Under the Radar: High Revenue Growth Meets Strong Financial Health

Our purpose here at Under the Radar is to bring companies, ideas, and strategies to your attention before Wall Street uncovers them.

We do not want to find ourselves in a situation like Yogi Berra once described a New York hangout—a place that no one goes to anymore because it is too crowded. We aim to bring you companies that are undervalued and selling for a fraction of their intrinsic worth as operating businesses, long before the thundering herd begins piling into the shares.

Occasionally, we identify a business that Wall Street is ignoring, which is trading for less than the value of its assets but has the financial strength to survive until conditions improve or until an acquisition occurs. Fast-growing companies that Wall Street has not yet discovered are another valuable source of potentially profitable ideas.

Sometimes, we introduce the names of hedge fund managers who work outside the spotlight yet consistently generate market-beating returns. Cloning their portfolios, away from the bright lights of Wall Street, can be profitable.

You have probably also noticed that I am country-agnostic. For the most part, I do not care where a business is located. If research shows that it has the potential for substantial profits, I want to share it with you.

My favorite thing to share with readers is a strategy that Wall Street is not discussing but has the potential to deliver significant winners. Those who have followed me for any length of time know that I am constantly testing ideas and strategies to determine what works and what does not.

Most ideas, no matter how exciting they may initially seem, fail to deliver real value. However, when we identify a strategy that empirical testing demonstrates can consistently deliver substantial winners, I cannot wait to share it with you. More often than not, the best ideas are the simplest, and that is the case with the strategy I am going to introduce today.

We will adhere to fundamental principles and invest in stocks with rapidly growing sales and strong financials. We are going to disregard earnings per share growth, analyst rankings and predictions, and valuation metrics. Instead, we will focus on one key question: Are these companies consistently selling more of their products and services?

We want to see high sales growth over one-, three-, and five-year periods. We are not interested in short-lived trends or companies that experience temporary spikes in demand, such as those selling fad products.

We also want companies that maintain strong balance sheets with ample liquidity. Their financial statements should show continued improvement. We avoid companies that are persistently borrowing more money or issuing stock to fund their operations.

To simplify our search, we screen for companies with high revenue growth rates and Piotroski F-Scores of seven or higher. This straightforward formula delivers returns that consistently outperform the market and helps uncover major winners before they begin to soar.

Over the past decade, this approach has uncovered significant winners, including off-the-radar stocks like Mr. Cooper COOP, Fortinet FTNT, and Arista Networks ANET early in their meteoric rise. It has also maintained positions in well-established giants such as NVIDIA NVDA, Amazon AMZN, and Meta META.

When I ran the screen today, I identified several off-the-radar stocks with strong fundamentals and consistently high revenue growth. Investors who act before Wall Street takes notice could see substantial gains in the coming years.

One standout is Doximity, Inc. DOCS, a leading digital platform for U.S. medical professionals that provides tools for collaboration, medical news updates, career management, and virtual patient visits. Founded in 2010, Doximity has expanded to serve over 80 percent of U.S. physicians, along with a significant number of nurse practitioners and physician assistants.

It functions as a professional network, a telehealth provider, and a marketing platform for pharmaceutical and hospital systems. With more than 80 percent of U.S. doctors registered on the platform, Doximity has become an indispensable digital tool in the medical industry. The company’s rapid growth is beginning to attract Wall Street’s attention, and investors are starting to accumulate shares.

This simple strategy also uncovered another off-the-radar stock poised to benefit from the massive growth in semiconductors over the next decade.

While most investors are focused on major semiconductor names such as TSMC, ASML, and NVIDIA, a lesser-known Japanese company is playing a crucial role in the industry’s expansion. Lasertec Corporation LSRCY dominates the high-precision inspection and measurement market for semiconductor manufacturers.

Based in Yokohama, Lasertec specializes in tools that inspect photomasks and wafers, particularly for cutting-edge extreme ultraviolet (EUV) lithography—the same technology that enables the production of the most advanced chips in the world. If a chip is destined for an artificial intelligence server, a high-performance GPU, or an advanced smartphone, there is a high probability that Lasertec's inspection systems ensured its quality.

Business is thriving. In the fiscal year ending June 2024, Lasertec reported revenue of ¥213.5 billion, representing a remarkable 39.7 percent year-over-year increase. Net income surged to ¥59.08 billion, reflecting a 27.97 percent rise. Growth of this magnitude is difficult to overlook, especially in a market where artificial intelligence and high-performance computing continue to drive demand for cutting-edge chips.

Despite its essential role, Lasertec remains under the radar. Unlike TSMC which manufactures chips, or ASML which builds lithography machines, Lasertec provides the crucial inspection technology that ensures semiconductor production remains efficient and precise. Its niche is indispensable, and its financial performance confirms its strength.

Lasertec operates with a fabless model, focusing on research and development while outsourcing production. This strategy keeps costs low and fosters innovation, allowing the company to remain agile in an industry where technological advancements occur at a rapid pace.

With subsidiaries across the United States, China, South Korea, Taiwan, and Europe, Lasertec ensures its global clients receive the necessary support. Its inspection technology is a vital component of next-generation semiconductor manufacturing, making it a business worth watching.