Everyone has a different definition of a “millionaire-maker stock.” My personal favoirite is a stock that can turn the average annual wage into a million dollars relatively quickly. In Canada, this means a stock that delivers a 20-fold return and converts $50,000 into $1 million within a decade.
Admittedly, these stocks are rare. However, we do have recent examples. Shopify, for instance, delivered a 20-fold return in less than five years from its initial public offering. It’s been one of the most successful growth stocks of our generation. But it won’t be the last.
Here are my top picks for potential millionaire-maker stocks you should keep an eye on.
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Hypergrowth stock 1
WELL Health Technologies (TSX: WELL) is already a millionaire-maker stock. You just have to go back in time to achieve those returns. WELL Health stock has delivered 6,320% since it listed in 2016. Much of its value was created in the last year alone, as people turned to telehealth services amidst the pandemic.
Now, WELL Health is worth $1 billion. That’s incredibly small compared to other health tech companies. Bear in mind that the global healthcare technology market is expected to be worth $800 billion by 2026.
The WELL Health team is making tangible progress in capturing the most important piece of that market: the United States. Last year, it acquired CRH medical, an American health tech startup, giving the company an opportunity to expand across the U.S. in 2021 and beyond. When this value is unlocked, WELL Health could certainly be a millionaire-maker.
Hypergrowth stock 2
Topicus.com (TSXV: TOI) is another potential millionaire-maker. The company was recently spun off from Constellation Software, Canada’s most underrated software firm.
Just like Constellation, Topicus seeks growth via acquisitions. It acquires and integrates niche software companies to expand its cash flow over time. The difference is that it acquires companies based in Europe, where the valuations are much more reasonable.
The stock itself is relatively well-priced. At the time of writing, it trades at a price-to-free cash flow ratio of 16. This implies a 6.25% free cash flow yield, which is much better than most tech companies. The company’s market value is $3 billion, whereas Europe’s untapped software sector is worth $161 billion. Topicus needs to consolidate less than a third of this market to deliver a 20-fold return.
Of course, Europe’s software market should grow at a steady pace and valuations may improve over time too, so Topicus may need to capture far less market share to achieve $60 billion in enterprise value over time.
This could be a millionaire-maker within the decade.
Hypergrowth stock 3
Canada Goose (TSX: GOOS)(NYSE: GOOS) is my final pick for millionaire-maker. The company is worth $5.4 billion. It has three catalysts for growth in the future. For one, it’s expanding its retail presence across China, which is a critical market for luxury retail. The brand is already popular there. Second, it’s focusing on e-commerce. Finally, the company is expanding its product line beyond heavy winter coats.
If these three catalysts ignite, Canada Goose could potentially be worth $100 billion over time, which is in line with other major luxury retailers with global footprints.
