Stocks to Create Life-changing Wealth: At any one time, there are a small handful of startup companies that will go on to become industry behemoths.
The fortunate investors who pick these stocks early and ride the wave as the companies grow can gain life-changing levels of wealth as a result.
While there’s never any guarantee that a startup will go on to generate such exponential gains, there are a few companies out there today that at least have the potential. Here are three stocks you should look that could bolster the high-growth portion of your portfolio.
Planet Labs (NYSE:PL), better known as Planet.com, has created one of the world’s largest Earth-imaging libraries.
The company images the entire planet each day using a fleet of relatively small, low-cost satellites. The dataset created from these efforts has considerable potential value to governments and businesses. Due to its subscription-based business model, Planet Labs also enjoys a recurring revenue rate of 94 percent.
In the most recent quarter, Planet Labs’ revenue grew to $40.1 million, slightly edging out analyst expectations of $39.5 million. Earnings slightly underperformed, with a loss of $0.17 per share against expectations of a $0.15 loss.
The overall trajectory of the company, however, remains strong. Next quarter’s revenue guidance of $41-43 million, for instance, would be about 38 percent higher than the same period in 2021.
The company is also in the early stages of developing its own analytics programs. This will help its customers to fully utilize the data Planet Labs provides without having to implement their own machine learning algorithms.
Reflecting its high-growth status, Planet Labs could have huge upside over the coming 12 months. The median price target for the stock is $11.25, 119.3 percent higher than the most recent price of $5.13. The low price target of $10 would return 94.9 percent, making Planet Labs one of very few stocks that actually have a high likelihood of doubling in price over the next 12-18 months.
The real value of Planet Labs, though, will be in the long run. The company has only begun to scratch the surface of the potential value its data library could offer to government agencies, businesses and NGOs. While the company is certainly in its early stages, there’s a decent argument for taking a risk on this stock for the possibility of outsized rewards down the road.
After selling off 40 percent YTD, travel rental innovator Airbnb (NASDAQ:ABNB) is once again looking like a potentially attractive buy.
In Q1, the company reported a 5 percent increase in its average daily rate, along with a record number of nights booked through its platform. Revenue of $1.51 billion topped analyst expectations of $1.45 billion.
Airbnb is also about as cheap as it has ever been at the moment. With a price to free cash flow multiple in the high 40s, investors are getting more for their money than they historically have. The company’s price-to-sales ratio is also currently 9.6, which is far from terrible for a high-growth tech company with strong fundamentals.
Airbnb is also the beneficiary of a business model that requires it to maintain relatively few assets. Because individual operators own the properties Airbnb helps to rent, the company does not have maintenance or mortgage costs to consider. This will be especially helpful as interest rates rise – Airbnb can continue expanding its property offerings without initiating property loans at higher rates.
Airbnb has at least the potential to overperform in the coming year. The median stock price among analysts is $185, 87.1 percent above the current price of $98.87. The lowest target puts the stock at $95, just 3.9 percent lower than where it currently trades. This suggests an asymmetrical risk proposition and indicates that the stock may not have much more room to fall without some additional piece of bad news.
Overall, Airbnb could be one of the more resilient high-growth startups to buy in this market. The company is still growing well and should continue to benefit from post-pandemic travel patterns among consumers.
While there are risks to travel from rising gas prices, Airbnb makes it possible for people to easily find lodgings close to home. If consumers begin taking shorter trips to save on gas, Airbnb should not see the same effects as the rest of the travel industry.
Singapore-based tech startup Sea Limited (NYSE:SE) is a fast-growing powerhouse in the Southeast Asian market.
The company’s most recent quarterly report detailed 64 percent year-over-year revenue growth for a total of $2.9 billion. One of the main drivers of this explosive growth was the company’s eCommerce platform, Shopee, which generated $1.5 billion and saw 39 percent growth in gross merchandise volume.
The company did incur fairly heavy losses, mostly due to investments made to keep up with its own rapid growth. Garena, the business’s video game segment, also slowed to 45 percent year-over-year growth. These downsides, however, were largely overshadowed by the massive growth of the company’s eCommerce line.
Analyst forecasts give Sea Limited a median target price of $135, 90.2 percent higher than its current level of $70.99. While cooling growth in its gaming segment could stop it from advancing quite this far, the stock clearly has the potential to outperform the market this year.
On a longer time horizon, Sea Limited could be a strong value play on the emerging economies of Southeast Asia. The company has frequently been described as the “Amazon of Southeast Asia,” a title that is perhaps well-deserved given its expansive eCommerce and tech interests.
Shopee is also expanding into Latin America and Europe in hopes of delivering value to underserved populations in other emerging markets.
Sea Limited isn’t without its risks.
The company has grown faster than anyone could have expected, requiring it to invest heavily in new facilities and staff to keep up. It may also have too many business segments for such a young company. For investors seeking potentially massive growth in Southeast Asia as China’s streak of success cools off, though, Sea Limited could be a winner.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.