There's no arguing with NVIDIA (NVDA +1.80%) and its wealth-building returns in 2017. The stock has doubled this year, making it one of the five best performers among the 500 members of the S&P 500 market index.
That's all in the rearview mirror now, though. What investors really want to find is the next NVIDIA-sized growth story. So with all due disrespect to the graphics-chip designer, we asked three of your fellow investors to find ideas in that vein.
Read on to see why our panelists would rather sideline NVIDIA to own Tesla (TSLA +3.28%), Oaktree Capital Group (OAK +0.00%), and Impinj (PI 2.45%) right now.
Image source: Getty Images.
A great business at an even better price
Jordan Wathen (Oaktree Capital Group): After getting off to a fast start for the year, shares of Oaktree Capital Group have come back down to earth. I think the recent drop gives investors an opportunity to buy a great company at a price that could lead to market-beating returns over the short and long hauls.
Oaktree Capital Group earns its money by managing other people's money, running funds that invest in everything from distressed debt to high-grade bonds. It also owns a stake in DoubleLine, a fast-growing credit manager led by Jeffrey Gundlach.
The company manages about $100 billion, earning recurring management fees on its clients' investments. It also collects incentive fees when its fund returns top their hurdle rate of return, allowing Oaktree to share in the profits it creates for its fund investors.
Strong stock markets and a benign credit market are good for investors, but they're making business more difficult for Oaktree: It thrives in market downturns where it can deploy billions of dollars, thus laying the seeds for a future incentive-fee harvest.
Investors are letting Oaktree trade as if it weren't one of the world's best-performing, most profitable, and most credible asset managers on public markets. I think that's a mistake -- one smart investors should capitalize on.
This is a spring-loaded bounce just waiting for a trigger
Anders Bylund (Impinj): Impinj's so-called RAIN RFID solutions are a hit. (RFID is radio frequency identification; RAIN is one of the standards for the technology.) Retailers and industrial manufacturers around the world have already started to rely on these specialized little radio chips to manage their inventories and work flows. Demand will only accelerate as the healthcare industry follows suit, and the Internet of Things as a whole starts tapping into these data-collection solutions.
As a leader in this space, Impinj CEO Chris Diorio holds a seat on the RAIN RFID Alliance's board of directors. The company is shipping approximately 7.1 billion RAIN endpoints this year. In other words, that's a chip for every person on earth -- populating that many real-world items with RAIN RFID tracking features.
And that's just the start. Impinj is growing its annual chip volume by nearly 20% per year.
However, investors had been hoping for even faster growth. The 20% endpoint growth guidance is an updated figure, down from the original 32% goal. So Impinj shares plunged 22% lower in August and haven't recovered yet.
But here's the thing. Those lowered full-year targets stemmed from delayed RAIN RFID rollouts for a handful of large clients, largely in the apparel retail sector. The same customers are ordering RAIN RFID readers and management tools faster than Impinj can make them at the moment, but the endpoint billings will have to wait.
So Impinj is currently running its RAIN RFID reader manufacturing lines at full speed, while slowing down endpoint production. And what happens when you build out massive infrastructures, just waiting to sink their teeth into some real work? Yep, you get a big bounce in those languishing endpoint orders.
That's how I see Impinj's near future working out, leading to soaring share prices in 2018 and 2019. What we have today is simply a very attractive buy-in point. And I would much rather own Impinj than NVIDIA over the next couple of years, that's for sure.
Image source: Tesla.
A longer-term tech play
Chris Neiger (Tesla): I've written many times about NVIDIA's opportunities in everything from driverless cars to artificial intelligence. The graphics chipmaker certainly has a lead in these markets right now, and its competitors appear to be playing catch-up.
But while NVIDIA's long-term prospects are very strong, Tesla's electric-vehicle and electricity storage opportunities may have even more traction.
Tesla's share price has skyrocketed 857% over the past five years -- still far short of NVIDIA's eye-popping 1,700% gains -- but investors should remember that Tesla is still a young company compared to many of its 100-year-old competitors.
Tesla CEO Elon Musk's exuberance about electric vehicles, solar-panel tiles on residential roofs, and batteries for home and commercial electric storage has fueled a loyal following of investors, but his company is far more than just a flash in the pan. Tesla just debuted two completely new vehicles this month, an electric semi truck and an all-new roadster. Once those are in production, Tesla's fleet will include an entry-level sedan, a luxury sedan, an SUV, a sports car, and a long-haul truck.
The company hasn't been without its problems, of course. In October, Tesla said it had only delivered 220 of its Model 3 vehicles, and most of those went to people inside of the company. There's currently a list of 450,000 people who've reserved the Model 3, which makes the lack of deliveries for the company's least expensive vehicle all the more disappointing.
But Tesla did increase production across all of its models by 4.5% year over year, to 26,130 vehicles in the quarter. Tesla also expects deliveries of its Model S and Model X to reach a total 100,000 vehicles by the end of this year.
The company's shares have climbed as investors have bought into Musk's belief that electric vehicles can be beautifully designed, fun to drive, and -- eventually -- available to most everyone. When Tesla finally achieves that last goal (through substantial Model 3 deliveries), and proves quarter after quarter that it can mass-produce electric vehicles at near the cost of entry-level combustion-engine sedans, I think investors could start pushing Tesla's share price to new heights -- and eventually outpace NVIDIA's gains.
