In the back of every investor’s mind is the stock that got away and became a huge success.
Consider Apple Inc. (NASDAQ: AAPL), which grew from a small computer manufacturer in Cupertino, California, into a technology behemoth. If you had invested just $10,000 in the company’s initial public offering back in 1980, your position would be currently worth $2.2 million.
Today, of course, Apple is a mature business. Its biggest gains are behind it. That means if you’re looking for the next multibagger — stocks that can deliver 100%, 1,000%, even 10,000% gains — you have to hunt for the next Apple. You have to search for companies with similar business traits, great management teams, and long growth runways. Here aree three names that have just that.
1. Sierra Wireless, Inc.
Multibaggers don’t come out of a vacuum. They are usually the product of some important, emerging industry with huge growth potential. The biggest stock market winners had new products, new management teams, or new industry conditions that propelled the company to fresh all-time highs.
Sierra Wireless, Inc. (TSX: SW)(NASDAQ: SWIR) is on the forefront of one such trend: the Internet of Everything. Right now, 99% of all physical things remain “unconnected,” but that’s about to change. In a few years, everything you own — including your car, house, and appliances — will be connected to the Internet.
Sierra is the company making this vision possible. Its wireless modules and cloud management services allow devices to connect to the Internet and be easily controlled. As more and more devices move online, Sierra will see the demand for its technology grow multifold.
2. Valeant Pharmaceuticals Intl Inc.
The hallmark of great CEOs is that they’re driven in some big or cool way. I call the thing a CEO wants to make happen a BHAG — Big Hairy Audacious Goal. They’re the driving force behind great executives like John Mackey at Whole Foods Markets, Inc. or Howard Schultz at Starbucks Corporation.
Valeant Pharmaceuticals Intl Inc. (TSX: VRX)(NYSE: VRX) CEO Michael Pearson has a BHAG: to join the ranks of the world’s top 5 pharmaceutical companies by the end of 2016. To crack this group, Valeant will need a market capitalization of at least $150 billion, more than three times its current value.
And Valeant certainly has the business model to pull it off. The company has grown quickly through acquisitions, buying up small drug makers and pushing their products through its huge distribution network. As long as Valeant can continue to find sizable targets, there’s no reason why it won’t hit its two-year target.
3. Westport Innovations Inc.
North America is sitting on an ocean of natural gas, and the energy industry is drowning amidst the supply glut. Thanks to new technologies like horizontal drilling and hydraulic fracturing, vast quantities of energy are being extracted from shale fields across the country. And this has ushered in an era of low natural gas prices.
That’s great news for Westport Innovations Inc. (TSX: WPT)(NASDAQ: WPRT), which builds natural gas-powered engines. At current prices, the clean burning hydrocarbon is 50% cheaper than diesel as a transportation fuel. And this fundamental shift has encouraged some of the largest trucking fleets in America — such as The Coca-Cola Company, Waste Management, Inc., and FedEx Corporation — to convert to natural gas engines.
This might only be the beginning for Westport. Other industries — including locomotives, mining companies, and cell phone towers — are considering the switch. If Westport can capture even a fraction of these giant markets, the stock could surge from here.
