth softening further. Also, still-elevated financing costs will continue to prompt the businesses to hire and deploy capital with discretion. Investors should know that lower inflation and interest rates, together with a balanced labor market, should result in cooler but more sustainable economic growth in 2025. EY expects real GDP growth to average ~2.7% in 2024.
Regarding consumer spending, Vanguard believes that healthy balance sheets, together with a steady labor market, should support consumer spending over the coming quarters, though at a more modest pace as compared to recent quarters.
As per Merrill (A Bank of America Company), for long-term investors, events such as worker strikes do not often warrant action. Concerning military conflict events, the company has continued to be constructive on Defense stocks for years considering the trend in geopolitical risk. It was highlighted that the pure-play S&P 500 Defense stocks were able to outperform S&P 500 Energy stocks on October 1. This was because of elevated tensions in Israel/Iran and spike in oil prices. Also, defense stocks outperformed when equity volatility increased in July.
Therefore, Merrill believes that defense stocks provide some non-cyclical diversification benefits that cannot be offered by energy. For interest rates, the risks of supply-side inflation warrant the Fed’s attention considering the potential for disinflation to slow or stop. Also, the geopolitical conflict can mean longer-term rates and borrowing rates for the private sector remaining higher for longer.
To put things in perspective, Wall Street analysts opine that, amidst uncertainties, long-term investors should be inclined towards diversification and fundamentally strong companies that offer strong potential for the next 3-5 years.
With this in mind, let us now look at the 10 Stocks That Could 10X Over the Next 5 Years.
An experienced fund advisor setting parameters on investments with remaining maturities of one to three years.
Our Methodology
To list the 10 Stocks That Could 10X Over the Next 5 Years, we conducted extensive research and sifted through several online rankings. After extracting the list of 20-25 stocks, we narrowed the list to the following 10 stocks, and ranked them in the ascending order of their hedge fund sentiments, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Stocks That Could 10X Over the Next 5 Years
10) GigaCloud Technology Inc. (NASDAQ:GCT)
Number of Hedge Fund Holders: 5
GigaCloud Technology Inc. (NASDAQ:GCT) offers end-to-end B2B e-commerce solutions for large parcel merchandise in the US and internationally.
Market experts believe that GigaCloud Technology Inc. (NASDAQ:GCT)’s diverse strategies and efficient supply chain management should help the company continue its growth trajectory. It rolled out a BaaS offering, which has seen strong interest from sellers. GigaCloud Technology Inc. (NASDAQ:GCT) anticipates continued growth from both organic and inorganic sources, including further integration of the Noble House business and expansion of the B2B marketplace. Also, it signed fixed-rate contracts in a bid to mitigate the impact of freight rates on gross margins.
Moving forward, GigaCloud Technology Inc. (NASDAQ:GCT) focuses on strategic mergers and acquisitions to drive volume growth and expand its ecosystem. The company continues to demonstrate its capacity for sustained growth and profitability. Its strategic initiatives enabled it to navigate a tough retail environment.
GigaCloud Technology Inc. (NASDAQ:GCT) highlighted that active 3P sellers went up by 39.8% to 930 during the 12 months ended June 30, 2024, from 665 in the same period of 2023. Market experts opine that this number is expected to double as the company continues to execute its strategy. This expansion should significantly boost Gross Merchandise Value (GMV), and in turn, fuel its revenue and earnings growth.
Lake Street Capital assumed coverage on the shares of GigaCloud Technology Inc. (NASDAQ:GCT) on 29th July. They gave a “Buy” rating and a $50.00 price target.
9) AllianceBernstein Holding L.P. (NYSE:AB)
Number of Hedge Fund Holders: 5
AllianceBernstein Holding L.P. (NYSE:AB) is a publicly owned investment manager.
AllianceBernstein Holding L.P. (NYSE:AB) continues to plan strategic initiatives in a bid to expand its capabilities in the US retail market, ramp up growth in separately managed accounts, and launch tax-efficient products. Such developments should leverage its distribution advantages in private alternatives. Its diversified global offering resulted in market share gains across sectors, with the private markets business expanding to $64 billion (as reported by the company in its Q2 2024 earnings call).
AllianceBernstein Holding L.P. (NYSE:AB) anticipates that the targeted margin improvement should commence in Q4 2024 as a result of its North American relocation strategy. During the earnings call, the company discussed healthy demand for liability-driven investments and projections for money to move into higher-yielding strategies.
The importance of local alternatives in market demand, along with their success in Japan’s fixed-income strategies, was also highlighted. AllianceBernstein Holding L.P. (NYSE:AB)’s institutional business possesses a healthy pipeline, with a significant portion of fees coming from alternatives. Given its strong emphasis on diversification and global offerings, AllianceBernstein Holding L.P. (NYSE:AB)’s trajectory of growth is expected to continue over the near term.
The Goldman Sachs Group upped its target price on the company’s shares from $40.75 to $41.00, giving a “Buy” rating on 3rd October. Insider Monkey’s Q2 2024 database revealed that AllianceBernstein Holding L.P. (NYSE:AB) was in the portfolios of 5 hedge funds.
8) CompoSecure, Inc. (NASDAQ:CMPO)
Number of Hedge Fund Holders: 20
CompoSecure, Inc. (NASDAQ:CMPO) is engaged in manufacturing and designing of metal, composite, and proprietary financial transaction cards in the US and internationally.
The company announced that Dave Cote, former CEO of Honeywell, will take over as the Executive Chairman after the strategic transaction, which involves his family’s acquisition of a majority interest in CompoSecure, Inc. (NASDAQ:CMPO). This move should simplify the company’s structure, enhance shareholder value, and reduce market uncertainty. CompoSecure, Inc. (NASDAQ:CMPO) amended and extended its credit facility, and secured lower rates and more flexible terms.
It has an expanded partnership with Fiserv to market and resell Arculus Authenticate, which should help in creating significant opportunities. In Q2 2024, CompoSecure, Inc. (NASDAQ:CMPO) rolled out numerous new card programs and continues to experience growth. Overall, the strategic leadership changes, improved financial flexibility, and promising partnerships are expected to act as key growth enablers.
Wall Street is optimistic about the potential impact of a formal partnership between Chase and Apple for the Apple Card program. This might serve as a growth catalyst for CompoSecure, Inc. (NASDAQ:CMPO) because of its exclusive relationship with Chase. Industry veterans believe that the company’s growth trajectory is expected to continue primarily because of a significant market shift from traditional plastic to metal payment cards.
Analysts at Lake Street Capital increased their price target from $14.00 to $18.00, giving a “Buy” rating on 2nd October.
7) Gulfport Energy Corporation (NYSE:GPOR)
Number of Hedge Fund Holders: 33
Gulfport Energy Corporation (NYSE:GPOR) is engaged in the acquisition, exploration, development, and production of natural gas, crude oil, and natural gas liquids in the US.
Market experts opine that Gulfport Energy Corporation (NYSE:GPOR)’s well-hedged position and low-cost operations are expected to provide resilience against market fluctuations. The natural gas market appears to be well-placed for potential structural improvements in the supply and demand dynamics. Wall Street believes that such changes might benefit the company in the near to medium term.
The operational efficiencies were noted both in field operations and financial management. Such improvements resulted in renewed investor optimism and have placed Gulfport Energy Corporation (NYSE:GPOR) well in its peer group.
Its competitive position is expected to be further strengthened by operational improvements and a strategic focus on natural gas production. Moving forward, emerging opportunities for Gulfport Energy Corporation (NYSE:GPOR) consist of Ohio Marcellus Shale play, which might offer avenues for growth. Moreover, the merger between Chesapeake Energy and Southwestern Energy created the potential for acreage acquisitions, which the company might be well-positioned to pursue due to its improved equity position.
Its well-hedged position offers a buffer against the volatility in natural gas prices, enabling Gulfport Energy Corporation (NYSE:GPOR) to lock in favorable prices for a portion of its production. This gives revenue stability and predictability in cash flows. As per Wall Street, the shares of the company have an average price target of $187.43. Greenlight Capital, an investment management firm, released Q2 2024 investor letter. Here is what the fund said:
“We exited a few positions during the quarter, including, Gulfport Energy Corporation (NYSE:GPOR): During our 4-year holding period, the company successfully reorganized and emerged from bankruptcy with a clean balance sheet. The company executed successfully and we exited with a 62% IRR.”
6) Visteon Corporation (NASDAQ:VC)
Number of Hedge Fund Holders: 33
Visteon Corporation (NASDAQ:VC) is an automotive technology company, which is engaged in designing, manufacturing, and selling automotive electronics and connected car solutions for vehicle manufacturers.
Visteon Corporation (NASDAQ:VC) continues to position itself as a critical player in the evolving automotive technology landscape, with a strong emphasis on digital products and advanced electronic systems. The company is focusing on offsetting near-term Light Vehicle Production (LVP) headwinds by diversifying into underpenetrated customer segments and non-LVP business lines. This approach will reduce Visteon Corporation (NASDAQ:VC)’s reliance on traditional automotive production cycles and open new growth avenues.
The company’s cost structure is expected to act as a critical tailwind over the near term. Its ability to maintain efficient operations remains critical in sustaining profitability amidst industry-wide challenges. Visteon Corporation (NASDAQ:VC)’s capital allocation strategy focuses on bolt-on M&As, with a focus on vertical integration and revenue enhancement opportunities. Its ability to execute its diversification strategy, exploit new business opportunities, and achieve the margin targets are expected to be critical factors in determining future success.
Through its focus on underpenetrated customer segments and non-LVP business lines, Visteon Corporation (NASDAQ:VC) continues to position itself to capture new revenue streams. As per Wall Street, the shares of the company have an average price target of $136.55.
TimesSquare Capital Management, an equity investment management company, released its fourth-quarter investor letter. Here is what the fund said:
“Offsetting that was the -10% pullback from Visteon Corporation (NASDAQ:VC), which designs and manufactures automotive electronics, primarily for driver information and display clusters. Its revenues were shy of expectations, though earnings were better than expected and management lifted its guidance. While the UAW strike settlement was a positive development for automotive production in the short term, concerns grew for EV component providers as EV supply exceeded demand. Even though Visteon’s digital cockpit solutions are used across all types of vehicles, notable future growth is expected from its wireless battery management systems for EVs. Because EV sales rates might take several quarters to reaccelerate, we trimmed our position in Visteon.”
5) On Holding AG (NYSE:ONON)
Number of Hedge Fund Holders: 34
On Holding AG (NYSE:ONON) is engaged in the development and distribution of sports products worldwide.
Market experts opine that On Holding AG (NYSE:ONON)’s innovative products and strong brand positioning are expected to act as critical tailwinds. The company’s strategic emphasis on DTC channels, together with its efforts to strengthen wholesale partnerships, should continue to aid its strong growth trajectory. On Holding AG (NYSE:ONON)’s initiatives consist of brand marketing collaborations, multichannel retail management, and an emphasis on product innovation. Such efforts led to increased brand awareness and continued strength in product sell-through.
Market experts believe that the company’s expansion into the apparel category should aid its revenue growth in the near term. This expansion focuses on establishing On Holding AG (NYSE:ONON) as a holistic athletic brand. It should open up additional revenue streams and reignite its presence in the broader sportswear market.
The strategic focus of On Holding AG (NYSE:ONON) on expanding DTC channels, increasing wholesale doors, and improving the apparel category should fuel future growth. Its improved inventory metrics can also support profitable growth and healthy reordering patterns. Through continuous investment in the e-commerce platform and expansion of its physical retail presence, On Holding AG (NYSE:ONON) should increase its DTC mix and achieve overall growth.
Analysts at Stifel Nicolaus increased their price target on the shares of On Holding AG (NYSE:ONON) from $45.00 to $59.00, giving a “Buy” rating on 18th September. Artisan Partners, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:
“We initiated new GardenSM positions in On Holding AG (NYSE:ONON) during the quarter. On is an emerging global athletic sports brand focusing on performance footwear. Performance running footwear is one of the most challenging categories to break into, requiring a high degree of technical knowledge, significant investment spending and marketing prowess, each of which On has acheived over the years. The company’s foundation in performance footwear provides a high barrier to entry and a strong and credible foundation for the brand to continue growing. We believe On will generate attractive growth as it scales across product categories, channels and geographies within the $300 billion global sportswear market.”
4) Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 37
Rivian Automotive, Inc. (NASDAQ:RIVN) designs, develops, manufactures, and sells electric vehicles and accessories.
The company continues to focus on advancements in production and believes that strategic partnerships will act as primary tailwinds. The JV with Volkswagen should result in significant cost savings, operating efficiencies, and future revenues. Rivian Automotive, Inc. (NASDAQ:RIVN) continues to focus on vertical integration and cost reductions through material and supplier cost savings. Moving forward, Rivian Automotive, Inc. (NASDAQ:RIVN) should be aided by progression in gross profit with the help of improved variable cost, fixed cost leverage, and a rise in revenue per delivery unit.
The company’s product lineup consists of the R1T pickup truck, R1S SUV, and Electric Delivery Van (EDV). It continues to focus on expanding its offerings with the highly anticipated R2 platform, which will be launched in H1 2026. The R2 line should broaden Rivian Automotive, Inc. (NASDAQ:RIVN)’s customer base.
The R2 platform can act as a critical value driver, with industry veterans expecting a market size that can be potentially 7-10 times larger as compared to the R1 platform. Moreover, the expansion into more accessible price points might fuel demand. Rivian Automotive, Inc. (NASDAQ:RIVN)’s focus on software capabilities and continuous vehicle updates via scalable architecture is seen as a potential differentiator.
Analyst at Barclays upped its price target on the shares of Rivian Automotive, Inc. (NASDAQ:RIVN) from $14.00 to $16.00, giving an “Equal-weight” rating on 16th July. Meridian Funds, managed by ArrowMark Partners, released its second quarter 2024 investor letter. Here is what the fund said:
“Rivian Automotive, Inc. (NASDAQ:RIVN) is a US-based electric vehicle manufacturer focused on the design, development, and production of electric adventure vehicles, pickup trucks, and commercial delivery vans. We own Rivian because we believe the company is a future leader in the growing electric vehicle market with a strong brand, compelling products, and a vertically integrated business model. During the quarter, Rivian’s stock price was driven by its progress on cost reduction initiatives and management’s stated confidence in achieving positive gross margins by the end of 2024. The recent announcement of a joint venture with Volkswagen, involving up to $5 billion in investment, also significantly boosted Rivian’s financing outlook and validated its technology. We trimmed our position in Rivian given the strong performance in the quarter.”
3) General Dynamics Corporation (NYSE:GD)
Number of Hedge Fund Holders: 48
General Dynamics Corporation (NYSE:GD) operates as an aerospace and defense company.
In the near term, the diversified nature of the portfolio should support General Dynamics Corporation (NYSE:GD)’s stock price. Wall Street experts opine that the recent final FAA certification for the G700 aircraft is the significant milestone for the company. This certification should contribute positively to its performance and market sentiment. While its Aerospace division saw significant attention, General Dynamics Corporation (NYSE:GD)’s defense business should continue to be a cornerstone of its operations.
Industry veterans believe that the outlook for the business jet market is positive, which bodes well for the company’s expected delivery ramp, mainly for its Gulfstream aircraft. Overall, the healthy long-term fundamentals in the business jet market gives a favorable environment for the company’s aerospace operations over the near term.
Moving forward, the G700’s entry into service might fuel increased sales and market share for General Dynamics Corporation (NYSE:GD) in the ultra-long-range business jet segment. The company’s defense business offers numerous potential growth drivers, which should contribute to its long-term success. The ongoing global demand for naval systems should act as a potential tailwind.
BTIG Research assumed coverage on the shares of General Dynamics Corporation (NYSE:GD) on 26th June. They gave a “Buy” rating and a $345.00 price objective. As per Insider Monkey’s Q2 2024 data, 48 hedge funds held stakes in the company.
2) RTX Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 54
RTX Corporation (NYSE:RTX) offers systems and services for commercial, military, and government customers in the US and internationally.
RTX Corporation (NYSE:RTX) remains optimistic about aligning its business model with airframers to better serve customers and address profit driver misalignment in the upcoming programs. Despite the challenges in product costs and supply chain, it continues to make strides in its GTF engine program and align its initiatives with customer needs and market demands. Collectively, these measures are expected to support the company’s stock price over the next 3-5 years.
In the recent earnings, RTX Corporation (NYSE:RTX)’s management highlighted its substantial backlog, which totalled $206 billion. It also commented that there remains robust demand for its offerings. RTX Corporation (NYSE:RTX) continues to concentrate on fulfilling customer commitments, fueled by its CORE operating system, which enables efficient execution and management of operations. Raytheon, an RTX Corporation (NYSE:RTX) business, was awarded a $736 million contract from the US Navy to produce AIM-9X® SIDEWINDER® missiles.
RTX Corporation (NYSE:RTX) raised its FY 2024 outlook, with adjusted sales expected to come in the range of $78.75 billion – $79.5 billion, up from $78.0 billion – $79.0 billion. It expects adjusted EPS of between $5.35 – $5.45, up from $5.25 – $5.40.
Analysts at Susquehanna upped their target price on the shares of RTX Corporation (NYSE:RTX) from $119.00 to $140.00, giving a “Positive” rating on 26th July.
1) Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 56
Lockheed Martin Corporation (NYSE:LMT) is a security and aerospace company, which is engaged in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services.
Wall Street analysts remain optimistic about Lockheed Martin Corporation (NYSE:LMT) primarily because of an improved revenue growth outlook, de-risking of the F-35 program, and favorable market sentiments for the Missiles and Fire Control (MFC) segment. The resumption of F-35 deliveries should help Lockheed Martin Corporation (NYSE:LMT)’s stock for the next 12-18 months. Also, the planned production rate increases because of the US and international demand should aid the MFC segment.
In the past, the strong performance of this segment stemmed from higher global defense spending and the need for advanced missile systems across geopolitical hotspots. Wall Street assumes that this trend is likely to continue, offering a strong foundation for Lockheed Martin Corporation (NYSE:LMT)’s growth over the coming years. Moreover, increased defense spending in Europe and other regions, primarily because of geopolitical tensions, should help the company’s international business.
Lockheed Martin Corporation (NYSE:LMT) appears to be well-placed to benefit from this trend as its diverse portfolio of products and services align with the requirements of international customers. For FY 2024, the company expects net sales in the range of $70,500 million – $71,500 million and free cash flow of between $6,000 million – $6,300 million.
Susquehanna boosted its price target on the shares of Lockheed Martin Corporation (NYSE:LMT) from $540.00 to $565.00, giving a “Positive” rating on 24th July. Wall Street believes that the trend of higher international defense spending creates a significant opportunity for Lockheed Martin Corporation (NYSE:LMT). With countries planning to modernize military capabilities due to evolving global threats, demand for the company’s advanced defense systems should grow.
While we acknowledge the potential of LMT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than LMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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