Investing in companies in their first year of being publicly traded can be an exciting and perilous proposition. It may take time for enough information to come out about a new stock before the market can gather a strong sense of its actual value, leading to volatility. Shares can see large upticks as well as large declines as investors fill in the picture around the company more and more. Below, I’ll detail three stocks that have been on the right side of this equation, rewarding those who got in early.
Reddit Takes the Market by Storm
Reddit (NYSE: RDDT) has provided a total return of over 300% since the company had its initial public offering (IPO) on Mar. 20. The communication services business revolves around Reddit.com, which has over 100,000 discussion boards on various topics. Users call each discussion board a subreddit. Users can read and post on these subreddits, sharing and taking in information that interests them. The company primarily generates revenue from selling advertisements on these subreddits.
Although there is little that is proprietary or groundbreaking about Reddit and its business model, the site is thriving. For many, it has become a de facto source when looking for informal or personal information on the internet. For example, in the "r/BeyondTheBump" subreddit, users share tips on transitioning from pregnancy to parenthood. The platform has become extremely popular, with over 250 million unique users each week. With that number of users, it's no wonder advertisers want to buy space on it. Additionally, each subreddit's niche lets companies target ads toward their most receptive customers.
The company has exhibited extremely strong and accelerating revenue growth. In Q1, revenue grew by 48% from the previous year. In Q3, the figure hit 68%. The company has also been handily beating estimates on revenue.
Amer Sports: Sporting Goods Company from Finland Jumps on the Scene
Amer Sports (NYSE: AS) has returned an astounding +500% since going public on Mar. 7. The company makes sportswear and sports equipment. Its three segments are Technical Apparel, Outdoor Performance, and Ball & Racquet Sports. Amer owns and operates well-known brands like Arc’teryx, Salomon, Wilson, and Louisville Slugger. Shares jumped an incredible 235% on their first day. Only institutional investors had access then, but shares have continued to climb throughout the year.
Beating estimates on revenue and recording a positive adjusted profit in three out of four quarters in 2024 has raised sentiment around the firm. The technical apparel segment, led by Arc’teryx, has been particularly impressive. The segment has grown revenues by over 30% in each quarter from the previous year.
Even more impressive is the growth in revenues within certain geographies. In Greater China and the Asia Pacific regions, revenue grew by 56% and 47%, respectively, last quarter. The company has also been growing its direct-to-consumer channel revenue at around 40%. This helps increase margins by cutting out wholesaler middlemen. In Q3, adjusted gross margin and adjusted operating margin both rose several hundred basis points from last year.
Nano Immediately Starts Riding the Small Modular Reactor Wave
As of the Friday, Nov. 22 close, Nano Nuclear (NASDAQ: NNE) had risen an unbelievable 740% since going public back in May. However, by 12:20 EST on Nov. 25, shares dropped 23%, bringing the yearly total return down to a still very impressive 540%. Like Nano, NuScale Power’s (NYSE: SMR) shares have soared this year. This is due to the potential of the small modular reactors (SMRs) these companies are working to commercialize. The proliferation of AI has created a need for data centers to receive reliable and clean electricity, which is exactly the type of electricity that nuclear reactors can provide.
However, there is one big problem: traditional nuclear reactors are extremely expensive and time-consuming to build. Analysts hope that SMRs can lower the initial cost and reduce the timeline for building nuclear energy capacity. However, this technology has yet to prove economical, and so far, no SMRs are operating in the United States. This results in Nano having $0 in revenue.
Nano is still very early in its journey to having a reactor built and in use. In 2024, it filed patent applications and is discussing its reactor designs with the Nuclear Regulatory Commission. In August, it purchased a 14,000 sq. ft. facility to serve as its nuclear technology headquarters. The company is also working to become a player in nuclear fuel transportation and nuclear consulting services.
