It's no secret that companies with revolutionary technologies can make investors rich. However, the sad reality is that the vast majority of people don't like to invest in companies with daring new ideas about what tech can do. Human beings' brains are naturally attuned to stability and survival, making us hesitant or outright skeptical (or both) of emerging technologies.
Don't get me wrong -- it's always a good idea to ask questions, but that kind of fear could prevent individuals from discovering lucrative opportunities in the markets. Let's look at what the following revolutionary stocks have to offer for those brave enough to invest in them.
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1. Maxar Technologies
Maxar Technologies (MAXR +0.00%) is a leading provider of earth intelligence and space infrastructure. The company's biggest client is the U.S. Department of Defense. It provides the agency with battlefield logistics via its orbital satellites to coordinate space, air, land, and naval operations.
If that doesn't sound cool enough already, get this: Maxar also has an impressive track financial record. Last year, the company's revenue increased by 3% to $1.72 billion from $1.67 billion in the year period. It also brought in $243 million in operating cash flow, which is very impressive given the high cost of launching satellites into space and subsequent maintenance. For the past three years, the company has brought in between approximately $105 million to $317 million in annual operating cash flow.
Maxar has a high but manageable debt level, which stands at just $2.5 billion after subtracting its cash balance. Since 2019, it has been making more in operating income than its interest expenses (north or south of $200 million per year), which is good, as the company can always refinance when its debt principal comes due. This year, it expects to further increase its sales to $1.89 billion and break even in terms of free cash flow. By 2023, Maxar projects its annual free cash flow will reach $325 million.
Despite all its achievements, the company is only trading at 1.5 times sales, which is relatively cheap given its projected annual revenue growth rate of 9.4%. I think this is an exciting space stock worth adding to your portfolio or watch list.
2. Snowflake
With a market cap of almost $70 billion and trading at 115 times revenue, many investors are probably wondering how a seemingly overvalued stock like Snowflake (SNOW +0.97%) could make them any richer. After all, cloud computing stocks typically trade at only 9 to 53 times revenue. The truth is, Snowflake is a revolutionary cloud computing company. It serves as an all-in-one platform for data processing, sharing, and engineering. Snowflake also features a pay-by-consumption model, where unused capacity is rolled over, instead of charging subscription fees.
The company has the numbers to back up the tech-hype talk. During its 2021 fiscal year (ended Jan. 31), Snowflake's revenue increased by 124% to $592 million. There are now 186 Fortune 500 companies using Snowflake's cloud platform. On average, the firm has a net retention rate of 168%, indicating that each existing customer is spending more and more money with Snowflake.
For fiscal 2022, the company expects to grow its sales by 82% and break even in terms of free cash flow. It now has 77 customers spending more than $1 million per year on its platform, compared to just 41 in fiscal 2020. Overall, I think Snowflake has just the right charm to attract high-net-worth entities. Despite trading at a stunning premium, the stock will be well worth stomaching its current risk.
3. VG Acquisition
By the end of this year, special purpose acquisition corporation (SPAC) VG Acquisition (VGAC +0.00%) will complete its takeover of consumer genetic testing company 23andMe. 23andMe has genotyped more than 11.2 million individuals and expects to increase that number to 16.4 million by the end of 2024. The company analyzes and reports a client's complete ancestry composition, health traits, and risks for hereditary diseases based on the genetic data.
Even though that may sound exciting, its core business is limited, because genetic testing is mostly a one-time expense. From 2019 to 2024, 23andMe has forecasted that without a change, it will see virtually no revenue growth, with annual sales remaining steady near $400 million.
But having recognized that problem, 23andMe is taking active steps to change its own fate. It has a $300 million partnership with British pharmaceutical giant GlaxoSmithKline (GSK +1.82%) to develop drugs based on its consumer genome database. It already has 18 experimental therapeutics targets and plans to double that amount over the next few years.
The most promising target is its venture into cancer immunotherapy. The top three best-selling drugs in this field generate more than $27 billion in revenue annually. With $759 million in cash and no debt, 23andMe is in an ideal position to leverage the capital received from its acquisition and invest in new growth opportunities. For investors looking for exciting biotech stocks, 23andMe is a fantastic bet.
