3 monster growth stocks that can turn $200,000 into $1 million by 2030
Jhis year was one of the toughest for Wall Street and investors in the past half-century. In terms of peak-to-trough decline, the benchmark S&P500 and growth oriented Nasdaq Compound fell 24% and 34%, respectively. This puts both indices in a bear market.
While bear markets can undoubtedly instill fear and test investors’ resolve, they are also a proven opportunity to buy game-changing companies at a discount. As a reminder, every stock market correction and bear market in history has eventually been erased by a bull rally.
The current bear market is a particularly good time to recover supercharged growth stocks that have been beaten down by short-term fear. The following three monster growth stocks all have the potential to turn an initial investment of $200,000 into $1 million by 2030.
The first fast-paced company with the potential to quintuple investor money over the next eight years is the China-based electric vehicle (EV) maker Nio (NYSE: NIO).
Over the next two quarters, there is no doubt that auto stocks will face a veritable mountain of headwinds. Automakers are facing shortages of semiconductor chips, provincial COVID-19 shutdowns in China that have led to parts shortages and historically high inflation, which is eating away at their operating margins. Yet Nio has demonstrated that it has the capability and innovation to become one of the leading producers of electric vehicles in China, the world’s largest automotive market.
Once supply chain issues are a thing of the past, Nio should have no trouble ramping up production. In two years, the company has grown from less than 4,000 electric vehicles in a quarter to more than 25,000. In fact, production in November and December 2021 hinted at an annual rate close to 130,000 electric vehicles. Without supply constraints, I believe Nio can reach an annual rate of over 500,000 electric vehicles in 12 months or less.
Even more essential to Nio’s success is its continuous innovation. For example, it recently introduced two sedans, the ET7 and ET5, which will directly compete You’re hereNio’s flagship sedans, the Model S and Model 3. With the industry-leading battery upgrade, Nio’s sedans offer longer range than Tesla’s sedans.
Nio’s Battery-as-a-Service (BaaS) subscription is another way to drive long-term growth. The BaaS program lowers the initial purchase price of a Nio EV and allows buyers to charge, swap and upgrade their batteries. In return, Nio collects a high-margin monthly fee and, most importantly, retains first-time buyers to the brand.
Another monster growth stock with the ability to turn a $200,000 investment into $1 million by the end of the decade is the pet insurance company. Trupanion (NASDAQ: TRUP).
The big knock against Trupanion is that he chose subscriber expansion over short-term profits. Reinvesting in its platform is not cheap and has resulted in bigger losses over the past two years. But patience can pay off big time when investing in the pet industry, especially when you have as many competitive advantages as Trupanion.
Perhaps the most important thing to understand about pets is that owners will open their wallets in any economic environment for their four-legged, feathered, and scaly family members. Data from the American Pet Products Association shows that it has been more than a quarter century since US spending on pets has declined year over year.
On a more company-specific basis, Trupanion’s opportunity lies in its huge pool of potential “members”. To date, the company has only penetrated approximately 2% of the US and Canadian pet market. This compares to an insured rate of 25% for pets in the UK. If Trupanion was able to increase registrations to 25% of pets in the United States, it would have an addressable market worth over $38 billion. In other words, the pet insurance industry is still in its infancy.
Trupanion is also the only major pet insurance company that provides veterinary clinics with software to manage payment at the time of service. This is one of the many reasons why Trupanion’s rapport with veterinary clinics is unmatched.
A third monster growth stock that can turn a $200,000 investment into $1 million by 2030 is Multistate Cannabis Operator (MSO) Cresco Laboratories (OTC: CRLBF). Cresco ended March with 50 dispensaries operating in 10 states.
Since February 2021, few industries have been more universally hated by Wall Street than cannabis. It was expected that a Democratic-led Congress, along with the election of Democrat Joe Biden as President, would quickly lead to the passage of cannabis reforms at the US federal level. But in the absence of marijuana legalization or banking reforms becoming law, pot stocks fell into a 16-month downtrend.
While the weed industry has been buzzing for over a year, it also offers an intriguing opportunity for patient investors to take advantage of the rapid growth in legalized states. After all, three-quarters of all states have green-lighted marijuana in some way. It’s music to the ears of the greatest MSOs, like Cresco.
Cresco’s most significant growth opportunity stems from its retail presence. Cresco has targeted a number of limited license states, such as Illinois, Ohio, and Massachusetts. Regulators deliberately limiting the number of dispensary licenses issued give Cresco’s retail stores a fair chance to build brand awareness and customer loyalty.
Cresco Labs is also in the midst of a transformative deal that will see it acquire MSO Care British Columbia (OTC: CCHWF) in an all-stock deal. Assuming the deal goes through, Cresco Labs would have more than 130 outlets in 18 markets. Columbia Care has regularly used acquisitions as a way to grow. By buying Columbia Care, Cresco would turn the tables and gain immediate exposure in a number of high dollar markets.
Finally, Cresco Labs is the largest wholesale cannabis supplier in the United States. Wall Street often rejects wholesale marijuana because of its less favorable margins compared to retail sales. However, Cresco holds a cannabis distribution license in California, the country’s largest cannabis market. This allows him to place his exclusive products in more than 575 dispensaries in the Golden State. This volume advantage more than offsets the lower margins associated with wholesale cannabis.
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Sean Williams holds positions at Columbia Care. The Motley Fool holds positions and recommends Cresco Labs Inc., Nio Inc., Tesla and Trupanion. 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.