Missed Nvidia? 7 Stock to Watch!

Key Concepts

• Growth Investing: A strategy focused on investing in companies with high growth potential, often characterized by accelerating revenue and earnings.
• Small and Medium-Cap Companies: Companies with market capitalizations that are smaller than large-cap companies, offering potentially higher growth but also higher risk.
• AI (Artificial Intelligence): Technology that enables machines to perform tasks that typically require human intelligence, such as learning, problem-solving, and decision-making.
• Fintech (Financial Technology): Technology that aims to compete with traditional financial methods in the delivery of financial services.
• Defense Sector: Companies involved in the development and production of military equipment and services.
• Drones (Unmanned Aerial Vehicles - UAVs): Aircraft that can be controlled remotely or fly autonomously.
• Satellite Components and Constellations: Parts used to build satellites and networks of satellites orbiting the Earth.
• Telemedicine/Telehealth: The delivery of health care services remotely using telecommunications technology.
• Circuit Boards: The foundation for most electronic devices, providing the physical structure and electrical connections for components.
• Surveillance Technology: Systems used to monitor and observe activities in specific locations.

Smaller Technology Companies with Big Growth Potential

This video highlights seven smaller technology and defense companies that investor Bruce Campbell believes have significant growth potential, many of which are leveraging Artificial Intelligence (AI). The focus is on identifying the "next Nvidia" or "next Palantir" by looking at small and medium-cap companies exhibiting accelerated revenue and earnings growth.

Bruce Campbell's Investment Criteria

Bruce Campbell, an investor with a history of backing successful tech companies like Nvidia and Palantir, focuses on growth companies, particularly in the tech sector. His key criteria for a stock to gain his attention are:

• Revenue Acceleration: Not just steady growth, but an increasing rate of revenue increase year-over-year.
• Profit/Earnings Acceleration: Similar to revenue, earnings should be growing at an increasing pace. He looks for growth rates like 15% this year, 20% next year, and 25% the following year, rather than linear growth (e.g., 5% each year).
• Growth Rate vs. Multiple: He analyzes the company's growth rate in relation to its valuation (multiple). Companies that achieve significant accelerated growth can "grow into" high multiples, as seen with Nvidia and Netflix.

Campbell acknowledges the "minefield of dead companies" in this space but emphasizes that a disciplined process can lead to significant opportunities.

Bruce Campbell's Stock Picks

1. ABX Technologies

• Main Topic: Fintech, specifically a new exchange for commodity trading and settlement.
• Key Points: ABX Technologies has built its own exchange for commodities, addressing the lack of standardized contracts for futures trading in certain markets (e.g., LNG). They offer digital technology for contract standardization, settlement, and proof of ownership.
• Specific Details: They have launched contracts for LNG carbon and European/Asian gold. Canaccord Genuity has initiated coverage, referring to the management team as the "Avengers of management team."
• Real-world Application: Creating a standardized and efficient trading platform for commodities.
• Potential Outlook: Campbell suggests that a larger entity like CBOE or TMX Group might acquire ABX Technologies due to its innovative approach.

2. Kraken Robotics

• Main Topic: Defense technology, particularly underwater drones.
• Key Points: Kraken Robotics operates at the intersection of technology and defense. They are a significant supplier to Anduril (a private defense company) for their "Ghost Shark" underwater drones.
• Specific Details: The company is experiencing "full-fledged" accelerated revenue growth, driven by increased defense focus on maritime and underwater operations.
• Real-world Application: Providing advanced underwater drone technology for defense and surveillance purposes.
• Comparison: Often compared to Anduril, a private company, making Kraken a public market opportunity.

3. Kratos Defense and Security Solutions

• Main Topic: Defense technology, focusing on drones for aerial applications.
• Key Points: Kratos specializes in drone technology for "above the Earth" applications. They are developing advanced drones that can be smaller, cheaper, and more versatile.
• Specific Details: Their technology allows for the production of drone squadrons that can fly together, or drones that act as "wingmen" for manned aircraft. They have seen massive revenue and earnings acceleration.
• Real-world Application: Developing autonomous aerial systems for military and defense purposes, including swarming capabilities and AI-assisted flight.
• Market Position: Campbell notes that while the market cap might be larger, the interest in defense and Kratos's specific offerings make it relevant.

4. MDA Space

• Main Topic: Space technology, specifically satellite components and constellations.
• Key Points: MDA Space is an industry leader in satellite components and building satellite constellations. The decreasing cost of launching satellites is expanding the market.
• Specific Details: The stock has experienced volatility, partly due to concerns about competition from SpaceX and a contract loss. However, Campbell sees this as a potential buying opportunity.
• Market Trend: As the cost of putting satellites into space continues to decline, the market for satellite services and data will grow significantly.
• Management: Praised for having "amazing management" and "tons of runway."

5. Rocket Doctor AI

• Main Topic: Telehealth with an AI integration.
• Key Points: Rocket Doctor AI is described as the "Shopify of doctor's office visits," enabling independent doctors to offer their services. Unlike platforms where patients may not see the same doctor twice, Rocket Doctor AI allows for doctor-patient relationship building.
• Specific Details:
  • Doctor Independence: Doctors are independent contractors, not employees of the platform.
  • Global Medical Library: An 8-year-developed, enclosed AI system akin to ChatGPT, containing extensive medical diagnoses, treatments, and symptoms. This library performed exceptionally well in doctor tests.
  • AI-driven Triage: The AI system can perform initial triage, speeding up doctor's times and directing patients appropriately.
• Real-world Application: Improving efficiency and patient care in telemedicine through AI.
• Adoption: Major US insurance companies like Aetna, United Health, Medicare, and Medicaid are signing on due to the cost savings AI provides.

6. TTM Technologies

• Main Topic: Electronics manufacturing, specifically printed circuit boards (PCBs).
• Key Points: TTM Technologies is the largest circuit board manufacturer in North America. Circuit boards are essential components in all electronics.
• Market Demand: Increased demand for technology, defense, and space applications directly translates to higher demand for their products.
• Financial Performance: The company has achieved topline growth in the teens and converted this into earnings growth between 20% and 30%.
• Analyst Coverage: While not extensively covered, the analysts who do follow the company are positive.

7. Zedcor

• Main Topic: Security technology, integrating AI into surveillance.
• Key Points: Zedcor applies AI to traditional surveillance technologies, creating advanced security solutions. They build tall (e.g., 40 ft) surveillance towers for job sites and locations.
• AI Integration: The towers are monitored centrally by AI, making the system highly efficient.
• Deterrence: These AI-powered surveillance systems act as a significant deterrent to crime, particularly in retail environments like Home Depot, Lowe's, and Walmart, by making individuals aware they are being identified.
• Business Growth: Zedcor's business is experiencing rapid growth, with continuous expansion in geographic reach and manufacturing.
• Management Strategy: The management team proactively purchased goods to hedge against tariffs and steel price increases, enhancing efficiency.

Conclusion

The video presents a curated list of seven smaller technology and defense companies that Bruce Campbell believes are poised for significant growth. The common threads among these companies are their innovative use of technology, particularly AI, their ability to demonstrate accelerated revenue and earnings growth, and their presence in high-demand sectors like fintech, defense, space, healthcare, electronics, and security. While acknowledging the inherent risks of investing in smaller companies, Campbell's analysis suggests these firms possess the foundational elements for substantial future appreciation.

Disclaimer: The video explicitly states that this is not financial advice.