It’s time to invest in growth stocks. In a low-growth world, these investments are your best chance to compound your capital five-fold. The picks below have already proven that capability, but idiosyncratic factors may cause a repeat performance.
If you’re looking for high-upside investments, here are your best options.
Bet on this turnaround
Don’t laugh, but BlackBerry (TSX: BB)(NYSE: BB) is one of my favourite tech stocks of the decade. The run could begin in the second half of 2020.
You likely remember BlackBerry as a smartphone manufacturer. In 2008, it had a 20% market share. During that period, the stock rose more than 100 times in value.
Those days are long gone. The company didn’t produce a single smartphone last year. Unbeknownst to the market, this stock has executed an incredible turnaround. It ditched the dying hardware business in exchange for hyper-growth software.
Right now, BlackBerry is a rising star in the field of cybersecurity. This should be the biggest growth market of the decade. We add millions of new endpoints ever year. Everything from smart watches to autonomous vehicles. All of these endpoints can be hacked. That’s where BlackBerry comes in.
BlackBerry has the market’s most advance internet of things security suite. Its Cylance division, for example, users artificial intelligence to detect threats before they occur. This is a core component of the company’s QNX platform, which secures self-driving vehicles.
Due to misconceptions about the company, BlackBerry trades at an 80% discount to its cybersecurity peers. Crowdstrike Holdings, for example, trades at 34 times BlackBerry’s valuation multiple.
If the discount narrowed even halfway, BlackBerry stock would be a clear multi-bagger opportunity. With tech stocks leading the recent market rally, BlackBerry’s rise could begin soon than expected.
This stock is bouncing back
Maxar Technologies (TSX: MAXR)(NYSE: MAXR) is another perfectly positioned stock that trades at a bargain discount. Other space stocks like Virgin Galactic Holdings are taking off. This company should be next.
Maxar makes space equipment, including sensors, satellites, rovers, and more. The company specializes in anything that’s considered space-grade. With billions of dollars being poured into the industry, this business is in the right place at the right time.
There’s only one problem: back in 2018, Maxar was the subject of accounting allegations.
“The company has made numerous aggressive accounting choices that inflate its Non-IFRS results,” alleged short-seller firm Spruce Point Capital. “Based on our forensic review, we estimate EBITDA and EPS are overstated by 17% and 79%, respectively.”
The market seemed to agree with the report, sending shares lower by more than 90%. This scandal is almost two years in the past. Maxar stock, however, still trades at an 80% discount to its all-time high.
Spending on space equipment continues to skyrocket. Several space-related stocks have already doubled this year. If Maxar can finally leave its accounting challenges behind, shares could make a resurgence. A return to previous highs would indicate 500% upside, and that’s not including any of the recent market growth.
This looks like an ideal opportunity to buy a growth leader at a discounted price due to outdated concerns.
