2 top stocks with solid growth potential

Recent market headlines are full of worries about sluggish growth and policy uncertainty as the November election approaches. However, there are also potential tailwinds, particularly with the Fed’s anticipated key interest rate cuts.

In this context, as always, investors are looking to find the stocks that are best positioned for the current conditions. SmartScore, an AI-powered data collection and collation tool from TipRanks, can help with this.

Smart Score scans the entire volume of stock market data and uses it to compare each public stock against a set of factors known to correlate with future performance. The result is a simple score for each stock on a scale of 1 to 10, with a “perfect 10” indicating stocks with solid growth potential. And in an uncertain market environment, this is an indicator that investors should take a closer look at.

So let’s do this. Using the TipRanks database, we looked at the big picture of two such top-scoring stocks. The Street sees them as strong buys with plenty of upside — and taken with the Smart Score’s “Perfect 10s,” that’s a combination that deserves closer scrutiny from investors. Here’s the downside.

Semtech Corporation (SMTC)

We’ll start with Semtech, one of the smaller firms working in the semiconductor chip industry. Semtech’s product line includes a wide range of analog and mixed-signal chips capable of powering smaller, faster and smarter electronic devices. The company provides chips and technology to address the needs of wireless RF, circuit protection, signal integrity, video broadcast, professional AV, cellular IoT solutions and power management – a wide range of applications that have a broad impact on the digital world of today.

The company has been in business since 1960 and has built its reputation as a successful niche player; While Semtech is a small company compared to the industry giants, it still reported revenue of over $868.76 million for the 2024 fiscal year.

More recently, we note that the company posted revenue of $215.4 million in its last reported quarter, fiscal Q2 2024 (July quarter). That was down nearly 10% year-over-year, but beat the forecast by $3.13 million. Semtech’s final earnings came in at 11 cents per share by non-GAAP measures, a penny more than expected.

Baird analyst Tristan Gerra is impressed with Semtech and sees the company benefiting from a broad footprint — the company has its hands in many segments of the chip industry. Gerra writes: “Continued strength in AI-driven optical component demand plays at the core of Semtech’s competencies across its entire product range. Semtech’s R&D team is stellar, with the company well positioned in ACC with new AI commitments, LPOs (possible ramp for Semtech starting F2H26) and 10G PON in the US (initial ramp commitment possible F2H26) among others . 400G/800G ramps complete the increase in signal integrity this year, while Semtech’s ramp timing on the Blackwell platform remains intact, with a potential advantage over the previously supplied base case.

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Looking ahead, the analyst sets an Outperform (Buy) rating on SMTC shares, and his $80 price target implies a 97% one-year upside. (To follow Gerra’s history, click here)

Overall, Semtech shares earn a Strong Buy consensus rating from the Street, based on 11 recent reviews, with an unbalanced breakdown of 10 to 1 favoring Buy over Hold. The stock is trading at $40.59, and the average price target of $56.44 suggests a one-year upside of 39%. (See SMTC stock forecast)

Rubrik, Inc. (RBRK)

Let’s stick with technology, but shift gears a bit and look at cyber security. Rubrik is a Silicon Valley technology firm involved in the development and distribution of data management and data security systems in the cloud, an essential niche in a digital world where more and more aspects of business depend on data and data analytics – and of maintaining the integrity of this data and its sources. Rubrik offers a wide range of products and solutions for enhanced data security, protecting its customers against cyber-attacks, malicious insiders and external disruptions. Whether your data resides on enterprise systems or in the cloud, Rubrik can secure it.

The company’s service is popular, as some of its financial numbers show. Rubrik boasts a high level of annual recurring revenue; Subscription ARR totaled more than $919 million at the end of July this year, and the company had 1,969 customers with subscription ARR of more than $100,000 each. This is a solid foundation for repeat business.

Rubrik went public earlier this year, holding its IPO in April. The shares began trading on April 25, and the offer has been increased since the initial filing. In this case, Rubrik floated 23,500,000 shares at $32 each and raised approximately $752 million in gross proceeds. The stock has been volatile in the months since the IPO.

When looking at Rubrik’s financials, we find that the company has released two sets of quarterly results since its IPO. The latest, released on September 9, covered the second quarter of fiscal 2025 and showed total revenue of $204.95 million. That total is reportedly up more than 35% year-over-year and beat expectations by $8.74 million. The company’s bottom line was a non-GAAP EPS loss of 40 cents per share — but even though EPS was negative, it was still 9 cents per share better than forecasts.

This new cybersecurity stock has caught the eye of Cantor analyst Yi Fu Lee, who sees the company as a good pick for investors interested in tech innovators. Lee writes, “The current focus for Rubrik is responsible growth, and we believe it is taking market share away from legacy vendors that have lagged behind in terms of innovation. We recommend that investors interested in a mid-cap technology growth name that has recently undergone a cloud transformation to optimize business acceleration for the next few years take a deep look at Rubrik. Rubrik began trading on the NYSE on April 25 and has traded off its $40 peak by more than 20%. We believe the volatile C1H24/F1H25 earnings season for the cybersecurity software sector presents an attractive entry point.”

These comments support Lee’s Overweight (Buy) rating here, and his $50 price target indicates a one-year gain of 62.5%. (To follow Lee’s history, click here)

There are 11 recent analyst reviews recorded for Rubrik and all are positive – for a unanimous consensus rating of Strong Buy. The stock has an average target price of $44.90 and a trading price of $30.75, together suggesting a 46% upside by this time next year. (See RBRK stock forecast)

To find good ideas for trading stocks at attractive valuations, visit TipRanks’s Best Stocks to Buy, a tool that aggregates all of TipRanks stock information.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.