Many investors dream of winning big on the stock market. While it may sound unlikely, it’s actually very possible to find companies that can turn a $20,000 into $100,000. In order for that to happen, your position(s) would have to grow five-fold, or return 500%. One way you can help give yourself every chance of achieving great returns like that is by focusing on smaller companies. The law of large numbers suggests that those companies will have a more likely chance of producing market-beating returns.
This company benefits from a close working relationship with an industry legend
Topicus.com (TSXV:TOI) is in a position that many companies would love the opportunity to be in. Although it operates as its own entity, the company receives a lot of guidance from Constellation Software. For those that don’t know the story behind these two companies, Topicus was once a subsidiary of the Canadian stock market legend. In February, Topicus was spun off into its own company and it has performed incredibly well since.
Topicus benefits from having six Constellation Software executives sit on its board of directors. This provides Topicus with the opportunity to learn from a very successful company in its industry. If Topicus can take advantage of that incredible opportunity, it could avoid many of the same mistakes that may have hindered Constellation’s growth early on. Topicus is still a relatively small company; it’s valued at $5.5 billion. A 500% return from here would give it a $27.5 billion valuation, which is still smaller than the size of Constellation Software today.
The rise of the e-commerce industry will help push this stock forward
As long as the e-commerce industry continues to grow, investors can expect many companies to continue entering the industry with hopes of providing life-changing innovations. Although it isn’t the first company to do it, Goodfood Market (TSX:FOOD) has done an excellent job of growing its online grocery and meal kit company over the past few years. The company currently estimates that it holds a 40-45% market share of the Canadian prepared meal kit industry.
In 2017, Goodfood reported $20 million in total revenue. Over the past 12 months, the company reported more than $380 million in revenue. That is a 19 times increase in revenue over the past four years! Investors have noted the company’s rapid growth and have rewarded it accordingly. Goodfood stock gained nearly 300% last year. Today, Goodfood Market is valued at a market cap of $681 million. A five-fold return from here is possible and would still make it smaller than the size of Topicus today.
Telehealth remains a promising area of growth
If the COVID-19 pandemic has taught us anything, it’s that any industry can benefit from innovation. The healthcare industry saw a massive shift, as Canadians sought out ways of seeking health care without putting themselves at risk of getting sick. This is where telehealth companies come in. By providing a way for patients to interact with primary healthcare providers from anywhere, companies like WELL Health Technologies (TSX:WELL) could see massive growth.
WELL Health is led by CEO Hamed Shahbazi. Prior to joining WELL Health, Shahbazi founded TIO Networks, where he learned the art of successfully executing mergers and acquisitions. Now, at WELL Health, Shahbazi has continued to follow an aggressive M&A strategy. Over the past year, the company has used acquisitions as its primary method of expansion into the United States. At a market cap of $1.55 billion, WELL Health’s growth runway looks very appealing.
