Everybody wants to grab a multi-bagger stock, but that’s never an easy task. Success leaves clues, however, and there are certainly a few key traits that all big performing companies share.
Revolutionary technology, starting out small, and having a large addressable market are some of the more important features that have helped stocks grow exponentially in the past. In this article we’ll look at three companies which, each in their own way, have at least one of these crucial factors covered.
3D technology company Matterport, Inc. (MTTR) looks to be heading back to all-time high price territory after the stock surged more than 6% in one day.
The “spatial data” firm recently penned a deal to provide products and services to Superyacht Creative, paving the way for the boutique and high-end yacht-focused multimedia outfit to expand its digital offering.
Matterport is a perfect fit for a firm like Superyacht, who decided they needed to index and digitize the inner spaces and glamorous world of the life aquatic. And where companies like Google and other mapping specialists excel in documenting the exterior geography of our physical universe, Matterport does something similar to our interior world too.
Harnessing the power of Artificial Intelligence, and in combination with hardware such as LiDAR, 3D cameras, and 360-degree photography equipment, Matterport is able to turn photos and videos into the digital “twin“ of any client’s building or physical space.
The rendered piece accurately calibrates distances, such that the finished product preserves the space’s correct dimensions and ratios. This kind of virtual reality experience is superior to a simple video tour because MTTR’s software is able to generate images at any scale which cover every inch of a scene.
As you might expect, the total addressable market for Matterport is enormous; in fact, it’s almost limitless – the vastness of interior spaces is essentially fractal, and new buildings are being constructed continuously.
To this effect, it’s no surprise to lean that MTTR’s Spaces Under Management grew by 75% year-on-year to 5.6 million in the Second Quarter 2021, while its subscription-based revenue of $15.3 million was also up by 53%.
Most importantly, the company’s total subscribers has exploded over the last twelve months, increasing 158% to 404,000.
Having only gone public this year, Matterport was able to secure $640 million in proceeds from its SPAC sponsor Gores Holdings VI, Inc. The business will need this money to continue expanding and bring in more paying customers, as so far the company is still a loss making enterprise.
But the firm’s low quarterly revenues – of just $29.5 million – is actually a boon for potential investors, as MTTR still has a lot of growing to do, and could easily multiply its stock 10-fold in the coming years.
Disrupting the decades-old credit card business is an audacious thing to do, but that is just what the “buy now, pay later” outfit Affirm Holdings, Inc. (AFRM) is attempting right now.
The short-term financing company quickly began making a dent in traditional credit provider markets, and followed this up by securing a partnership deal with the planet’s largest online retail brand, Amazon (AMZN). Indeed, AFRM previously worked with Canadian sales platform company, Shopify (SHOP), helping the e-commerce group grow conversion rates on its stores by half, while reducing purchase abandonments by another third.
It’s this ability to generate value for merchants that makes Affirm such an attractive proposition for sellers, playing no small part in the company’s staggering share price rise, having almost doubled in the last month alone.
Since the company targets customers who find it difficult to attain credit elsewhere, Affirm’s operating model is inherently risky.
Clients who sport poor credit scores to begin with are well known to be the demographic most likely to default on repayments in the future. However, the buy now, pay later solution is intended to mitigate these kinds of outcomes, with an upfront transparent pricing and fee structure, and the ability for consumers to set-up early limits on how much debt they are comfortable carrying.
Unlike Matterport, whose revenue profile is still in its infancy, Affirm’s top-line numbers are much more hefty. The company brought in $262 million in revenue for the Fourth Quarter 2021 – beating analyst predictions by $37 million – and posted Gross Merchandise Volume of $2.48 billion.
For a business hoping to grow its value by a multiple of 10, these big figures might be off-putting. But the credit card industry is massive; in 2019 alone, the four major credit card networks – Visa (V), Mastercard (MA), American Express (AXP) and Discover – accounted for nearly $4 trillion of credit card transactions. And with Affirm growing active customers by 97% last quarter, that ten-bagger doesn’t look so far off after all.
Despite the best efforts of gallant and heroic medical professionals, the cancer industry in the US continues to be a growing sector. According to a study by Acumen Research and Consulting, the increased prevalence of cancer worldwide is predicted to make the global chemotherapy market worth about $74.3 billion by 2027.
While such depressing news shows there’s still a lot of work to do to eradicate this disease, one company, DermTech, Inc. (DMTK) is trying its hardest to make death from cancer a thing of the past.
DermTech is a pioneer in the skin cancer detection space, having developed a non-invasive way to screen for melanomas and other common forms of carcinoma.
DMTK’s skin genomics platform and SmartSticker solution have proven so accurate that it is now considered a more effective way to test for skin cancer than a traditional surgical biopsy.
Indeed, DermTech uses state-of-the-art RNA molecule amplification to detect whether two genes highly predictive of melanoma – PRAME and LINC00518 – are present in a sticker sample. The company’s genomic level analysis and its strong patent protection give the firm a robust business moat in the oncology sector.
As for growth opportunities, DermTech is just getting started.
The company sees itself taking advantage of a $10 billion addressable skin cancer market, and the firm has been growing revenues on the back of increasing business possibilities for the last couple of years.
DMTK has two products at the commercial stage of development now, with a further one at validation stage and two at discovery. It’s also just started to monetize its sample volume, with its CAP-accredited lab operations now having capacity for 150,000 PLAplus tests every year.
A strong cash position of $258 million will ensure this innovative biomedical firm has every chance of returning big gains for investors further down the line.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.