At the beginning of every year, investors set out to pick out which stocks are going to make them rich. Many times, they’re looking for zeroing in on stocks that will pop 50% 5 years from now. However, this kind of approach is usually pretty bad.
There are opportunities to be had in finding companies that may not make you a million bucks by 2021 or 2022, but are flourishing enough to make you some solid gains over the next decade. Or better yet, you can invest in companies that are already making their shareholders rich through dividends. If that doesn’t scream good investing strategy then don’t know what does!
SBI Life Insurance
Insurance is another theme which has picked up steam quite recently and has huge growth opportunities given its underpenetrated nature. After LIC, SBI Life Insurance is among the best private insurance player with a leading APE growth (20%+). The company commands strong market share and continues to gain as it offers a multitude of products. With FDI limits in insurance now extended, players like SBI Life are bound to be at an advantage.
CDSL
As the lockdown forced many to stay at home, demat accounts have seen a surge in the past year. With this rising interest in the stock market, CDSL as a depository will continue to upscale and benefit. Being in a duopoly with NSDL, CDSL has created a strong market for itself and will continue to gain revenue as markets mature and volumes rise.
A basket of 10 fundamentally sound stocks could do the trick in making wealth in the long term. As Philip Fisher says, “Usually a long list of securities is not a sign of the brilliant investor, but of one who is unsure of himself.” Keeping this philosophy in mind, investors should stay invested and stay safe in this pandemic.
EverQuote
Small-cap stocks have the ability to make investors rich, too. For instance, online insurance marketplace EverQuote (NASDAQ:EVER) finds itself at the center of a steadily growing industry.
Whereas advertising and distribution within the insurance industry are expected to grow by an average of 4% annually through 2024, EverQuote anticipates that digital insurance advertising will grow by 16% annually over the same period. The company’s online marketplace helps consumers quickly price out policies, while at the same time allowing auto insurers to get the best bang for their advertising buck. Approximately 1 out of 5 consumers pricing a policy on EverQuote’s marketplace makes a purchase. This shift to digital advertising should allow EverQuote to sustain a double-digit growth rate for a long time to come.
What’s more, EverQuote is moving beyond auto insurance and into other verticals. Its marketplace now accommodates rental, home, health, and life insurance policies. Even though these new verticals represents a smaller percentage of total sales than auto insurance, revenue growth from these ancillary verticals has been superior to auto policies — 25% sales growth from auto policies in Q1 2021 vs. 41% from non-auto policies.
When EverQuote makes the turn to recurring profitability within the next year or two, the sky could be the limit.
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The Walt Disney Company (NYSE: DIS)
The Walt Disney Company is yet another household name on the list. Even if you’ve never been to Disney World or DisneyLand, you likely grew up watching Mickey Mouse or another Disney character bouncing around on your television screen.
Moreover, if you’re like most millennials who have cut the cable cord and chosen to stream entertainment, you’ve at least heard about Disney+, if you’re not already one of its growing number of subscribers.
When it comes to investing in the company, there are two big reasons you may want to consider diving in:
- COVID-19 Recovery. Disney felt quite a bit of pain as a result of COVID-19. Without consumers wanting to travel, its theme parks, hotels, and cruise lines have been struggling. The company’s theme parks and travel attractions are open. Although Disney hasn’t officially updated its capacity allowance, capacity has increased to about 50%, according to TheDisInsider. Around the world, however, consumers dream about going to Walt Disney theme parks, and considering the state of the COVID-19 crisis, demand is likely to boom ahead when capacity restrictions are relaxed, leading to a significant rebound.
- Streaming Entertainment. One of the major drivers in Disney’s recent stock growth has to do with its activities in the streaming entertainment space, which it has knocked out of the park. Launched in November 2019, Disney+ had more than 116 million subscribers as of September 2021, up from 86.8 million in December 2020 and 60.5 million in early August 2020.
Between a likely recovery in Disney’s travel-related business and incredible growth in the company’s streaming entertainment business, the company is firing on all cylinders.
Although it’s never a good idea to blindly follow analyst opinions, it is helpful to use their opinions as a source of validation for your own. When it comes to The Walt Disney Company, analysts seem to love the stock: 19 analysts currently cover it, with 16 rating it a Buy and three rating it a Hold with an average price target of $217 per share, representing the potential for more than 17% growth over the next year.
All in all, Disney has struggled from time to time, but you can never count the stock out. The company has a history of pivoting and making changes that are best for its growth and its investors. That’s not likely to change. The Walt Disney Company has plenty of potential for dramatic growth ahead.
Netflix (NASDAQ: NFLX)
Netflix, like many others on this list, is a household name. The company rose to fame by giving consumers the ability to stream entertainment, rather than buy it or subscribe to cable services. In fact, the company is known as one of the pioneers of streaming video.
As with other home entertainment stocks, COVID-19 proved to be a positive for the company, resulting in increased subscribers, revenue, and earnings. However, early 2021 wasn’t so great for the company.
As competition continues to flood into the space, many wondered if the company had what it takes to maintain its leadership position. Its stock suffered steep declines from mid-April through mid-May.
However, those declines proved to be short-lived, with the stock currently trading above early-year highs.
Although it has made up for the losses, there’s a strong argument that there’s plenty of room left in the recovery, especially with Netflix continuing to pour cash into the development of exclusive content.
Moreover, the concept of cord cutting isn’t expected to dissipate any time soon. In fact, as the cost of cable services continues to climb and consumers focus on saving money, cord cutting is likely to continue.
Sure, there’s plenty of competition on the playing field, but it’s hard to bet against a pioneer, especially one with a long history of investing in content, technology, and marketing strategies that have yielded fruit.
Maybe that’s why analysts love the stock. Of the 33 analysts covering the stock, 23 rate it a Buy, seven rate it a Hold, and only three rate it a Sell. The average price target of $617.93 represents the potential for nearly 5% gains over the next year. Moreover, considering the strong growth the stock saw over the past month, and stellar second quarter results, analysts are likely to update their price targets in the positive direction relatively soon.
All told, Netflix has competition to contend with, but as it continues to develop market-leading content, offer services at competitive prices, and expand its membership base through effective marketing strategies, the stock has plenty more room for growth.
Square
First up is fintech stock Square (NYSE:SQ), which is leading the War on Cash and the digital payments revolution. Even though Square has rocketed higher since the coronavirus pandemic, cashless payment growth is still in the very early stages.
For roughly a decade, Square’s seller ecosystem has been its foundation. This is the operating segment that provides point-of-sale devices and analytics to help businesses succeed. Driven by merchant fees, the seller ecosystem has grown from $6.5 billion in gross payment volume (GPV) in 2012 to what’ll likely be well over $130 billion in 2021, based on the $33.1 billion in GPV traversing its network in Q1 2021.
What’s more, we’re seeing bigger businesses latch onto the seller ecosystem. In the first quarter, 61% of all GPV came from businesses with at least $125,000 in annualized GPV, compared to 52% in the comparable quarter two years earlier. Square isn’t just for small merchants anymore.
However, it’s digital peer-to-peer platform Cash App that should have your attention. Cash App’s monthly active user count more than quintupled to 36 million by the end of 2020, with gross profit per user clocking in at $41, compared to less than $5 in costs to attract each new user. Cash App gives Square a number of new ways to generate revenue (e.g., Bitcoin trading), and it’s quickly become the company’s leading generator of gross profit.
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Teladoc Health
Innovative healthcare stocks are a good bet to make patient investors rich over the long run. With this in mind, there’s a very good chance that telemedicine kingpin Teladoc Health (NYSE:TDOC) can help the average investor in their quest to reach millionaire status.
If you think Teladoc was in the right place at the right time during the pandemic, you wouldn’t be wrong. Virtual visits on its platform catapulted from 4.14 million in 2019 to 10.59 million last year. But this is much more than just a pandemic play, as evidenced by the company’s 74% average annual sales growth between 2013 and 2019.
Telehealth services offer a number of sustainable advantages that’ll make it a mainstay in the U.S. treatment landscape. For one, virtual visits are considerably more convenient for patients than office visits. Conversely, it’s also easier for doctors to keep tabs on their sickest/chronically ill patients via virtual consultations. While this convenience won’t replace all medical visits, it does take a step forward in improving patient outcomes, which insurance companies are bound to appreciate (i.e., less money out of their pockets).
The Teladoc growth story also includes the cash-and-stock acquisition of Livongo Health in the fourth quarter of 2020. Livongo is a leading applied health signals company with approximately 658,000 diabetes members, as of March 2021. Livongo collects copious amount of data on patients and with the help of artificial intelligence sends them tips to help them lead healthier lives. Despite being in the early stages of its growth, Livongo was profitable on a recurring basis at the time of its acquisition.
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Conclusion
If you’re reading this right now, I know that you are looking into stocks that will make you rich in 5 years. I feel comfortable saying this because I have over 10 years of experience in investment management. I’ve helped thousands of people to make money in the stock market by providing them insider information on the best stocks to buy every week. You can make big money when you invest in the right place, but you also need to know when to invest in the right company in order to get ahead.