These stocks show how cost-cutting, resisting acquisitions and product expansion can create hidden gems.
Hidden gem stocks are a great way to invest in a market spooked by persistent inflation and a Federal Reserve that’s reluctant to cut interest rates this year. Dow Jones Industrial Average On May 29th, it fell 570 points, making it the worst month of 2024.
Minutes from the Federal Reserve’s last meeting suggested it was prepared to tighten monetary policy to curb inflation, which has pushed 10-year Treasury yields up to about 5% and made people less interested in buying stocks.
However, in this climate, analysts at Bank of America S&P 500 It will hit $5,000 as the market adjusts to rising inflation and interest rates. Meanwhile, Goldman Sachs He currently predicts the S&P 500 will hit 5,100, and Deutsche Bank is predicting a similar number, believing the U.S. economy is nearing a soft landing, which bodes well for stocks.
Overall, sentiment is mixed, which is why hidden gem stocks are the best bet. These stocks have fallen this year despite buy recommendations, the first is dealing with an unpredictable market by carefully relocating factories and adjusting auto production, the second is a cryptocurrency mining giant that is expanding amid a takeover spree, and the last is an education technology giant that is changing the way people around the world learn languages and is targeting a $61 billion market.
Rivian Automotive (RIVN)
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Rivian Automotive (Nasdaq:Riven) is one of the most undervalued hidden gems in the electric vehicle stock market, having fallen 51% this year and trading near an all-time low of $8.84.
RIVN plans to build and ship 13,980 vehicles in the first quarter of 2024, and produce 57,000 vehicles this year. During the first quarter, the R1S was the most popular electric vehicle in the U.S. in the $70,000+ category.
Additionally, Rivian is building a $5 billion EV factory in Georgia despite these obstacles, but construction has been delayed for now. After minor changes, Rivian will manufacture the R2 in Normal, Illinois instead of Georgia, saving more than $2 billion that it expects to be profitable by the end of the year. Rivian plans to start producing the R2 in early 2026 at its Illinois plant, which received $827 million in state funding for the expansion.
As for its existing product line, Rivian is planning changes to its R1T and R1S models for 2025 that will include the use of lithium iron phosphate (LFP) batteries, which have a lower energy density than existing batteries but are cheaper and have a longer lifespan.
Bitfarms (BITF)
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Bitfarm (Nasdaq:Vitafe), down 23% this year, rejected Riot Platform(Nasdaq:Riots) offered to acquire all of BitFarm’s outstanding shares for $2.30 per share, or a total of $950 million, but after the deal fell through, BitFarm’s stock price rose.
The offer was 24% higher than BitFarm’s volume-weighted average stock price over the past month, but the company said it “significantly undervalued” the company.
The matter is still ongoing. RIOT is BITF’s largest investor, with a 9.25% stake. The company is trying to force an extraordinary shareholders meeting and replace some of the directors with independent directors to allow the proposal to go through. Meanwhile, Bitfarms, with the support of investment banks, is Mauriceis considering other offers that have been presented.
Amid these proposed acquisitions, BITF recently added 24,000 miners and is on track to reach 88,000 in 2024, a significant figure following Bitcoin’s fourth halving. The company aims to reach 21 EH/s in 2024, up from 7.0 EH/s. Bitfarm has increased its generating capacity to 200MW by adding power to its Iguazu farm in Paraguay. In 2025, the expansion will add 23% more megawatts to handle the overall volume.
Duolingo (DUOL)
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Duolingo (Nasdaq:Duol) concludes our discussion of hidden gem stocks, with a consensus price target of $255, which equates to a potential upside of about 30%. That’s not surprising, given that Duolingo targets 1.8 billion people around the world who want to learn other languages, tapping into a potential $61 billion market.
Apart from the potential in the language learning market, Duolingo is also worthy of being considered among hidden gem stocks as it is continually updating its platform to incorporate new elements, with recent upgrades adding math and music lessons.
Duolingo revamped its model by introducing subscriptions, including a “Max” plan with extra features to keep users interested and coming back, and paid subscriptions grew 54% to 7.4 million as of the end of Q1 2024.
Meanwhile, monthly active users increased 35% to 97.6 million and daily active users increased 54% to 31.4 million, and Duolingo’s net profit was $27 million, beating Wall Street expectations by 46%.
Duolingo also raised its full-year 2024 guidance for bookings to $817.5 million from $808.5 million and revenue to $735.5 million from $726.5 million.
The number of Chinese customers using Duolingo to learn English has increased by over 100% in a short period of time, and most of the revenue will come from China, which is why Duolingo will increase its investment in China.
As of the publication date of this article, Faizan Farook did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are solely those of the author, which is subject to InvestorPlace.com’s copyright. Publication Guidelines.
