3 supercharged growth stocks that can turn $300,000 into $1 million by 2029

It has been one of the toughest years in decades for Wall Street and the investment community. Since hitting its respective all-time closing high in the first week of January, the much-watched S&P500 plunged into a bear market and posted its worst first-half performance since Richard Nixon was president.

On the one hand, bear markets can be confusing given how quickly major indices can drop in a short period of time. But on the other hand, history conclusively shows that buying stocks during bear market declines is a stroke of genius for long-term investors. This is because every double-digit percentage decline in history has eventually been erased by a bull market. Patience is the not-so-subtle secret ingredient needed for success.

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It also doesn’t hurt if investors buy and own companies with game-changing characteristics. What follows are three supercharged growth stocks with the capacity for innovation to turn an initial investment of $300,000 into $1 million by 2029.

Nio

The first colossal growth stock with the potential to generate a return of at least 233% by 2029 is the electric vehicle (EV) maker Nio (NYSE: NIO).

Over the past two quarters, Nio and other auto stocks have faced huge headwinds, such as semiconductor chip and general parts shortages, as well as historically high inflation. Based in China, Nio also handles national zero COVID policies, which have created supply chain headaches across the country.

Yet despite these challenges, Nio looks like an incredible deal for patient investors betting on sustained double-digit growth in global electric vehicle sales throughout the decade.

For starters, Nio is based on the world’s #1 automotive market. As China aims to phase out the sale of gasoline-powered automobiles by 2035, the ramp-up in electric vehicle sales is expected to be faster than in most developed countries. Considering China’s electric vehicle industry is still nascent, Nio has a real opportunity to become a major player despite being a relatively new entrant in the automotive industry.

Additionally, the company demonstrated impressive production totals despite the aforementioned headwinds. Nio has delivered over 10,000 electric vehicles in each of the past three months. This includes an all-time high of 12,961 electric vehicles in June. Management previously estimated that monthly production could reach up to 50,000 electric vehicles in a year once supply chain constraints are removed. In other words, Nio faces no demand issues.

It is also a company at the forefront of innovation. Nio introduced at least one new vehicle per year and expanded its SUV and sedan offerings to cater to a wider audience. What’s arguably most intriguing about Nio’s sedans is the fact that the superior battery upgrade provides superior range (around 621 miles) compared to virtually every other EV manufacturer.

Nio’s original thinking is also a competitive advantage. During the summer of 2020, the company launched its Battery-as-a-Service (BaaS) subscription. For electric vehicle buyers, BaaS reduces the initial purchase of a vehicle and enables battery charging, swapping and upgrading. As for Nio, it is giving up some short-term revenue in exchange for high-margin recurring subscription sales and the loyalty of its early buyers.

Green Thumb Industries

A second supercharged growth stock that can turn $300,000 into $1 million over the next seven years is the US Multistate Cannabis Operator (MSO) Green Thumb Industries (OTC: GTBIF).

After the 2020 election that saw Joe Biden win the presidency, Wall Street was excited about the prospects for cannabis reform at the federal level. That buzz really kicked into high gear when Democrats took control of the Senate by the narrowest margins in January 2021.

But after more than 19 months of President Biden in the Oval Office, it’s become painfully clear that legalizing marijuana isn’t on the agenda anytime soon. While pot stock investors may be disappointed to hear this, there are plenty of opportunities at the state level for legalizations to increase the sales and profits of MSOs like Green Thumb.

At the end of the first half of 2022, Green Thumb had 77 operating dispensaries in 14 states. While same-store sales growth has been disappointing over the past quarter, the pandemic has demonstrated the non-discretionary appeal of cannabis products. In other words, no matter what the US economy imposes on consumers, they will continue to buy jar products.

Although Green Thumb has a presence in most high-dollar legalized markets, its push into limited license states (Illinois, Ohio, Massachusetts, and Virginia) is what should raise eyebrows. Limited license marketplaces deliberately limit the number of dispensary licenses issued in total, as well as to a single company. This encourages competition and ensures that Green Thumb can grow its brands and retain subscribers.

However, the most exciting thing about Green Thumb Industries might be its revenue mix. Well over half of the company’s sales came from cannabis-derived products in the second quarter. Derivatives include oils, edibles, infused drinks, pre-rolls, and vapes. These are products with significantly higher prices and much better margins than dried cannabis flower. Pushing derivatives has helped Green Thumb achieve eight consecutive quarters of generally accepted accounting principles (GAAP) earnings. Comparatively, most MSOs aren’t even profitable on a recurring basis yet.Two people are texting on their smartphones.

Image source: Getty Images.

To block

The third and final supercharged growth stock with the ability to turn a $300,000 investment into $1 million by 2029 is the fintech giant To block (NYSE:SQ).

Like most high-flying growth stocks, Block was burned due to the weakening growth outlook for the US economy and unusually high inflation. The latter is particularly worrisome for a digital payment platform, as it threatens to reduce discretionary spending for the lowest income decile.

Yet even with these concerns, Block looks like a screaming buy after a nearly 80% pullback from its all-time high.

The company’s fundamental segment continues to be its Square ecosystem. Many of you may recall that Square changed its name to Block in December, but retained the Square name to describe its operating segment which offers digital point-of-sale solutions, lending and analytics. given to traders. In the quarter ended June, the Square ecosystem generated $48.3 billion in gross payment volume (GPV). That’s an annualized run rate of $193 billion. For context, GPV for the full year only totaled $6.5 billion in 2012. That’s how fast the Square ecosystem has accelerated.

To add, 39% of the $48.3 billion in Q2 GPV came from sellers with at least $500,000 in annualized GPV. This represents an increase from 27% of total GPV in the comparable quarter in 2020. Since the Square ecosystem is a paying business, attracting larger merchants should result in a significantly higher gross margin.

But the real cash cow for Block in the long run seems to be peer-to-peer digital payment platform Cash App. In less than five years, the number of active users of Cash App has grown from 7 million to 47 million. The gross profit per active Cash App account has always been several times higher than the acquisition cost for each new user. So, as Cash App evolves, Block recognizes a disproportionate positive increase in its gross profit.

Perhaps most importantly, the acquisition of the Buy Now, Pay Later Afterpay service allows Block to create a closed-loop payment system between Cash App and its Square ecosystem. Connecting the two provides a competitive edge that could really boost operating margins throughout the decade.

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Sean Williams holds positions at Block, Inc. The Motley Fool holds positions and endorses Block, Inc., Green Thumb Industries, and Nio Inc. The Motley Fool has a Disclosure Policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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