2 Bets That Might Pay Off by 2025

Making modest returns in the short term might seem more attractive than making hefty returns way off in the future. But the balance between the two is key to financial independence.

| More on:
Double exposure of a businessman and stairs - Business Success Concept

Image source: Getty Images

Not all stocks are held long term for the same reason. It’s a good idea to keep decent Dividend Aristocrats long term, because the rise in payouts might help you stay ahead of inflation (if you have a decent-sized dividend income). Many steady and reliable growth stocks are amazing long-term holdings, since the longer you keep them, the more sizeable your nest egg is likely to become.

There is another type of stock that you might consider keeping in your portfolio for years — even decades. And these are stocks that might pay off in the right conditions. Naturally, because of their “unpredictable” nature, you shouldn’t divert too much of your capital into these stocks, but even a small investment can help you grow your capital by a decent margin once these wildcard bets pay off.

A marijuana stock

Cannabis stocks have been in a rut for so long now that many investors have disregarded this category as a lost cause. Some vitality was promised alongside the U.S. marijuana legalization, but that’s also on the ice for now. Most cannabis stocks in Canada are simply down, but one, HEXO (TSX:HEXO)(NASDAQ:HEXO), has completely cratered.

The stock is currently trading at a price 95% down from its 2019 peak. This kind of fall usually spells major financial trouble, like a company heading for bankruptcy. HEXO, however, got down to that level because of its dangerous approach to debt. The company is using debt to fund its aggressive acquisition strategy and has already acquired three major businesses, including Redecan, which cost the company $400 million.

Even the company’s auditors have raised significant doubts regarding the company’s survival, making it a dangerous purchase, to say the least. But if you buy at the current price, and the position the company has claimed in the recreational market (thanks to the acquisitions) starts paying off, the return could be quite magnificent. If the stock can reach its glory-days valuation, buying now would mean multiplying your capital by 29.

A tech stock

CloudMD Software & Services (TSXV:DOC) is one of the few players in the still-nascent “digital healthcare delivery” marketplace. Even though telehealth has been around for a very long time, it has mostly been a niche market. But the pandemic helped many people and businesses realize that telehealth or virtual healthcare is an option worth considering.

And that’s not all that CloudMD does. The company is building a “combined healthcare ecosystem,” which includes health coaching, primary care, and healthcare navigation. The network already includes 11,500 mental health professionals, 22,000 family doctors, and about 55,000 specialists.  

The stock (at least till now) is not nearly as promising as the company’s own growth potential. It did spike in its early days (which was well into the pandemic), and the stock grew about 346% in a matter of months. But it has been downward relatively smooth sailing since then. But as the digital healthcare delivery solutions gain traction, CloudMD might start shining much brighter, and the stock may take off.

Foolish takeaway

If you can keep these two potentially powerful growth stocks in your portfolio till 2025, they might be able to give a decent boost to your overall capital appreciation. Make sure to close the position at the right time. These stocks are more reliable for their occasional spikes than they might be for long-term growth potential.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends HEXO Corp.

More on Investing

Pixelated acronym REIT made from cubes, mosaic pattern
Dividend Stocks

Passive Income: 2 REITs to Play Lower Rates

Killam Apartment REIT (TSX:KMP.UN) specializes in the East Coast market, where borrowers aren't as stressed as they are in Ontario…

Read more »

Dice engraved with the words buy and sell
Bank Stocks

Is BNS a Buy, Sell, or Hold?

Bank of Nova Scotia (TSX:BNS) stock looks like an intriguing high-yield bank stock to pursue this month.

Read more »

Increasing yield
Dividend Stocks

3 Cheap Canadian Stocks That Offer Over 7% Dividend Yields

Considering their high-yielding dividends and attractive valuations, these three stocks can be excellent holdings right now.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Tuesday, April 16

Canada’s latest consumer inflation report and the ongoing geopolitical tensions in the West Asia region could keep TSX stocks volatile…

Read more »

data analyze research
Tech Stocks

1 Stock I’m Buying Hand Over Fist in April Despite the Market’s Pessimism

Are you looking for a stock to buy this month despite the pessimism in the market?

Read more »

value for money
Dividend Stocks

Canadian Tire Is Paying $7 per Share in Dividends. Time to Buy the Stock?

With Canadian Tire trading ultra-cheap and offering a safe dividend yield of more than 5.5%, is it one of the…

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

Constellation Software Stock: Buy, Sell, or Hold?

Constellation Software stock has rallied 186% in the last five years and is now valued at an expensive 100 times…

Read more »

Payday ringed on a calendar
Dividend Stocks

Secure Your Future: Top 2 Monthly Dividend Stocks to Buy in 2024

Here are two top Canadian monthly dividend stocks you can buy today to minimize risks to your portfolio.

Read more »