It’s been a year for the record books…in all the wrong ways. The very followed S&P500 produced its worst six-month return to start a year since 1970. Meanwhile, the Nasdaq Compound (^IXIC 0.00%)which was largely responsible for sending the entire market to new highs, fell 34% below its all-time closing high set in November and entrenched itself in a bear market.
Although sharp declines in major U.S. indexes can rattle investors’ nerves and lead to unrealized short-term losses, they are historically the perfect time for patient investors to pounce. Indeed, every double-digit percentage decline in major indexes, including the Nasdaq Composite, was eventually put in the rearview mirror by an extended bull market rally. Over time, the broader market trends higher.
In other words, the current bear market represents an opportunity for long-term investors to acquire high-growth, innovative companies at a deep discount. The following three extraordinary growth stocks are prime examples of companies that can triple your money by 2028.
The first phenomenal growth stock with an assortment of competitive advantages in its sails that can triple your money in six years is none other than the FAANG stock Amazon (AMZN 1.12%).
Some people are clearly going to be apprehensive about a company valued at $1.4 trillion tripling in value over the next six years. But I assure you, it’s entirely doable, based on Amazon’s growth trajectory, innovation, and operating cash flow.
As most people are probably well aware, Amazon sits atop a very high pedestal in online retail. The Enterprise Marketplace is expected to bring in around $0.40 for every dollar in U.S. online retail sales in 2022. Amazon’s share of U.S. online retail sales is actually greater than that of its 14 closest competitors on a combined basis!
But it’s not retail that has the ability to propel Amazon to a 200% gain by 2028. In reality, it’s all down to its higher-margin sales channels, such as subscription services, advertising and cloud services. For example, the company has signed up over 200 million people worldwide for a Prime membership. The fees Amazon collects from its Prime members help the company channel money into other high-growth initiatives, as well as its rapidly growing logistics network.
All eyes are also on the Amazon Web Services (AWS) cloud infrastructure services segment. AWS generated a third of all cloud services spending in the first quarter. It increased its sales by 33% during an exceptionally difficult second quarter, and it is a considerably higher margin operating segment for Amazon. It frequently generates the bulk of Amazon’s operating revenue, although it accounts for only about a sixth of the company’s net sales.
With Wall Street and investors paying a median of 30 times year-end operating cash flow for Amazon stock throughout the 2010s, Amazon’s stock price could triple by by 2025, based on analyst consensus cash flow forecasts. By 2028, a quadrupling of Amazon’s annual cash flow per share isn’t out of the question, which could reasonably put a $4.2 trillion valuation on the table.
A second extraordinary growth stock with all the tools and intangibles needed to triple your money by 2028 is a dog-focused pet products and services company Bark (BARK 7.14%).
A quick look at Bark’s chart since his debut in December 2020 clearly shows that he has faced some challenges. Most companies that went public through a special purpose acquisition company (SPAC), like Bark, were burned at the stake in 2021 and 2022. The Nasdaq bear market has also been relentless for growth stocks that don’t. generate no profit. With Bark still in its expansion phase, it remains unprofitable, and therefore a target for sellers.
However, many of Bark’s indicators are pointing in the right direction, indicating plenty of “legs” for patient investors.
For starters, the pet industry is pretty much recession proof. According to sales data from the American Pet Products Association, spending on pets has not declined year over year in the United States for more than a quarter of a century. Additionally, the number of U.S. households with a pet is at an all-time high, according to APPA’s 2021-2022 survey. Owners are more than willing to open their wallets to ensure the happiness and well-being of their four-legged family members.
What makes Bark such an intriguing buy is its direct-to-consumer (DTC) operating model. Although the company offers its products in tens of thousands of retail stores, physical stores only accounted for 10% of revenue in the first quarter of fiscal 2023 (ended June 30, 2022). By comparison, DTC sales accounted for the remaining 90% of revenue. Having nearly 2.28 million active subscribers means less need for excess physical inventory and generally less overhead. In short, this should help Bark maintain a gross margin of around 60%.
Bark’s innovation is also beginning to translate into increased sales. The company’s Bark Bright dental products (dog chews and toothpaste) saw sales increase 169% to $2.4 million in the quarter ended June. Meanwhile, Bark Eats will target specific breeds with dry diets. The fact is, Bark’s innovation is leading to additional high-margin sales, which should help the company achieve recurring profits by the middle of the decade, if not sooner.
Pets are almost always a slot machine for business, which gives Bark a bright future.
The third extraordinary growth stock that can triple your money by 2028 is the cloud-based adtech stock PubMatic (PUBM -0.48%).
Over the past two quarters, the wall of worry has grown over advertising spending. We’ve seen back-to-back quarters of declining US gross domestic product (a “technical recession”), along with many advertising-focused companies slashing their growth prospects in 2022 as the Federal Reserve rapidly raises interest rates. ‘interest. As for PubMatic, business was business as usual.
PubMatic is what is called a sell-side provider. Specifically, it helps publishing companies sell their digital signage space to advertisers using its cloud-based programmatic advertising platform. Although you may think that the highest price offered always wins, it doesn’t. PubMatic’s machine learning software selects the most relevant advertisements for users. This satisfies advertisers and should ultimately increase ad pricing power for publishing companies in the long run.
What makes PubMatic such an impeccable investment are the trends in digital ad spend. Advertising dollars are gradually shifting from traditional print to digital platforms, such as video, mobile, connected TV and over-the-top programmatic advertising (offering ads through streaming services). While the digital advertising industry is expecting low double-digit growth through the middle of the decade, PubMatic has just completed its eighth consecutive quarter of revenue growth of over 20%. PubMatic crushes the industry average growth rate, and that’s mostly the result of existing customers spending significantly more year-over-year.
Another remarkable thing about PubMatic is the company’s cloud infrastructure. Rather than relying on a third-party provider, PubMatic built its platform from the ground up. As the company’s sales grew, the efficiency of scaling became really evident.
The icing on the cake is that PubMatic ended the last quarter with $183 million in cash, cash equivalents and marketable securities, and without a penny of debt to its name. With an impeccable track record and a sustained growth rate of 20% (or more), tripling by 2028 seems well within reach for PubMatic.