3 Stocks I Bought That Could Produce 10X Returns
I tend to be a more conservative investor than most of my colleagues. For the most part, my portfolio is filled with slow-and-steady stocks like real estate investment trusts, banks, and large blue-chip companies. However, I also like to allocate some of my portfolio to exciting growth stocks that could have massive long-term potential. This is how I came to own shares of Square(NYSE:SQ) for an $11 price tag just after its IPO (currently around $), to name one example.
With that in mind, I've recently added a few exciting growth stocks to my portfolio, and here are three in particular that could have the potential to produce massive returns over the next decade and beyond if things go well.
Image source: Getty Images.
Real estate agents beware
One of the most speculative stocks I ever bought is Offerpad(NYSE:OPAD), which I recently added to my portfolio after the company went public via SPAC merger.
If you aren't familiar, Offerpad is an iBuyer, which is a company that buys homes directly from sellers, makes cosmetic repairs, and then sells them directly to homebuyers (hopefully) at a profit. Not only is Offerpad one of the few companies laser-focused on the iBuying business, but it is arguably the most efficient, earning a profit in the second quarter.
The company anticipates buying as many as 6, homes this year, but this could be just a starting point. There are roughly 2 million homes bought and sold in the U.S. each year, at a total price of more than $6 trillion.
As if that weren't enough, the iBuying market is just one way Offerpad could grow its business. The company also offers traditional brokerage services for sellers who want to see what their homes could get on the open market, title insurance, moving services, and mortgages. In the future, it aims to add things like insurance, home warranties, remodeling services, and more, effectively becoming a one-stop real estate solution.
The Amazon of Latin America
By far, MercadoLibre (NASDAQ:MELI) is the most established business of the three. Often referred to as the Amazon(NASDAQ:AMZN) of Latin America, MercadoLibre operates a large e-commerce marketplace in Brazil, Argentina, and several other Latin American nations. It also operates a payment processing platform called Mercado Pago. Think of Mercado Pago in the same context as an earlier-stage PayPal (NASDAQ:PYPL), which was a part of eBay and gradually branched out to dominate the entire online payment landscape in the U.S. and beyond.
So far, growth has been phenomenal. In the second quarter of , MercadoLibre's marketplace saw $7 billion in merchandise volume, which was 46% higher year over year. Mercado Pago is now processing payments at a $70 billion annualized pace, and the most important part (payment volume from outside the marketplace) grew by a staggering 94% year over year.
While these numbers might sound huge, keep in mind that they represent roughly 4% of Amazon's merchandise volume and 6% of PayPal's payment volume, so there's still tons of room to grow.
MercadoLibre started out as a value buy in my portfolio last March during the initial COVID crash, and I've added to it several times since. It is now one of my largest holdings, and one I plan to keep for the long haul.
A potentially transformative healthcare stock
Another recent SPAC IPO I bought is 23andMe(NASDAQ:ME), which recently went public through a blank-check company sponsored by Richard Branson's Virgin Group.
23andMe is best known for its consumer-facing home genetics testing kits, and while this certainly is a promising revenue stream, it isn't the most exciting part of the business. The real potential comes from the massive database of consumer genetic information 23andMe continues to accumulate -- currently million customers -- that could ultimately be applied to pharmaceutical research and development. 23andMe has a 50/50 drug development agreement with GlaxoSmithKline(NYSE:GSK), and there is currently one therapeutic in Phase 1 trials and another set to enter clinical trials next year.
To be sure, 23andMe is a long way from profitability. It lost $42 million in the most recent quarter on just $59 million in revenue. However, the long-term potential from the pharmaceutical side of the business is massive, and the risk-reward profile makes sense, especially considering that you can buy shares right now for less than Richard Branson did.
Approach these with patience and caution
As a final thought, it's important to emphasize that I own all three of these as long-term investments. And while I feel they all have the potential to produce 10X returns (or far more), there's absolutely no guarantee. Offerpad and 23andMe in particular could have very binary outcomes over time. In short, these stocks are most appropriate for investors with relatively high risk tolerance and the patience to ride out the roller-coaster ride we'll likely see in the years ahead.
Hey, Luke Lango here.
Source: Freedomday / Shutterstock.com
I know, I’m a new face and name to some of you folks. So, in order to get to know each other better, I figured a great place to start our journey in MoneyWire is for me to tell you about my investment philosophy and how we will build on what you are accustomed to.
Fortunately, it’s very simple — and very profitable. And if you follow just one big secret, I’m positive you’ll be able to score 10X returns in the stock market — not just once, but time and time again.
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
But… before I get to sharing that big secret with you… let me tell you a story so we can get better acquainted…
Three months ago, shares of space tourism pioneer Virgin Galactic (NYSE:SPCE) were reeling.
Insiders were selling the stock in droves — the company’s founder (Richard Branson), the venture capital investor who took the company public (Chamath Palihapitiya), and the fund manager who focuses on growth stocks like Virgin Galactic (Cathie Wood — many of you may recognize her as the CEO of ARK Invest) collectively sold about $ million worth of stock over the course of a month — and competitor Blue Origin had just announced it was going to start selling tickets for rides on its own space tourism rocket.
Virgin Galactic stock collapsed from over $60 in February, to a low of $14 in mid-May.
Everyone was bearish on the stock… well, everyone except me.
I wrote around that time that Wall Street was being unnecessarily short-sighted, and that insider sales and increased competition in an early-stage company on the cusp of doing something no one has ever done before — commercially flying people into space — were non-news.
I told investors to take a step back, look at things from the foot-view, and understand that over the next decade, Virgin Galactic is going to create a huge, one-of-a-kind, never-seen-before space tourism business that will generate billions of dollars in annual revenue and hundreds of millions of dollars in net profits.
And so, I told folks to buy the dip.
A few weeks later, Virgin Galactic successfully completed a flawless test flight into space. Days after that, Virgin won FAA approval to commercially fly paying customers into space. A month after, the company flew Richard Branson into space in a flight that has been 15 years delayed.
And, amid all those developments, Virgin Galactic stock soared from $15 to over $50, more than tripling the money of investors who listened to me and bought the dip in May.
OK… but why am I telling you all of this?
Because the secret to scoring 10X returns and unlocking generational wealth in the stock market lies in the lesson of the Virgin Galactic story.
You have to understand: This is not an isolated incident. My investment career — which counts 21 stock picks that have soared 10X or more in just the past five years alone — is littered with examples of Wall Street being unnecessarily short-sighted on a stock, and me taking advantage of that.
As a MoneyWire reader, you already know that buying hypergrowth companies on unwarranted dips is key to long-term wealth building. It’s so important that you will continue hearing it from me in the days, weeks and months ahead.
Back in , Wall Street was saying that a small semiconductor company by the name of Advanced Micro Devices (NASDAQ:AMD) was going to go bankrupt — but I pounded on the table that the company was on the cusp of pioneering a CPU breakthrough that would forever change the fortunes of the company.
Since then, AMD stock has soared as much as 4,%.
In , Wall Street was hating on little-known Chegg (NYSE:CHGG) as a struggling textbook company with a cash-burn problem — but I was screaming at the top of my lungs about the long-term potential of Chegg’s digital education platform that had an opportunity to fundamentally change how students learn.
Since then, Chegg stock has soared as much as 2,%.
In , a famous short-seller called e-commerce solutions provider Shopify (NYSE:SHOP) a “get-rich-quick scheme,” while Wall Street analysts were doubting a small payments company by the name of Square (NYSE:SQ). But I was telling folks that Shopify was creating the future building blocks of online retail, while Square was ushering in a new era of cashless commerce that would antiquate cash transactions.
Since then, Shopify stock has risen as much as 1,%, while Square stock has shot up as much as 1,%.
In , it was The Trade Desk (NASDAQ:TTD) — a programmatic advertising company that Wall Street doubted but which I said had enormous long-term potential to create a new form of smarter, better, and faster advertising. In , it was Tesla (NASDAQ:TSLA) — the electric vehicle (EV) giant that everyone doubted but which I always said would redefine the auto industry.
Both of those stocks have soared more than 10X since I told investors to buy them.
And, in when the Covid pandemic struck and Wall Street was freaking out, I told everyone to sit back, relax, buy the dip and go all-in on next-gen work-from-home, digital media, telehealth and e-commerce stocks that would thrive in a social-distancing environment.
It was all those stock picks that earned me the title of the world’s #1 stock picker in , according to TipRanks, where I beat out over 15, other analysts.
Certainly, you get the point…
The common thread here is “big picture thinking” — or the ability to zoom out, ignore the day-to-day noise that Wall Street loves to pay attention to, and hyper-focus on the long-term secular trends driving consumer and business behavior.
This is what venture capitalists do.
While hedge fund managers get caught up in the day-to-day noise of “this earnings report beat” and “that economic report missed,” venture capitalists ignore all that noise, make investments exclusively based on long-term trends, and stick with those investments through thick and thin.
It’s no wonder that VC investors return 20% per year, while hedge fund managers return only 10% per year…
Short-term thinking is the bane of long-term success in the financial markets.
In order to truly “win” in the stock market and score 10X, 20X, even 30X returns, you need to adopt long-term thinking — you need to adopt the VC mentality.
And that’s what I like to think of myself as — a VC investor in the stock market… a person who always zooms out, ignores the noise, looks at the big picture, invests in emerging hypergrowth trends, sticks with those trends through volatility and unlocks long-term wealth creation along the way… while hedge fund managers are stuck returning 10% per year.
That’s my investment philosophy in a nutshell.
And once again, I know it’s a philosophy that you as a MoneyWire reader already know well. And it has undoubtedly helped you make money.
I am very excited about what we will do together, and I can’t wait to talk more with you about the strongest hypergrowth themes on the planet and the best companies that are leading the way.
In fact, I’ll be back in touch tomorrow with a story straight out of science fiction that is turning into a disruptive reality… and creating enormous investment opportunities.
This is going to be fun… and profitable!
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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The post This Is My #1 Secret to Scoring 10X Returns in the Stock Market appeared first on InvestorPlace.
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1 Growth Stock That Could Produce 10X Returns
Growth stocks tend to be volatile investments, and the market often overreacts to both their good and bad news. On the bright side, that occasionally creates buying opportunities for long-term investors. By thinking in terms of years rather than days, you can look past the near-term headwinds and focus on the big picture.
For instance, the share price of Coupa Software(NASDAQ:COUP) has fallen nearly 35% from its week high, fueled in part by a broader rotation away from growth stocks. However, that doesn't mean the tech company has altogether lost its strong competitive position and big market opportunity. Here's how this exciting stock could grow tenfold in the next decade.
Image source: Getty Images
A strong competitive position
Coupa specializes in business spend management (BSM). Its software platform connects clients (i.e. buyers) with over seven million suppliers, helping them control spend, optimize supply chains, and realize cost savings. In a general sense, Coupa is both an e-commerce marketplace and an expense management tool for businesses, designed to simplify traditional procurement and enterprise resource planning solutions.
Coupa's scale is one of its greatest assets. Over 2, businesses rely on its BSM platform, and Coupa enables these clients to pool their collective buying power through group sourcing events. This helps clients achieve better prices than they could get alone. Coupa also offers a range of pre-negotiated discounts across categories like office supplies and promotional products, creating instant value for clients.
Since its founding, Coupa's platform has powered $ trillion in business spend, creating troves of transaction data in the process. To that end, Coupa leans on artificial intelligence to surface suggestions, including cost savings opportunities and supply chain risk management strategies. This capability sets Coupa apart from its rivals, as its platform is the only BSM suite that offers real-time prescriptive insights.
Broadly speaking, this creates a network effect. Each customer adds to the collective buying power of the Coupa community, and each transaction generates more data for its AI models. In both cases, this enhances the value proposition for every customer, driving greater costs savings through group sourcing events and more intelligent recommendations.
Given its strong competitive position, research company Gartner has recognized Coupa as the leading provider of procure-to-pay software for the last five consecutive years. In the most recent report, Gartner specifically cites the platform's deeply integrated payment capabilities, robust network of suppliers, and AI-powered prescriptive insights as key differentiators.
Not surprisingly, that value proposition has helped Coupa deliver strong growth over the last three years.
Free cash flow
Data source: YCharts. TTM = trailingmonths. CAGR = compound annual growth rate. Note: Q2 ended July 31,
A big market opportunity
Looking ahead, management believes its BSM suite meets the needs of over , businesses, comprising a $94 billion addressable market.
To capitalize on that opportunity, Coupa has formed a vast partner ecosystem, including referral partners and systems integrators like Accenture and Deloitte. This strategy should help Coupa grow its business by on-boarding new clients, but it should also drive efficiency by enabling the company to offload support services.
Currently, Coupa teams help clients with implementation and configuration, but the revenue on these services comes with a negative gross margin. However, as firms like Accenture assume responsibility for these tasks, Coupa's gross profit should rise, allowing the company to allocate capital to other growth-generating endeavors.
To add, Coupa's partner ecosystem also includes technology companies like DocuSign and Workday. These third-party software vendors provide integrations through the recently launched Coupa App Marketplace. This extends the functionality of Coupa's platform by allowing clients to sync its BSM suite with tools for e-signatures, human capital management, and much more.
10x returns are not out of reach
Here's the bottom line: Coupa has established a strong competitive position. And given the magnitude of the market opportunity, there could be significant upside here for investors. Even if Coupa grows revenue at 30% annually through , assuming no change in the P/S ratio, the market cap could would grow 13 times in value. This year, the stock got a little ahead of itself, but the recent pullback creates a buying opportunity. And if the company can maintain its financial momentum, I think this growth stock could jump tenfold in value over the next decade.
Written by Jed Lloren at The Motley Fool Canada
Depending on how aggressively you invest, those interested in beating the market by a wide margin should look for companies with 10 times potential. It goes without saying that asking a stock to return 10 times your initial investment is very difficult to see through. However, there are certain companies that could pull of the feat. In this article, I discuss three top stocks with 10 times potential.
A % return less than a year after IPO
Nuvei(TSX:NVEI) has been an amazing performer since its initial public offering (IPO). On its first day of trading, the company made history when it closed the largest Canadian tech IPO of all time. This means Nuvei managed to raise more money on its opening day than popular growth stocks like Constellation Software, Lightspeed, and Shopify. Since then, it seems as though Nuvei stock has just continued to climb. Since its IPO last September, Nuvei stock has gained about %.
That means if you had invested in Nuvei’s IPO, you would already be a quarter of the way to seeing a 10 times return. At a market cap of about $ billion, Nuvei still has a lot of room to grow in the coming years. One thing that may help Nuvei achieve the lofty 10 times goal is the fact that it operates within the digital payments industry. The rise of related industries like e-commerce could push companies like Nuvei forward. If you’re looking for a potential 10 times return from a TSX-listed stock, Nuvei would be my top pick.
Learning from a company that has produced 10 times returns
One thing that could help a company produce a 10 times return is to learn firsthand from a company that has managed to do that. Topicus.com(TSXV:TOI) finds itself in that very unique opportunity. Until last February, Topicus was a subsidiary of Constellation Software. If you’re investing in Canadian companies, there’s no doubt that you would’ve heard about its former parent company. Like Constellation, Topicus is an acquirer of VMS companies. Because the businesses of these two companies are so similar, Topicus will be able to directly apply some of the lessons it learns from Constellation.
Since its IPO, Topicus stock has already managed to return about %. Yet, the stock is only valued at around $5 billion. A 10 times return from here would place the company at a size of $50 billion. Although that would place the company at a larger valuation than the current Constellation Software, it’s certainly not out of the realm of possibility. With massive backing helping propel Topicus forward and an industry ripe for acquisition, this company has a solid chance of producing massive returns.
Be aware of the law of large numbers
The law of large numbers in a financial sense states that a company will not be able to sustain high growth rates as it gets larger. Therefore, investors have the best chance of seeing high returns from smaller companies as those businesses with a lengthier growth runway to work with. However, it’s important that investors choose smaller companies with a strong business outlook. I feel like that describes Goodfood Market(TSX:FOOD) very well.
The company operates in the online grocery and meal-kit industry. Before the pandemic, it already claimed about 40% of the Canadian meal-kit industry. With the widespread business closures and lockdown restrictions pushing Goodfood’s business forward last year, investors are more eager than ever to invest in this company.
While this is certainly a different take on the rapidly growing e-commerce industry, there’s no doubt that groceries are an essential part of life. Goodfood is at the forefront of innovation in that industry.
The post 3 Top Stocks With 10X Potential appeared first on The Motley Fool Canada.
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Fool contributor Jed Lloren owns shares of Shopify. The Motley Fool owns shares of and recommends Constellation Software, Lightspeed POS Inc, Lightspeed POS Inc., Shopify, and Topicus.Com Inc. The Motley Fool recommends Goodfood Market Corp and recommends the following options: long January $1, calls on Shopify and short January $1, calls on Shopify.
Buy 10x stocks to
The economic and health trials and tribulations that kicked off this decade proved cryptocurrency isn’t the only unstable investment. In fact, the entirety of the stock market crashed, and the recovery over the following year wasn’t a straight line across the board. Some companies went bankrupt while other experienced 10x gains.
So, what are some stocks that could 10x in today’s economy?
The stock market looks a lot like the days before we knew what a coronavirus was. But there are key changes that occurred under the surface. Legacy banks crashed while Fintech rose, airlines stayed grounded while Tesla (TSLA) raced to the top.
Nothing that happened to the market is necessarily a surprise. The crash only highlighted and amplified industry trends we were already watching. Here are five companies that could very well be on their way to 10x investor returns.
1. DermTech Treats Biggest Cancer Culprit
DermTech Inc (NASDAQ:DMTK) is a biotechnology company with a revolutionary melanoma and skin cancer detection product. Its secret sauce is a non-invasive skin genomics platform, and it has already provided 3x gains to investors who bought in
DMTK share price hit a week low of $ during the coronavirus crash before jumping to a high of $ before pulling back somewhat.
This triggered the company to announce the closing of a public share offering of over million shares priced at $ each. It will temporarily drive the price down, but could add to this $ million company’s liquidity while possibly making it a billion-dollar company very soon.
Skin cancer is the most common global cancer, and it’s estimated to affect 20 percent of Americans by the age of Worldwide stay-at-home orders temporarily kept people out of the sun’s harmful UV rays, but it’s only a matter of time before being couped up inside leads to an exodus of spring and summer vacations.
DermTech’s tests are not yet FDA approved, but it does have premarket approval and is undergoing clinical trials.
There’s also positive data coming from Canada, which approved it in And the company gained early in the year on news of Medicare expanding coverage for skin cancer patients.
If the world keeps moving this way, DermTech could 10x at least once in the s.
2. Bloomberg Estimates 10x Square Revenues
Square Inc (NYSE:SQ) proved it’s a dominant force in the Fintech industry when small businesses had to go mobile in a hurry.
The Square payment platform is easy to adopt for small businesses working to offer contactless payments. And Weebly makes it easy to build an ecommerce presence.
Cash App experienced the biggest boom though – the app generated $ billion in revenue and $ in gross profit in the third quarter of alone.
Rumors also swirled at the start of that the company could buy Jay-Z’s Tidal music streaming service.
It started the year with a market capitalization over $ billion and a very lofty P/E ratio over x. Share prices dropped to a week low of $ before climbing almost 10x to a high of $ And the astonishing growth projected over the next ten years suggests this company hasnt come close to reaching its potential yet; Bloomberg estimates 10x revenue growth from here.
That means it already provided an 8x return to investors who bought in at the right time. And it can do it again by the end of the decade – traditional bank Wells Fargo (WFC) struggled to recover from the pandemic. This could be a signal that a new guard is taking over the financial industry.
By , we may very well call Square a “too big to fail” financial company.
3. Snap Year Over Year Growth Exceeds 50%
Snap Inc (NYSE:SNAP) is a dominate force in social media, counting roughly 46 million active monthly users in the United States alone. This helped the company generate $ billion in revenue while growing to a staff of over 2,
Despite this big user base, it remained largely unprofitable until the pandemic. In the third quarter alone, it reported 52 percent year-over-year revenue growth. Although advertising rates declined, its user growth more than made up for it.
Its daily active users at the end of were around million, and average revenue per user grew from $ to $ This led to a $56 million profit, something that spiked the company’s stock price heading into the holiday season.
Snap started at an $81 billion market capitalization after gaining 7x returns for investors in one year. Its share prices fell to a week low of $ before skyrocketing to highs around $ by year end.
With Facebook (FB) facing antitrust action, Snap could find itself in a sweet position to provide another 10x return by the end of the s.
And what older investors may be unaware of is just how popular the app is with teens. Theyre not rushing to Facebook like their older siblings and parents once did. Instead theyre smitten by the cooler Snap interfaces, Stories and Map features.
4. DMY Technology Group II (Genius Sports)
DMY Technology Group (NYSE:DMYD) is the blank check company created for Genius Sports to go public.
This sports data and technology company runs statistics and provides data management for major sports leagues from the NCAA to the PGA, NASCAR, and more.
The technology makes sending data and statistics throughout the league and to bookmakers easier.
And sports betting is a growing industry in the s, thanks largely to a Supreme Court ruling that gives states the power to legalize it. Not only that, but fantasy sports is on the rise too – sports data could be a gold mine for investors willing to take the plunge.
With its market capitalization sitting above $ million, bullish investors believe it is a stock that could 10x in value by
5. IPOE (SoFi) On Cusp Of Becoming Major Institution
Social Finance is a Fintech company set to IPO in through the IPOE special acquisition company (SPAC). Like Square (SQ), it’s run by a former c-suite executive from Twitter, and it’s quickly becoming a full-suite financial institution.
SoFi provides student loan refinancing, mortgages, credit cards, banking, and personal loans through both a mobile app and desktop interface.
With PayPal (PYPL), Square, and Bitcoin on the rise and Wells Fargo on the ropes, many analysts believe the s will signal a shift of money away from the “too big to fail” financial institutions. SoFi’s peer-to-peer solution enables liquidity in a hard economy.
By the end of the s, SoFi has the potential to gain 10x returns for its IPO investors.
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