3 supercharged growth stocks that can turn $250,000 into $1 million by 2030
OWhether you’re a newbie or a seasoned investor, you’ve received a not-so-subtle reminder over the past few months that stock market corrections are a normal and inevitable part of the investment cycle. Since the start of the year, the broad base S&P500 and widely followed Dow Jones Industrial Average dipped into official corrective territory (down at least 10%), while tech focused Nasdaq Compound briefly fell into a bear market.
There is no doubt that sharp declines in indices can be disconcerting. But it is important to recognize that stock market corrections rarely last long. Additionally, every crash and correction in history has proven to be an ideal buying opportunity for patient investors. Buying high-quality stocks during pullbacks and allowing your investment thesis to materialize over time is a lucrative strategy.
That being said, the recent market correction has made three supercharged growth stocks particularly attractive. If you were to invest $250,000 in these companies, they have all the tools necessary to make you a millionaire by 2030.
The first supercharged growth stock that should reward patient investors handsomely by the turn of the decade is the telehealth giant Teladoc Health (NYSE: TDOC).
Teladoc is one of dozens of high-growth companies that benefited enormously from the early stages of the COVID-19 pandemic, but have since been rocked by valuation and growth issues. It also paid a price (literally and figuratively) for its acquisition of Livongo Health in late 2020, which resulted in bigger than expected losses in 2020 and 2021.
Despite these near-term challenges, there is no suggestion that Teladoc’s direction has strayed or that its competitive advantages have faded a bit. For example, company sales increased by 74% on annual average between 2013 and 2019 (before the pandemic). In the wake of the pandemic, sales growth is expected to continue to exceed 20% on an annual basis.
What Teladoc’s sales growth demonstrates is that we are seeing a change in the way personalized care is delivered. While virtual visits may not be feasible for every appointment, Teladoc’s platform offers patients and physicians a powerful tool to improve overall outcomes. Virtual visits are more convenient for patients and they allow doctors to easily keep tabs on patients with chronic conditions. The end result should be less money in the pockets of health insurers (so they will favor telemedicine visits).
Although the acquisition of Livongo was, in retrospect, prohibitively expensive, the deal nevertheless gives Teladoc the ability to cross-sell its solutions and address the needs of people with chronic conditions who would benefit most from its personalized care. Additionally, the one-time costs associated with this agreement will not negatively impact Teladoc’s results in 2022 and beyond.
After a nearly 80% retracement, Teladoc shares can now be bought for about five times last year’s sales. But if Teladoc continues to grow by 20% per yearit will generate over $10.5 billion in sales by 2030. That would give it a price-to-sales ratio of 1. In other words, if Teladoc simply maintains its existing price-to-sales multiple, investors shouldn’t having trouble turning $250,000 into $1 million.
Another supercharged growth stock with all the tools and intangibles needed to quadruple investors’ money over the next eight years is marijuana stock Jushi Holdings (OTC: JUSHF).
Few industries have been more universally hated by the investing community over the past year than US stocks. The expectation with a Democrat-led Congress and Joe Biden in the Oval Office was that federal legalization, or at the very least cannabis banking reforms, would become a reality. So far, these expectations have not materialized and investors are clearly not satisfied.
However, federal legalization is not a necessity for large-scale multi-state operators (MSOs) like Jushi to thrive. With roughly three quarters of all US states legalizing weed to some degree, there is more than enough organic opportunity for these businesses to grow rapidly and turn a profit.
Jushi is a relatively small player among the most well-known MSOs. At the start of this month, it had 29 operating clinics in half a dozen states, with plans to expand its portfolio to about 40 operating clinics by the end of 2022.
What makes this company so unique is its focus on limited license markets, such as Virginia, Illinois, Pennsylvania and Massachusetts. Limited license states deliberately limit the total number of retail licenses issued, as well as to individual businesses. It’s a way to ensure that smaller players like Jushi have a fair chance to grow their brand(s) and retain an audience without being crushed by a deeper-pocketed MSO.
Interestingly, however, Jushi hasn’t been afraid to pull the acquisition trigger. It completed the NuLeaf takeover just two weeks ago, which will strengthen its vertically integrated presence in Nevada. It also entered the highly lucrative California pot market last year.
But maybe the best thing about Jushi it is management that aligns its portfolio with that of its shareholders. About $45 million of the first $250 million in capital raised came from insiders and executives. We also saw CEO Jim Cacioppo buy shares of the company on the open market. When leaders have skin in the game, good things often happen.
A third supercharged growth stock that can turn an initial $250,000 investment into a million by 2030 is based in Singapore Sea Limited (NYSE:SE).
Like Teladoc, The sea has been crushed in recent months. A forecast calling for slower growth in 2022 did not sit well with investors who expect eye-popping revenue growth from the company. Sea also noted that it could be until 2025 before two of its key segments can “substantially self-fund their long-term growth.” That’s a bit longer than some optimists expected.
While short-term losses aren’t ideal, Sea’s three operating segments are growing like wildfire and paint the picture of a future mega-cap company.
At the moment, Sea’s gaming division, known as Garena, is the only one generating positive earnings before interest, taxes, depreciation and amortization (EBITDA). What makes Garena so intriguing is that 11.8% of the company’s 654 million quarterly active users (QAUs) paid to play. The pay-to-play conversion rate for mobile games is typically under 10 figures. As long as Sea can sustain that level of engagement, mobile gaming should be a financial bright spot.
The second key segment is its SeaMoney financial services products. Since the emerging markets targeted by the sea in Southeast Asia and South America may lack access to basic banking services, the company’s digital wallet solutions can play an important role in democratizing finance for the booming middle classes in these regions. SeaMoney counted nearly 46 million QAU at the end of 2021.
But the segment that most excites investors is the Shopee e-commerce platform. In all of 2018, Shopee saw $10 billion in gross market value (GMV) flow through its platform. In the fourth quarter of 2021 alone, Sea recorded $18.2 billion in GMV through Shopee. Demand for online ordering is skyrocketing in Southeast Asia and Brazil, which should help Sea expand its e-commerce operations over time and reduce its losses.
Patient investors could see Sea Limited double its sales a few times over the next eight years.
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