Holding positions in great companies long term could change your life. Amazon stock has surged roughly 40,000% over the last two decades, which means a $1,000 investment made in the company would now be worth roughly $400,000. Buying Netflix stock at its initial public offering back in 2002 would have yielded even better results, and a $1,000 investment in the entertainment company would now be worth about $492,000 based on today’s stock price.
With that kind of life-changing performance in mind, a panel of Motley Fool contributors has identified three stocks that are primed to be world beaters. Read on to see why they think these companies have what it takes to deliver massive wins for shareholders.
This small-cap could serve up huge wins
Keith Noonan: The ability to gather and analyze valuable data is one of the biggest keys to business success in the 21st century. Impinj (NASDAQ:PI) is a company that makes it easy to track and gather data from non-electronic objects — bridging the Internet of Things into a world beyond smart cars, mobile devices, and connected toasters.
Impinj makes radio-frequency identification (RFID) tags, sensors, and software. Its small, durable chip tags function without the need for a power source, and can store and transmit rewritable data.
Using these technologies, a manager could press a button and be shown on a monitor exactly where particular items were located in a store or warehouse. If needed, that worker could see visualizations of those items being moved around in real time or quickly survey the goods in a location.
RFID technologies dramatically reduce the time needed to take inventory and improve reporting accuracy, and they’ve found early adoption among retailers including Zara, Macy’s, and Nike. In addition to retail, Impinj’s solutions are also already being used in the airline and healthcare industries, and there’s attractive expansion potential across each of these categories.
However, that’s still just scratching the surface of Impinj’s growth opportunity. As companies increasingly aim to automate manufacturing operations, RFID technologies could become increasingly useful. Machine vision will likely be central to many robotics and automation initiatives, but RFID tech offers some unique and supplementary benefits that suggest big long-term potential.
With a market capitalization of roughly $1.3 billion, Impinj is still a relatively small company with a potentially explosive runway for growth. Investors should understand that it’s a relatively risky stock, and the business trajectory is admittedly marked by some uncertainty, but I think it’s one that could have a tremendous payoff for patient investors.
Already a life-changing stock, the future looks incredible
Jason Hall: With a market cap knocking on the door to $100 billion, and total returns of more than 6,700% since going public, I wouldn’t fault anyone who assumed that they’ve already missed out on MercadoLibre (NASDAQ:MELI).
But a closer look at the business, its prospects, and the economies it operates in tells a completely different story. Simply put, I think it’s incredibly short sighted to give up on the future gains this Latin American e-commerce and fintech star can deliver. Despite a stellar history, MercadoLibre continues to grow at a breakneck pace.
Gross merchandise volume or GMV — the value of every transaction on its platform — was up 46% to $7 billion in the second quarter, putting it on track for a $30 billion year. For context, Amazon reported GMV closer to $490 billion last year. True, the U.S. economy dwarves the combined GDP of the countries MercadoLibre operates in today. But that’s sort of the point: Over the next several decades, Latin America will be one of the fastest-growing places on earth, and MercadoLibre’s dominant position is a huge head start over the competition.
Here’s the thing: E-commerce might not even be the best part. Payments platform Mercado Pago is so popular, more transactions happen off of MercadoLibre than on it, up 94% last quarter, and it has connected millions of unbanked people to digital commerce. Looking for life-changing investments? Look no further than this massive winner to keep winning for years to come.
Upstart could permanently change lending
Jamal Carnette: It’s understandable if investors think they’ve missed the boat with Upstart Holdings (NASDAQ:UPST), as the stock is up more than 600% year to date. However, Upstart has a massive market opportunity that investors shouldn’t ignore.
If you’ve read any financial website (including ours), you know how important your FICO credit score is when being considered for loans and insurance rates, applying for some jobs, or renting housing. While caring about your FICO score is good advice and well-intended, personal finance sites paper over a flawed system: FICO scores are a rather poor predictor of risk. For example, Upstart notes that 80% of Americans have never defaulted on a loan but only 50% have top-tier credit.
That’s Upstart’s opportunity. The company was founded by former Google employees determined to use artificial intelligence to design a better underwriting system. So far, the data is encouraging: In a study with major banks, the company found its model could approve three times the number of borrowers while keeping the same loss rates as traditional underwriting.
It’s early, but the company is finding a receptive audience from banks using its underwriting system, what Upstart calls “partner banks.” In the recent quarter, revenue grew 1,000% year over year to 194 million.
More importantly, conversion on rate requests jumped to 24%, up from 9% in last year’s corresponding period. The takeaway: More partner banks are requesting loan terms from Upstart and then choosing these terms compared to their internal models.
Like all stocks, Upstart has risks. The company was founded in 2012, so it lacks a real-world track record of loan performance in a sustained recessionary environment. Additionally, despite being profitable the company is considered expensive on traditional metrics, with a price-to-earnings ratio of 311.
That said, the company appears to be at the forefront of disrupting lending, a trillion-dollar industry per month. Even if it’s only partially successful, investors could be in for life-changing returns.
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.