We recently compiled a list of the 10 Best Up and Coming Stocks To Buy According to Analysts. In this article, we are going to take a look at where Enovix Corp. (NASDAQ:ENVX) stands against the other up and coming stocks.
Donald Trump’s victory in the recent presidential election is expected to encourage companies that have been hesitant to pursue IPOs in 2025, capitalizing on the positive market reaction and anticipated deregulation. Following the election, the Russell 2000 Index rose to near a three-year high, while the S&P 500 reached record levels, creating a favorable environment for risk-taking among investors. Nearly $40 billion has been raised through IPOs this year, marking a 64% increase from 2023, although still below pre-pandemic averages. The pro-cryptocurrency stance of Trump may also influence the market, with expectations of increased activity in crypto-related IPOs if regulatory conditions improve. While an immediate surge in IPOs is unlikely due to a limited number of companies ready to file, there is optimism for a larger set of IPOs next year as companies seek to raise capital and insiders look for liquidity.
Generally, there’s also a noticeable disconnect between the tech IPO market and the broader IPO landscape, with many firms opting to remain private longer due to the growth of private credit as an alternative funding source. However, optimism exists that public markets will regain attractiveness as valuations rise and investor demand for public offerings increases. On October 24, Ashley MacNeill of Vista Equity Partners appeared on CNBC to shed light on the then-current stagnant state of the IPO market. We covered this in detail in our 10 Best IPO Stocks To Buy Heading into 2025 article, here’s an excerpt from it:
“MacNeill emphasized that for the IPO asset class to function effectively, 3 key conditions must align: a stable macroeconomic environment, investor willingness to deploy capital, and companies’ ability to communicate their earnings forecasts…
Despite the prevailing sentiment of a strong economy and record highs in the stock market, the IPO market remains stagnant. MacNeill suggested that this disconnect may stem from a bifurcation between the tech IPO market and the broader IPO market… MacNeill noted that this trend has contributed to the delay in the IPO market’s return to normalcy. However, she remains optimistic about the evolution of IPOs, suggesting that public markets will regain their appeal as high valuations and investor demand for public offerings increase.”
Additionally, expectations for M&A activity are on the rise, fueled by renewed investor eagerness. Mitch Berlin, vice chair of strategy and transactions at EY Americas, joined CNBC’s ‘The Exchange’ on November 22 to discuss what he sees for M&A activity in 2025. He noted that while there is a general sense of optimism, it is essential to differentiate between private equity and corporate growth. Berlin anticipates a 16% increase in private equity activity and an 8% increase in corporate transactions, driven largely by pent-up demand and significant capital reserves available for investment. This growth is also influenced by maturing assets that private equity firms are eager to leverage.
Looking ahead, Berlin speculated on potential headlines for early 2025, predicting larger deals primarily within the tech sector, fueled by advancements in AI. He also highlighted the continued importance of oil and gas in M&A, albeit from a value rather than volume perspective. Life sciences companies are expected to utilize their cash-rich balance sheets to make strategic acquisitions aimed at replenishing their research and development pipelines. Furthermore, he expressed optimism that regulatory hurdles from the Federal Trade Commission (FTC) and Department of Justice (DOJ) would become less of a barrier, allowing for smoother deal approvals.
Addressing concerns about interest rates, Berlin reassured that the current environment would not hinder deal-making. He expects interest rates to decrease further in 2025, which could stimulate more activity. Many deals are being funded through cash on hand, and private credit continues to be a significant source of financing, with three-quarters of deals this year being supported by such credit.
Berlin’s insights reflect a robust outlook for both private equity and corporate M&A activity as firms adapt to changing market conditions. As firms adapt to the changing market, investors should stay alert for new opportunities. With an anticipated strong IPO market in 2025, this context sets the stage for our upcoming list of the 10 best up-and-coming stocks to buy according to analysts.
Methodology
We used the Finviz stock screener to compile an initial list of 30 stocks that went public in the last 5 years. We then selected the 10 stocks with high analysts’ upside potential and that were also the most popular among elite hedge funds. The stocks are ranked in ascending order of analysts’ upside potential.
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).
A close-up of a battery cell being assembled with intricate precision.
Enovix Corp. (NASDAQ:ENVX)
Average Upside Potential as of November 26: 115.98%
Number of Hedge Fund Holders: 14
Enovix Corp. (NASDAQ:ENVX) is a leader in advanced silicon-anode lithium-ion battery development and production. It focuses on creating batteries that are safer, more efficient, and longer-lasting compared to traditional lithium-ion batteries. Its innovative battery technology is aimed at various industries, including wearables, smartphones, laptops, electric vehicles, and medical devices.
In the third quarter of 2024, the company made significant progress. It opened a new manufacturing facility in Malaysia, Fab2, to boost production. This facility is already shipping battery cells to customers. Additionally, it recently announced a development agreement with one of the top 5 smartphone manufacturers in China. This collaboration aims to develop a customized 100% active silicon anode battery, designed to power smartphones launching in late 2025.
This partnership marks a significant milestone for the company, solidifying its position in the smartphone market and demonstrating the growing demand for high-energy-density batteries. By leveraging its innovative technology, it aims to deliver batteries that can significantly enhance the performance and battery life of smartphones.
Financially, the company saw impressive growth. Revenue for the quarter reached $4.32 million, a substantial increase of 2,058.50% compared to the same period last year. Looking ahead, the company expects revenue to continue growing, with a projected range of $8.0 million to $10.0 million for the fourth quarter.
Its cutting-edge technology and commitment to innovation have positioned the company as a key player in the battery industry. With a focus on delivering high-performance batteries for various applications, including IoT devices, mobile devices, computing devices, and electric vehicles, Enovix Corp. (NASDAQ:ENVX) is poised to shape the future of battery technology.
Massif Capital Real Assets Strategy stated the following regarding Enovix Corporation (NASDAQ:ENVX) in its Q2 2024 investor letter:
“Enovix Corporation (NASDAQ:ENVX): Enovix is perhaps a bit of an outlier in our portfolio given that it is a battery manufacturer selling into consumer goods markets, but it fits nicely in what we believe to be the Massif Capital analytical sweet spot, businesses where science/technology, geopolitics/geoeconomics and energy/materials overlap. While some would argue that Enovix is inappropriate for a liquid real asset portfolio, the traditional definition of real asset businesses is dated.
Traditionally, real asset businesses are those that own and operate real estate, infrastructure, and natural resource assets. While this definition is workable, and most of the companies we invest in fall into one of these categories, it does not consider the ever-growing role of applied physical sciences in specific manufacturing fields, nor does it take into account the growing importance of material sciences and the changing nature of energy in general. Enovix is a material sciences business aiming to transform an ever-growing list of unique, highly refined materials into energy storage devices. They create value by understanding materials’ physical and electrochemical properties better than others…” (Click here to read the full text)
Overall ENVX ranks 4th on our list of the best up and coming stocks to buy according to hedge funds. While we acknowledge the potential of ENVX as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ENVX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.