Ddespite increased volatility over the past two weeks, Wall Street is on track for another record year. The wide S&P 500 hit 67 closing records in 2021 (second of all time), and it has more than doubled its average annual total return by 11%, including dividends, dating back four decades.
But investors don’t have to be complacent in simply accepting market-matched returns. The following five supercharged stocks all have the potential to easily outperform the S&P 500 benchmark over the next 15 years. If you were to invest $ 100,000 in these innovative companies, there’s a good chance you’ll have $ 1 million or more by 2036.
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Typically, innovation and competitive advantages lead to outperformance. That’s why a $ 100,000 investment in accommodation and the travel disruptor Airbnb (NASDAQ: ABNB) could make investors much richer over the next 15 years.
Airbnb is only scratching the surface with its hosting potential. It has over 4 million hosts on its platform, but that’s a fraction of an estimated billion homes worldwide. When owners realize the income potential of accommodation, that number is expected to increase dramatically.
Additionally, it’s worth noting that the fastest growing category for Airbnb’s hosting platform continues to be long-term stays (28 days or more). In an environment where more people are free to work remotely than ever before, the Airbnb hosting model offers the perfect “escape”. Then again, the accommodation market was on fire long before the pandemic hit, with gross bookings more than quintupled in the three-year period between December 31, 2016 and December 31, 2019.
Keep in mind that Airbnb is more than just hosting. It also aims to disrupt the travel industry with its Experiences segment. By partnering with local experts, Airbnb has the potential to swallow up more vacation spending by selling adventures and packages.
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While there are faster growing trends, perhaps there is no safer trend with sustainable double-digit growth potential this decade than cybersecurity. This is what makes the cybersecurity stock Ping Identity (NYSE: PING) a good bet to turn $ 100,000 into $ 1 million in 15 years.
The reason this specialist in identity verification solutions remains cheaper than most of its peers is because of its poor performance during the early stages of the pandemic. With some of its customers opting for shorter-term license subscriptions due to pandemic uncertainty, revenue growth has stagnated.
However, Annual Recurring Revenue (ARR), which takes into account sustained revenue from subscriptions, hasn’t failed to beat. ARR has grown steadily in mid to high teens. This year and into 2022, we’re seeing sales growth starting to catch up with its double-digit increase in ARR.
Additionally, Ping Identity has been successful in enforcing its Software as a Service (SaaS) subscription on its customers. SaaS delivers juicy margins and boosts customer loyalty, making it even easier to forecast business cash flows. In an industry where price-to-sales (P / S) ratios of 20 or more are normal, Ping’s P / S ratio of 6 stands out as an incredible value.
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Speaking of amazing values, a social media business Pinterest (NYSE: PINS) Offers supercharged growth with a price / earnings-growth (PEG) ratio of around 1. A PEG ratio of 1 is often considered “undervalued,” although this depends on the industry.
Wall Street has been skeptical of Pinterest in 2021 after two straight quarters of falling monthly active users (MAUs). But the important thing to recognize is that this drop appears to be solely related to the fact that coronavirus vaccine rates are increasing and people are leaving their homes more often. If we eliminate Pinterest’s MAU growth over a three-, four-, or five-year period, we would see that it stays within historical standards.
What’s much more important is that Pinterest causes the bank to monetize its existing users. Even with MAU growth of less than 1% in the third quarter compared to the previous year, global and international average revenue per user grew by 37% and 81% respectively. Advertisers have shown that they will pay extra to get their message across to Pinterest’s user base.
To build on this, Pinterest is perfectly positioned to become a key e-commerce destination over the next decade. Its entire business model is designed so that users tell others loudly what interests them, services and places that interest them. This makes Pinterest the perfect platform for marketers to target their ad dollars to motivated buyers.
Image source: Getty Images.
Cannabis may just be a commodity, but a small-cap stock of marijuana Jushi Holdings (OTC: JUSHF) is at the center of the world’s fastest growing weed market (the United States).
Like most multi-state operators (MSOs), Jushi is focused on expanding its retail presence and controlling costs and quality through vertical integration. What will separate him from a host of other MSOs is his state-level focus and his initiates.
Although Jushi has a presence in several states, it has found its way into a number of limited license markets, such as Pennsylvania, Illinois, Virginia, and Massachusetts. In limited license markets, regulators deliberately limit the total number of dispensary licenses issued, as well as to a single company. This encourages competition and ensures Jushi a fair chance to grow his brands into potential billion dollar markets.
It’s also worth noting that while Jushi will generate most of its sales from these aforementioned states, management has not been afraid to pull the trigger on profit-making acquisitions. A good example was the acquisition of two dispensaries in California, the world’s largest market for cannabis sales, earlier this year.
But perhaps the best thing about the fast growing Jushi is that his insiders and executives invested around 18% of the first $ 250 million in capital raised. When management and insiders are invested alongside investors, good things often happen.
Image source: Block.
Last, but not the least, To block (NYSE: SQ) has all the tools to turn a $ 100,000 investment into $ 1 million by 2036, or potentially sooner. Block is the company formerly known as Square.
Block’s bread and butter has long been its ecosystem of sellers. It is the segment that provides merchants with point-of-sale devices, loans, and analytics to help businesses succeed. In 2012, $ 6.5 billion in gross payment volume (GPV) flowed through Block’s network. This year, the annual GPV execution rate, based on the third quarter GPV, exceeds $ 167 billion.
Initially, the seller ecosystem was developed to help small traders increase their sales. However, over time, we have seen larger marketers welcome Block’s solutions with open arms. In the quarter ended September, 66% of all GPVs were from merchants with at least $ 125,000 in annualized GPVs. That’s an increase of 10 percentage points in two years. Since this is primarily a fee-driven segment, bigger traders mean juicier gross profit.
Looking to the future, Cash App is Block’s golden ticket. This digital peer-to-peer payment app saw its MAU more than fivefold in three years (ended Dec.31, 2020) to 36 million, with gross profit per MAU ($ 55) 11 times the cost of acquisition. each new MAU (about $ 5).
In addition, the current acquisition of After payment gives Block a way to create a closed loop ecosystem that will connect Cash App to the seller ecosystem. In other words, there are still years of supercharged growth to come.
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Sean Williams owns Block, Jushi Holdings and Pinterest. The Motley Fool owns and recommends Afterpay, Airbnb, Block, Jushi Holdings, Ping Identity Holding, and Pinterest. 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.