Finding home-run stocks can be very hard. However, by holding solid companies over the long term, investors can greatly increase their chances of finding those highly sought-after home-run stocks. A home-run stock can be described many ways. To me, a home-run stock is a company that can generate a 10-fold return over the next decade (or sooner). In this article, I’ll discuss three stocks that have managed to turn $10,000 into more than $400,000!
This stock has made many investors richer in a short time
About once a decade, investors are gifted with an opportunity to invest in a generational company. The stock that has dominated the late 2010s and early 2020s is Shopify (TSX: SHOP)(NYSE:SHOP). Since its IPO, Shopify stock has managed to generate a return of 5,335%. This represents an average annual gain of 86.99%. To put that into perspective, a $10,000 investment made on its IPO would be worth $543,462 today. Over the same period, the TSX has returned a total of 32.81%.
Investors may be fearful that Shopify’s greatest days are behind it. However, I would argue that its best days of growth still lie ahead. The company is continuing to expand its product and service offerings, which has allowed Shopify to secure many new customers, one of which being Netflix. Shopify also managed to surpass Amazon for the first time in terms of customer traffic. These are very promising signs that suggest that Shopify could still produce massive returns from here.
Another tech stock has been incredible over the past decade and a half
Constellation Software (TSX: CSU) is another company that has managed to make investors much richer in recent years. Since October 2007, Constellation Software has produced a return of 10,013%. That means that a $10,000 investment made 14 years ago would have become $1,011,687! This also represents an incredible return of 39% on an annual basis over that period. Since October 2007, the TSX has generated an average annual return of 2.59%.
Constellation Software’s business isn’t as exciting as Shopify’s. The company is an acquirer of vertical market software businesses. Its model is simple: find good companies and help them become great. This strategy has worked very well in the past, as Constellation focused on small- and medium-sized businesses. It has decided that now’s the time to start targeting larger businesses. If Constellation can find success in this new addition to its business strategy, it could be the catalyst the company needs to keep generating market-beating returns.
You can find success outside of the tech sector
Investors may have noted that both companies mentioned earlier have been tech stocks. However, it’s possible to find companies that are capable of producing life-changing returns in other sectors as well. Brookfield Asset Management (TSX:BAM.A)(NYSE: BAM) is an alternative asset management company, which operates and invests in assets within the real estate, infrastructure, and renewable utility industries. Since August 1995, Brookfield stock has generated a 4,420% return for an average of 15.66% on an annual basis. That would have turned $10,000 into more than $450,000.
One catalyst that could help Brookfield continue to post outstanding returns is its partnership with Tesla. The companies plan to develop the largest sustainable neighbourhood in North America. With solid management backing Brookfield, and a very innovative project ahead, this stock has everything it needs to continue being successful in the future.
