If there’s a lesson Wall Street is always willing to teach, it’s the importance of patience. Despite undergoing 38 double-digit percentage corrections over the past 71 years, the benchmark S&P 500 has eventually always put these downturns firmly in the rearview mirror.
In other words, the quality of the companies you buy and the length of time you give your thesis to play out is far more important than when you choose to buy. Thus, even with the broader market near an all-time high, surefire winning stocks with exceptional upside potential can still be found.
For instance, each of the following four surefire stocks have the potential to triple your money by 2026, or perhaps even sooner.
Image source: Getty Images.
Nio
Some investors (myself included) would say the electric-vehicle (EV) industry has been bordering on bubble-like valuations. For example, the recent initial public offering of Rivian briefly pushed its market cap to north of $100 billion without any trailing-12-month revenue. But for China-based EV manufacturer Nio (NYSE:NIO), there’s a genuine pathway for this supercharged growth stock to triple by 2026.
Nio’s success will primarily be dependent on its production expansion and innovation. In terms of the former, the company was held back in the second and third quarters by semiconductor-chip supply issues. With those concerns now being pushed out of the picture, Nio delivered close to 10,900 EVs in November. That’s an annual run rate of more than 130,000 EVs. By the end of next year, Nio’s run rate could more than quadruple to 600,000 EVs.
When it comes to innovation, Nio has multiple ways it can win. Next year, it’ll be introducing three new models to its lineup. The company is also leaning on its battery-as-a-service (BaaS) program as a means to boost customer loyalty and drive long-term margins higher. In exchange for a reduced initial purchase price, customers enrolled in the BaaS program pay a recurring monthly fee.
Nio is on track to nearly quadruple its sales to $20 billion by 2024 in the world’s No. 1 auto market (China) and should push to recurring profitability in 2023. If it can meet these lofty expectations, its current market cap of $45 billion would be an absolute steal.
Image source: Getty Images.
Jushi Holdings
High-growth stocks have been trading at a premium throughout 2021. But one industry where growth stocks are being priced at a discount is cannabis. That’s why marijuana stock Jushi Holdings (OTC:JUSHF) is a good bet to triple investors’ money by or before 2026.
To address the single-biggest concern in the cannabis space, the U.S. federal government doesn’t need to legalize weed or pass reforms for multi-state operators to succeed. Legalization would eliminate some operating inefficiencies, but it’s not necessary for Jushi and many of its peers to thrive.
Jushi has three factors that could allow its stock to triple in value in the coming years. First, there’s a focus on limited-license markets (Pennsylvania, Illinois, Virginia, and Massachusetts). States that purposefully limit how many dispensaries can open, as well as how many licenses a single business can hold, make it easier for smaller players like Jushi to build up their brands and garner a loyal following.
Secondly, Jushi’s management team has prudently used its capital to make modestly sized acquisitions. The ability to sprinkle in inorganic growth opportunities with dispensary openings is a powerful tool to expand the company’s reach and boost its long-term profit potential.
Third, Jushi’s insiders and executives have played a key role in capital raising. Approximately $45 million of the initial $250 million in capital raised by Jushi came from insiders and execs. This ties their financial interests to that of their shareholders, which is often a very good thing.
Image source: Lovesac.
Lovesac
Another surefire stock with all the tools necessary to triple your money by 2026 is furniture-retailer Lovesac (NASDAQ:LOVE).
Just saying the words “furniture retailer” is normally enough to send any investor into a deep sleep. That’s because the furniture industry has a stodgy operating model reliant on foot traffic and a lot of similar wholesale products. Lovesac is approaching furniture sales in two unique ways.
Arguably the biggest differentiator between Lovesac and other furniture stores is the furniture. Lovesac’s core product (accounting for roughly 85% of sales) is its modular couches known as sactionals.
Sactionals can be rearranged dozens of ways to fit any living space. Additionally, there are approximately 200 cover choices with sactionals, so they’ll match any color or theme of a home. And for those of you who lean toward eco-friendly companies, the yarn used in these covers is made entirely from recycled plastic water bottles.
Lovesac also stands out for its omnichannel sales platform. Whereas traditional furniture stores live and die by foot traffic to brick-and-mortar locations, Lovesac shifted nearly half of its sales online during the worst of the pandemic. The company operates pop-up showrooms and has showroom deals in place with brand-name retailers, as well.
Superficially, Lovesac is a furniture company. But pan out a bit, and you’ll see a profitable, cutting-edge innovator with sustainable double-digit growth potential and low overhead expenses.
Image source: Getty Images.
PubMatic
A fourth and final surefire stock with the potential to triple your money by 2026 is advertising-technology company PubMatic (NASDAQ:PUBM).
Before the internet was invented, humans handled the buying, selling, and placement of advertisements. It was an arduous and inefficient process, at best. Nowadays, software from programmatic-ad companies handles the buying, selling, and optimization of ads.
PubMatic is a sell-side platform in the programmatic-ad space. This simply means its customers are the publishers looking to sell their display space. While it’s in PubMatic’s best interest to net its clients as much money as possible for their display space, the company also recognizes that providing relevant content to users will keep advertisers happy, too.
In other words, PubMatic’s cloud-based, machine-algorithm-driven platform won’t always fill display spaces with the highest-cost ad. Over time, though, it should lead to improved pricing power for the company’s clients.
Speaking of clients, PubMatic is working on a four-quarter streak of growing organically by at least 50%. This is to say that existing publishers have spent at least 50% more year over year with the company for four straight quarters. That’s pretty convincing evidence that publishers like the platform.
What investors should note is that the shift to digital advertising still has a long runway. Global digital-ad spend is expected to average 10% annual growth through 2025. PubMatic, on the other hand, shouldn’t have any trouble more than doubling this pace.
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.
Be the first to comment