Everyone wants to find the next monster stock — the one with upside of 1,000% or more. This task is easier said than done, however. All too often, investors simply pile into yesterday’s monster stocks in hopes that these companies can repeat the performance.
Take Shopify Inc (TSX:SHOP)(NYSE:SHOP), for example. Shares are up more than 100% over the last 12 months. Since its IPO in 2015, Shopify stock has increased in value by more than 1,000%. That’s a true monster stock. Many growth investors are still buying shares, but the days of monster growth are over.
If the company were to rise by another 1,000%, the market cap would exceed $400 billion– larger than Warren Buffett’s Berkshire Hathaway Inc.
Instead of buying former stars, you can amass your riches by discovering tomorrow’s monster stocks. Where should you look? Here are three perfect opportunities.
Take to the sky
Drone Delivery Canada (TSXV:FLT) is creating a $1 billion market opportunity out of thin air. The company is the first to explore delivering supplies via drone to remote communities in Canada, potentially saving consumers and businesses millions of dollars per year while expediting delivery times.
That’s particularly helpful for time-sensitive, life-saving items like replacement parts or medication. Eventually, Drone Delivery could be using its network of drones to deliver everything from postcards to Amazon.com, Inc. orders.
Today, the market is rightfully in wait-and-see mode, assigning the business a mere $180 million valuation. According to research, the drone delivery market is set to reach US$11 billion by 2022. Annual growth should remain in the double digits, resulting in a market size of US$29 billion by 2027.
In Canada, the near-term opportunity is likely closer to around $1 billion, but Drone Delivery could certainly take its expertise abroad. Valued at just one-fifth of its near-term potential, this stock could double or triple several times if it can execute.
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Play the trend
Patriot One (TSXV:PAT) is worth just $250 million. If its main product gains traction, this could be a $1 billion stock in a matter of months.
Using radar, Patriot One developed a tech system that detects concealed weapons like guns and knives. This technology, dubbed PATSCAN CMR, would add life-saving capabilities to first responders. But wait, this technology goes much further than mere detection.
“Aside from the cognitive ability to detect guns and knives, the PATSCAN CMR can assess threats,” wrote Fool contributor Christopher Liew. “Prior to installation, the system undergoes training and programmed to learn continuously upon deployment. Over time and after every screening instance, it becomes smarter and more tenacious in detecting hidden weapons.”
The market isn’t betting on this stock yet, but one or two major sales could change sentiment overnight.
Bet the house
Maxar Technologies Inc (TSX:MAXR)(NYSE:MAXR) is a classic high-risk, high-reward opportunity. There could be 1,000% upside here. Just be warned—80% or more in downside is also possible. Still, this could be a great bet.
Maxar designs and creates stuff for space consisting of highly specialized equipment that helps with mission-critical processes like communication, visuals, radar, and satellites.
From 2000 to 2017, things were going great. The stock increased in value by more than 400%, handily beating the market. Then conditions took a sharp turn for the worse. The company had issues with one of its deliveries and also faced allegations of “cooking the books” by motivated short-sellers. The stock fell 80% in response, pushing the debt load to 10 times its market cap.
Now tagged with a $700 million valuation, Maxar stock is grossly mispriced. If regulators move in and customers lose faith, the company could ultimately go under. If conditions normalize, Maxar would likely revert to a $3 billion valuation, making this stock a true multi-bagger opportunity.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Amazon. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Amazon, Berkshire Hathaway (B shares), Shopify, and Shopify. Shopify and Maxar Technologies are recommendations of Stock Advisor Canada.
Fool contributor Ryan Vanzo has no position in any stocks mentioned.