Which stocks are poised to take over from giants like Apple, Microsoft, and Amazon? The “Next Magnificent 7” of smaller growth stocks, as hinted in Motley Fool’s Market Pass promos, are about to be revealed. Stay tuned for the insights from Thinkolator
The Motley Fool is rolling out its “Market Pass” subscription, a bundled service priced at $998 for the first year. This package includes several of their investment advisory services—such as Stock Advisor, Rule Breakers, and Everlasting Stocks—along with an “Ultimate Portfolio” handpicked from their top recommendations. Their latest pitch? A teaser campaign hinting at a new group of high-potential stocks, dubbed “next Magnificent 7”. Here’s how they’re framing the opportunity:
For some context, The Motley Fool has openly shared its list of the original “Magnificent 7” stocks, along with details on how often they’ve been recommended and re-recommended. While I can’t confirm every instance, it’s clear that these stocks have frequently been highlighted in their promotions over the past 15 years.
What are the upcoming growth sectors and which companies could dominate those areas? You can find more information from the Foolies.
The stocks are believed to be in sectors that have . They are smaller companies with a typical market capitalization of $25 billion, in contrast to the Magnificent 7’s average market cap of nearly $2 trillion. This makes them 74 times smaller than the Magnificent 7.
Here are some additional hints to help identify this stock:
The government has been increasing its spending in this sector, further boosting the company’s growth potential.
The description strongly aligns with Zscaler (ZS), a stock that Motley Fool has backed for years. With a market capitalization of around $32 billion, Zscaler is currently trading at roughly 75 times its projected 2024 earnings (adjusted… Similar to several other rapidly expanding tech stocks its profitability largely depends on substantial stock-based compensation to offset significant operating expenses). While the latest earnings report contained a somewhat underwhelming outlook, leading to a dip in share price, the company remains on a strong growth trajectory. Analysts anticipate an average (modified) earnings expansion rate of about 30% over the coming years. Additionally, Zscaler continues to expand its customer base, with high-value clients spending $100K+ increasing by over 20% and those spending $1 million+ growing by over 30% in 2023.
Zscaler is undoubtedly an impressive company with strong growth, although its high valuation adds a layer of complexity for potential investors. While I’m not extremely familiar with it, you can find a free post from the Motley Fool (published in December) that offers some insights, and the most recent earnings call slides available is available for a deeper understanding of the company’s direction.
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More clues:
This tease is likely referring to Intellia Therapeutics (NTLA), co-founded by Jennifer Doudna, rather than CRISPR Therapeutics (CRSP), Charpentier co-founded. While both Nobel laureates have played key roles in commercializing CRISPR technology, CRSP’s market cap has remained above $3 billion since 2020, whereas NTLA recently had $2.6 billion market equity, making it the more probable candidate.
The gene-editing sector is undoubtedly exciting, with each company taking distinct approaches and targeting different genetic disorders. However, for investors, it has been a volatile and often frustrating space. Most of these companies remain in the pre-revenue stage, heavily reliant on cash and collaborative agreements with major biotech companies. Unless you timed your exit near the speculative highs of 2021, chances are you’ve taken a hit.
CRISPR Therapeutics has been the strongest performer, while Intellia (NTLA) and Beam Therapeutics (BEAM) have at least kept pace alongside the S&P 500 since their IPOs. Looking ahead, CRSP is the only one expected to generate meaningful revenue by 2026-2027, but profitability remains a distant goal for all players in this space. As they navigate clinical trials and regulatory hurdles, wild price swings are likely to continue.
If you have a favorite in this sector or deeper insights into their science and business models, feel free to share your thoughts!
Shall we discuss the next investment opportunity?
Other clues:
The cybersecurity market is highly competitive, making it difficult to pick a winner. However, Crowdstrike (CRWD) is the leading choice and experiencing the most rapid growth cybersecurity company, with a projected revenue growth of 25-30% over the next few years. On the other hand, PTC (PTC) is a lesser-known “IoT” company that uses AI in manufacturing automation, with steadily growing profits and available cash flow. While there are other possible contenders, CRWD and PTC are the best guesses for the top two “NEXT Magnificent 7” stocks.
During 2018-2019, many people thought that we would all be wearing virtual reality headsets all the time by now. When people expected that we would everyone would be wearing headsets all the time by now…
What is the share for this industry?
The company being referenced here is Axon (AXON), previously called Taser (with the previous ticker TASR before rebranding in 2017). Motley Fool has been bullish on this stock for years—Tom Gardner was promoting Taser nearly two decades ago.
Axon’s success extends far beyond its well-known less-lethal weapons. Its breakthrough vision was recognizing the immense potential of cloud-based storage for police body camera footage, a business that has flourished. This model has also proven incredibly sticky—previously used by a law enforcement agency. or district attorney’s office integrates a secure and reliable video recording system, there’s little incentive to switch to a competitor, especially given the long-term need for preserving legal evidence.
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Give me hints about something?
It looks like you’re referencing Nuvei (NVEI), a Canadian fintech firm, and its growth trajectory, along with the challenges it has faced. Nuvei’s focus on sectors such as game, cryptocurrencies sets it apart from traditional payments companies, although similar to many companies exposed to e-commerce, it experienced a drop in profit after the peak of 2021. This sharp decline in earnings, alongside negative reports from Spruce Capital, contributed to a significant reduction in the stock’s value. Despite this, the company has had strong growth and, with the involvement of Ryan Reynolds, has garnered significant attention. However, this stock’s performance hasn’t been stellar since its IPO, as evidenced by the gradual decline over the last couple of years.
Analyst are now optimistic about Nuvei’s potential to grow again, with earnings expected to reach $2.11 per share in adjusted terms for the current year, making the stock relatively cheap at about 13 times forward earnings. While it carries higher risk, especially given the ongoing skepticism from short-sellers like Spruce Point, the company remains an intriguing option—especially with the added endorsement of Ryan Reynolds. Nuvei is scheduled to report earnings tomorrow evening, which will provide more clarity on its trajectory. Companies operating in “fintech” sector, especially those focused on payments, and while many of the traditional ones are expensive, Nuvei appears to be a more affordable option in comparison. For reference, PayPal (PYPL), a significantly larger player in the space, also trades at around 12 times earnings, though it’s not the shares that Foolies are targeting in this case, based on the clues provided.
We still have two more sectors to cover which are currently considered as “hot”.
t looks like Ørsted, the Danish energy company, has had a rough couple of years, especially with rising rates impacting offshore wind initiatives, especially in the U.S. Their valuation has dropped to around 19 times the expected earnings, which might make them more appealing at a lower price, but they are still undergoing the midst of restructuring. The company is trying to navigate through canceled projects like Ocean Wind project off the coast of New Jersey, while also focusing on hydrogen, sustainable fuels in Denmark.Despite their involvement in renewable energy, their income is still largely tied to offshore, onshore wind energy projects for near future.
They are projecting an adjusted EBITDA of around 3.49 billion for 2024, with an firm value $30 billion, which gives them a valuation of about 8 times expected EBITDA. While the outlook is uncertain, especially after a tough 2023 with project cancel, the company’s focus on ambitious renewable energy goals and strong European incentives offers hope for a recovery. The business remains capital-intensive, though, and it’s still hard to say whether they can turn things around in the short term. What do you think about their restructuring efforts and the future of their U.S. projects?
Darling Ingredients, with Valero , operates in industries that might not be the most glamorous, but they certainly rake in significant profits. Here are the details:
It sounds like you’re leaning toward Darling as a better investment option compared to Orsted, mainly due to Darling’s potential for recovery and unique capabilities, even though they’ve had a few weaker quarters. At $42/share, with an expected return to $4+/share in earning by 2025, mid-single-digit growth afterward, the stock seems undervalued at only 10X forward profits. Despite being initially recommended by Motley Fool over ten years ago., Darling has not been a recent focus for them.
And they provide quite a few hints for this one.
MongoDB is a popular IPO that had a volatile ride in 2021-2022, but have been performing well since Spring 2023 due to their MongoDB Atlas platform. The company is growing at an impressive rate and has been endorsed for their value proposition. However, it is on the expensive side, valued at around 20X sales, and has a high stock-based compensation. They are just now reaching profitability, So, It’s expected that they’ll have $2.92 in adjusted earnings per share this year, which results in a valuation of nearly 150 times their forward adjusted earnings.
Can MongoDB becomes leader in the ‘Next Magnificent 7’ list? They have shown impressive revenue growth and have established partnerships with major tech firms. Additionally, there is a high need for database management systems. in the realm of AI and other fields. However, it’s difficult to make any definite predictions about their future success, especially when they are competing against giants such as Oracle. The Foolies have presented several other ideas for the ‘Next Magnificent 7’ list.
