Prediction: These 3 Stocks Will 10x in the Next 10 Years | The Motley Fool
Finding stocks that 10x isn’t easy, but it happens more often than you might think. All of the Magnificent Seven stocks have been ten-baggers over their history, as have many other S&P 500 stocks.
Over a long enough time frame, successful companies at reasonable valuations can deliver returns of 900% or more. Sometimes it happens remarkably fast, as we saw with Micron and the rest of the memory sector this year. Who will be next? No one knows for sure, but below are three stocks I think have a strong chance of achieving that return over the next decade.
Image source: Getty Images.
1. Upstart
Upstart (UPST +0.93%) was a stock market darling for a brief time during the pandemic as the company posted triple-digit revenue growth and strong profits in 2021.
The stock crashed in 2022 as rising interest rates crushed the business and the hype. Today, Upstart, which is a loan originator that has built an AI model for credit, is still down 90% from its all-time high.
That seems like a mistake. Upstart is in a much stronger position than it was a few years ago. The business is profitable on a generally accepted accounting principles (GAAP) basis, and it’s projecting 35% revenue growth through 2028. Upstart is also competing in a massive addressable market, especially after entering the home and auto loan markets, so it could be several times larger than it is today, with a market cap of just $2.4 billion.
Today’s Change
(0.93%) $0.23
Current Price
$25.00
Key Data Points
Market Cap
Day’s Range
$24.71 – $25.14
52wk Range
$23.96 – $66.73
Volume
6.4M
Avg Vol
4.2M
Additionally, the company is in the process of securing a bank charter, which will make it easier to launch new products nationwide and lower its costs. After adjusting for stock-based compensation, as most tech companies do, Upstart is trading at a price-to-earnings ratio of around 13. That looks like a massive mispricing of this growth stock. If Upstart continues to execute, the stock will respond, and if interest rates eventually come down, the stock could skyrocket. Even without a macro tailwind, a 10x in ten years is within reach for a disruptive growth stock that looks significantly undervalued.
2. RH
RH (RH -0.22%), the home furnishings company formerly known as Restoration Hardware, was a top performer for much of its history, but it’s struggled in the post-pandemic era as the housing market has stalled.
RH is now down more than 80% from its all-time high, even though the company has continued to deliver growth in a challenging macro environment, targeting revenue growth of 5.5%-7% in 2026 and an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of 15%-16.2%.
The company will likely need some help from macroeconomic forces like interest rates to 10x, but at a market cap of just $2.4 billion, it’s not unreasonable for it to get there.
Today’s Change
(-0.22%) $-0.28
Current Price
$126.54
Key Data Points
Market Cap
Day’s Range
$125.64 – $128.55
52wk Range
$106.30 – $239.40
Volume
818K
Avg Vol
809.5K
Gross Margin
44.29%
RH has expanded into Europe and has extended the brand to guesthouses and jet and yacht charters. CEO Gary Friedman is a visionary, and he will continue to push the company in new directions and hold it to high standards. His previous bold bets, like shifting to a membership model, have paid off, and RH has clearly established itself as a luxury home furnishings retailer able to earn a premium.
The housing market won’t be stagnant forever, and once it wakes up, RH is poised to capitalize on the rebound in demand, which could send profits and the stock soaring.
3. Sweetgreen
Sweetgreen (SG +5.56%) has been a disappointment since its 2021 IPO. The company is the leading fast-casual salad chain, but it’s struggled to turn a profit and has faced pushback from customers over its high prices. Additionally, after years of billing its Infinite Kitchen as the future of the company, Sweetgreen sold the technology to Wonder, though it retained the rights to use it. More recently, it faced a setback from the cyclosporiasis outbreak.
Today’s Change
(5.56%) $0.38
Current Price
$7.22
Key Data Points
Market Cap
Day’s Range
$6.92 – $7.26
52wk Range
$4.49 – $10.63
Volume
5.9M
Avg Vol
5.6M
Gross Margin
92.05%
Despite those challenges, there are signs that Sweetgreen could be turning the corner. Its restaurants remain popular with average unit volumes of $2.5 million, not far behind Chipotle. Its new wraps, which offer a handheld option at a lower price, have been popular, and the company has also introduced a turnaround plan to cut costs and improve profitability.
At a market cap of less than $1 billion, Sweetgreen seems priced as if it were slowly going out of business, rather than as a company with a significant growth opportunity ahead. If it can return to same-store sales growth and take steps toward profitability, the stock will be rewarded. With new store expansion over the next decade, it could reach a $9 billion market cap, making it a 10x stock.
