Despite increased volatility over the past couple of weeks, Wall Street is on track for another banner year. The broad-based S&P 500 has hit 67 record-closing highs in 2021 (that’s second all time), and it’s more than doubled up its annual average total return of 11%, including dividends, dating back four decades.
But investors don’t have to be complacent simply accepting market-matching returns. The following five supercharged stocks all have the potential to handily outpace the benchmark S&P 500 over the next 15 years. If you were to put $100,000 to work in these innovative companies, there’s a real chance you’ll have $1 million or more by 2036.
As a general rule, innovation and competitive advantages breed outperformance. That’s why a $100,000 investment in hosting and travel disruptor Airbnb (NASDAQ:ABNB) could make investors a lot richer over the next 15 years.
Airbnb is just scratching the surface with its hosting potential. It has more than 4 million hosts on its platform, but this represents a fraction of the roughly 1 billion households worldwide. When homeowners become aware of the income potential of hosting, this figure should significantly increase.
Additionally, it’s worth pointing out that the fastest-growing category for Airbnb’s hosting platform continues to be long-term stays (28 or more days). In an environment where more people are free to work remotely than ever before, the Airbnb hosting model provides the perfect “get away.” Then again, the hosting marketplace was on fire long before the pandemic hit, with gross bookings more than quintupling in the three-year period between Dec 31, 2016 and Dec. 31, 2019.
Keep in mind that Airbnb is about far more than just hosting. It’s also aiming to disrupt the travel industry with its Experiences segment. By partnering with local experts, Airbnb has the opportunity to gobble up more vacation spending by selling adventures and packages.
Although there are faster growing trends, there may not be a safer trend with sustainable double-digit growth potential this decade than cybersecurity. That’s what makes cybersecurity stock Ping Identity (NYSE:PING) a good bet to turn $100,000 into $1 million in 15 years.
The reason this identity verification solutions specialist remains cheaper than most of its peers has to do with its ho-hum performance during the early stages of the pandemic. With some of its clients choosing shorter term-based license subscriptions due to pandemic uncertainty, revenue growth stalled.
However, annual recurring revenue (ARR), which takes into account sustained revenue from subscriptions, hasn’t missed a beat. ARR has been consistently growing by the mid-to-high teens. This year and into 2022, we’re seeing sales growth begin to catch up to its double-digit ARR increase.
What’s more, Ping Identity has been successfully pushing its software-as-a-service (SaaS) subscription on its customers. SaaS offers juicy margins and provides an added boost to client loyalty that makes forecasting the company’s cash flow even easier. 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.
Speaking of incredible values, social media company Pinterest (NYSE:PINS) offers supercharged growth with a price-to-earnings-growth (PEG) ratio of about 1. A PEG ratio of 1 is often viewed as “undervalued,” albeit it depends on the industry.
Wall Street has been skeptical of Pinterest in 2021 following two consecutive quarters of monthly active user (MAU) declines. But the important thing to recognize is that this decline looks to be solely tied to coronavirus vaccine rates ticking higher and people getting out of their homes more often. If we peel back Pinterest’s MAU growth over a three-, four-, or five-year period, we’d see it’s still within historic norms.
What’s far more important is that Pinterest is making bank from monetizing its existing users. Even with less than 1% MAU growth in the third quarter from the prior-year period, global and international average revenue per user respectively rose by 37% and 81%. Advertisers have demonstrated that they’ll pay a premium to get their message in front of Pinterest’s user base.
To build on this point, Pinterest is perfectly positioned to become a key e-commerce destination over the next decade. Its entire operating model is designed around users telling others loud-and-clear what things, services, and places interest them. This makes Pinterest the ideal platform for merchants to target their ad dollars at motivated shoppers.
Cannabis might be just a commodity, but small-cap marijuana stock Jushi Holdings (OTC:JUSHF) finds itself at the center of the fastest-growing weed market in the world (the United States).
Like most multi-state operators (MSOs), Jushi is focused on growing its retail presence and controlling costs and quality through vertical integration. What’ll separate it from a host of other MSOs is its state-level focus and insiders.
Though Jushi has a presence in multiple states, it’s found a home in a number of limited-license markets, such as Pennsylvania, Illinois, Virginia, and Massachusetts. In limited-license markets, regulators purposely limit how many dispensary licenses are issued in total, as well as to a single business. This encourages competition and ensures Jushi has a fair chance to build up its brands in potential billion-dollar markets.
It should also be noted that, while Jushi will generate most of its sales from these aforementioned states, management hasn’t been afraid to pull the trigger on earnings-accretive acquisitions. A good example was acquiring two dispensaries in California, the top market for weed sales globally, earlier this year.
But perhaps the best thing about fast-growing Jushi is that its insiders and executives put up about 18% of the first $250 million in capital raised. When management and insiders are vested right alongside investors, good things often happen.
Last, but certainly not least, Block (NYSE:SQ) has all the tools necessary 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 seller ecosystem. This 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) traversed Block’s network. This year, the annual GPV run-rate, based on Q3 GPV, tops $167 billion.
Initially, the seller ecosystem was developed to help small merchants grow their sales. However, over time, we’ve witnessed larger merchants welcome Block’s solutions with open arms. In the September-ended quarter, 66% of all GPV originated from merchants with at least $125,000 in annualized GPV. That’s up 10 percentage points in two years. Since this is predominantly a fee-driven segment, bigger merchants mean juicier gross profit.
Looking to the future, Cash App is Block’s golden ticket. This digital peer-to-peer payment app has seen its MAU count more than quintuple in three years (ended Dec. 31, 2020) to 36 million, with gross profit per MAU ($55) coming in 11 times higher than the cost to acquire each new MAU (about $5).
Furthermore, the pending acquisition of Afterpay gives Block a way to create a closed-loop ecosystem that’ll connect Cash App with the seller ecosystem. In other words, there are years of supercharged growth still to come.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.