As a growth investor, one of my goals is to find the stocks that have the potential for 10 times returns or greater. In my opinion, there are so few stocks that have this sort of potential. Fortunately, there are two companies that I believe should hit that mark, assuming its leadership team manages to continue executing exceptionally. Which two stocks do I think have the potential to set you up for life?
Taking advantage of the digital boom
The first company is Docebo (TSX:DCBO). Yes, its stock has skyrocketed since the start of the year. As of this writing, Docebo stock has gained about 194% since January 1. However, I strongly believe that the company has incredible upside from here. Keep in mind, Docebo currently has a market cap of $1.4 billion. A 10 times return from here would only place it at a valuation of $14 billion. Considering what the company does, that seems like peanuts compared to what it could be in the future.
Docebo provides enterprises with an online learning platform. The company’s product offerings make use of Docebo’s proprietary artificial intelligence software, which streamlines the training process. Through its platform, training managers are able to assign, monitor, and evaluate training programs with ease.
One of the most recent headlines to emerge from the company was its partnership with Amazon. In early September, Docebo announced that Amazon Web Services will use its platform to scale access to AWS Training and Certification product offerings globally.
In my first article covering Docebo, I’d highlighted the fact that the company had done an excellent job in attracting large customers to its platform. I also believed that it would only be a matter of time before behemoths turned to the company. This news is validation of that belief.
The telehealth industry is still heating up
Before you read on, it is important to understand that the industry may experience a period of lesser gains. This is to be expected after nearly every company in the industry saw its value explode during the pandemic. However, I believe that the future is very bright for these companies. One company in particular, WELL Health Technologies (TSX:WELL), has my attention more than others.
WELL Health Technologies is one of three large Canadian telehealth companies. Of the pureplay telehealth companies, it can be argued that the company is the industry leader. WELL Health is led by its founder-CEO Hamed Shahbazi. Hamed is an experienced entrepreneur who founded and led TIO Networks. In July 2017, TIO Networks was acquired by PayPal for $304 million. As of this writing, Hamed is the largest shareholder in WELL Health. He currently holds an 8.5% stake in the company.
WELL Health primarily grows through acquisitions. While some growth investors would prefer seeing organic growth, this is a strategy that has proven successful in Canada. Companies such as Constellation Software and Enghouse have grown a significant amount through acquisitions.
WELL Health currently has a market cap just over $1 billion. A 10 times return in the company would place it at $10 billion. Considering similar companies like Teladoc are valued at $23 billion and still growing, WELL Health may very well follow that growth story.
There are few companies on the market that have the potential to set investors up for life. However, I believe companies like Docebo and WELL Health fit this description. Both are leaders in their respective industries and have very long growth runways ahead.