In stocks, you cannot predict with time certainty that your returns will double. But you can increase your possibility of achieving a particular return over time without defining the exact time. Because sometimes, growth may get delayed, and sometimes it may come early. In either case, book profits when the stock reaches your desired outcome. Here, we will discuss how you can make your best effort to build a $1 million portfolio.
What do you need to build a $1 million portfolio?
The TSX Composite Index has surged at an average annual rate of 6.3% in the 15 years since the 2008 crash. At this rate, $10,000 invested in the 2008 dip would be $27,200 today. An investment portfolio with a 10% average annual return can grow a $12,000 annual investment to $1 million in 24 years. You can accelerate this process by investing 20-25% of your portfolio in high-growth stocks that could give you a 20% average annual return.
Here are two growth stocks that could give you supernormal returns by tapping the future growth trends of green hydrogen and artificial intelligence (AI) at the edge.
Ballard Power Systems stock
Ballard Power Systems (TSX:BLDP) manufactures hydrogen fuel cells for heavy vehicles like buses, trucks, rail and marine, and select stationary power applications. However, it is facing cost challenges that are slowing its commercialization. Plus, a recessionary environment has created a risk of a budget cut or delays in such futuristic projects that are low-yielding in the short term.
Ballard Power Systems has already started work on initial orders as governments worldwide invest in green hydrogen to meet the most pressing issue of energy security. Its fourth-quarter order backlog and revenue stood at US$133.4 million and US$20.5 million, respectively.
Now is the right time to buy the stock as macroeconomic weakness has pulled the stock down to its 2019 levels. The stock jumped 600% between October 2019 and January 2021, when all green stocks peaked on Joe Biden’s election as US President.
The alarming rate of climate change is harming the environment. Governments, at some point, will have to accelerate their green efforts and introduce some stringent policies. A policy-level change could boost Ballard Power Systems’ stock. That is the time you can book profits. A $10,000 investment today could become $100,000 if the company realizes its goals to replace gasoline with green hydrogen in heavy vehicles worldwide.
BlackBerry stock
While Ballard Power Systems will take longer to achieve exponential growth, BlackBerry (TSX:BB) is closer as its QNX software and IVY vehicle intelligence platform have secured design wins. The only thing stopping its growth is the overall macroeconomic weakness. First, the semiconductor supply issues delayed 2022 electric vehicle (EV) sales. Now, high inflation and interest rates are delaying car purchases. These attributes are not in the company’s control. But what is in its control is to continue innovating and securing design wins. Thus, BlackBerry has a $640 million royalty revenue backlog.
While EV is a near-term growth trend, Blackberry is well-placed to ride the secular growth trend of AI at the edge. The 5G rollout will connect edge devices to high-speed internet, allowing them to perform mission-critical tasks. The criticality of the application will drive the need for endpoint security, in which Blackberry has technological expertise. It currently caters to the cybersecurity needs of the governments of 17 of the G20 countries. Government contracts act as a promotional tool for such tech as they have a stringent selection process.
BlackBerry stock’s average trading price is above $8, but the demand and supply headwinds have pulled it below $6. Now is a good time to buy the stock at a 25% discount. You can benefit from the EV adoption and Internet of Things proliferation, too.
Investing tip
Diversify your portfolio, and invest regularly in the top stocks of the month. It could help you invest in stocks that are riding the current trends.
