Companies Ahead of the Curve: Going From Pennies to Billions

March 03, 2017 - By: Baystreet Staff


An Unprecedented Period of Change Creating More Multi Billion Dollar Companies Than Ever Before

With technology and lifestyle changes accelerating, there have never been more new multi-billion industries in the last two decades than ever before. Companies that were quick to adapt to these new trends reaped the benefits in growing revenues and valuation. But in business and in life, there’s adapting and then there’s being ahead of the curve.

Although companies with the foresight of future trends are often handsomely rewarded, unfortunately, trends can take years to come into full swing. But once realized, the frontrunners and their early investors are the first to reap all the benefits of patience and foresight.

Here are some notable companies capitalizing on major trends.

Organic Foods

Chances are, before the year 2000, you’ve never even heard or thought about the term organic food. Organic food is now a major trend informing grocery-purchasing decisions all over the world. Whole Foods Market (WFM) went public in 1992 at a valuation of under 100 million! Reporting under $300,000 in revenues for 1992, Whole Foods was taking a major gamble on organic foods being the future.

As organic foods began to catch on, Whole Foods quietly and successfully continued to grow their revenues. Their gamble paid off, with over a billion in revenues by 1997. As the industry and investors began to take notice, the company’s market capitalization grew to a massive $24 billion by 2014. Although Whole foods generated over $15 billion in its last fiscal year, shares have sold off in the belief that the organic food craze has run its course. However, with the post-millennial generation beginning to enter the market, organic foods and Whole Foods may be due for a second wind.

Smartphones

Without a doubt, one of the biggest winners of the Smartphone revolution has to be Arm Holdings (ARMH). Founded in 1990, the company focused on designing processors that were small, powerful, and low in power consumption. Outside of applications in disk drives, there wasn’t a strong need for ARM processors. After going public in 1998, the company remained in obscurity. This all changed after smartphones. As smartphones began to develop, the arms race to develop and add new features created a strong demand for processors that were small, powerful, and low in power consumption.

Before long, ARM designed processors became the industry standard for cutting edge smartphones. ARM Holdings started to generate millions and millions in revenue in the decade leading up to 2010. As investors finally took notice in 2010, the valuation of the company shot up to the multi billion territory and continued to grow, before finally being acquired by SoftBank Group in 2016 in an all-cash deal for a sweet $32 billion dollars.

OLED Displays

There’s a massive paradigm shift happening right now in electronic displays. With bulky CRTs having gone the way of the dinosaur, display technology has been changing rapidly. After CRTs, it was plasma, then it was LCDs, and now it’s OLED. With companies like Apple and Samsung pioneering the shift to OLED technology in their line of smartphones and televisions, companies specializing in OLEDs are poised to benefit massively over the next few years.

Of the OLED companies, Universal Display (OLED) is the clear frontrunner. Founded in 1994, and having gone public in 1996, Universal Display has pioneered OLED technology. With discoveries such as energy saving OLED applications, it’s clear why the first OLED manufacturer, Tohoku Pioneer, used Universal Display’s materials and proprietary research back in 2003. A few years later, Samsung launched their first iteration of an OLED screen for its smartphones in 2007. After years of development, OLED technology finally became consumer ready. With OLEDs in the process of becoming the dominant standard for current displays, Universal Display’s revenues are continuing to skyrocket reaching $200 million in 2016.

In the year of its IPO, the company was valued at $31 million. The investors, who recognized the value of OLED technology and bought in at that valuation and have held it until today, have made over 130 times their original investment! Universal Display is currently worth $4 billion, and should continue to grow significantly as OLED displays continue to displace older displays. The company just smashed their Q4 expectations, beating EPS consensus by 14 cents or by 34%, just going to show how it’s just the beginning for OLEDs and Universal Display.

Premium Health Products

With the advent of social media, maintaining good health and appearances has never been more important. In the goal of taking the perfect selfie or profile picture, premium health products are setting up to be the next organic foods of the personal health market.

Immudyne (IMMD) may be poised to become the leader in this newly revitalized market. As seen with the trends and market leaders above: strong, sudden, and sustained revenue growth is a telltale sign that the associate trend is starting its parabolic growth. Offering premium products containing its proprietary compound, Immudyne is in a period of record growth. In 2015, the company reported a 70% gain on its top-line. Then the company more than quadrupled its 2015 revenue in 2016, while simultaneously developing a stronger cash position. Immudyne’s patented product lines that are endorsed by opinion-leading dermatologists are driving sales, pointing towards the growing opportunity in premium health products. The Company’s highly scalable and capital efficient direct-marketing business model enables global scalability with minimal dilution to shareholders.

Despite revenues ramping up to over $4million in the last fiscal year, the valuation of the company remains relatively unchanged at $11million today. This may be due to its early stage in the trend development curve, remaining unnoticed by investors during its growth phase, similar to Universal Display and ARM Holdings. With compounding double to triple digit sales growth year over year, the current valuation highlights an opportunity to get in ahead of the curve. With all the other companies trading above 10x forward revenue at this point in their history, Immudyne’s valuation could appreciate significantly.

Spotting Trends and Getting In

With all the companies seen above, it’s clear that they were all too early for the party when they first joined. That being said, the time and work the companies put in made it their party when the rest of the companies and investors came to join. With the right idea, it’s apparent that a few years of strong and sudden revenue growth is a key indicator that the company is entering full swing, signaling the rapid adoption and growth of a specific trend or technology. Investors that are able to spot the right companies during this key period stand to make huge gains over the coming years as the rest begin to take notice.

About One Equity Stocks

One Equity Stocks is a leading provider of research on publicly traded emerging growth companies. Our team is comprised of sophisticated financial professionals that strive to find the companies and management teams that will outperform the market and deliver investment returns to our subscribers. We are not a licensed broker dealer and do not publish investment advice and remind readers that investing involves considerable risk. One Equity Stocks encourages all readers to carefully review the SEC filings of any issuers we cover and consult with an investment professional before making any investment decisions. One Equity Stocks is a for profit business and is usually compensated for coverage of issuers. In the case of Immudyne, we have been compensated 250,000 shares of common stock in for advisory, marketing and business development services. The owner of One Equity stocks is long IMMD.

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