The stock market may be at something of an impasse as investors decide exactly what Brexit will mean for the U.K., U.S., and the rest of the world, but that hasn't stopped real estate and home-related marketplace giant Zillow Group (NASDAQ:Z) (NASDAQ:ZG) from surging higher by 51% so far in 2016.
Persistently low lending rates have been a boon for the housing industry, coercing consumers to refinance to lower rates and encouraging first time homebuyers, as well as investors, to consider buying real estate. That's all great news for Zillow, which is on track to grow its sales by 28% in 2016.
Yet our Foolish contributors believe considerably better opportunities abound beyond Zillow. With this in mind, we asked three of our contributors to name one stock each that they believe could handily outperform Zillow. Here's what they had to say.
One lustrous growth opportunity
Sean Williams: Zillow's had a pretty good year thus far, but my guess is it will have nothing on midcap silver miner Pan American Silver (NASDAQ:PAAS) over the next three to five years. A utopian scenario has been building for Pan American Silver, and the company looks ready to take advantage.
There are three fundamental and/or psychological reasons why silver prices could be headed notably higher. The first is the global uncertainty created by Brexit. Gold will always be viewed as the traditional uncertainty-based safe-haven investment, but silver tends to follow gold's footsteps pretty closely. If investors feel concerned about global growth, they're liable to turn to precious metals as a store of value.
Secondly, demand for physical silver has been on the rise. Private investor demand is always a driver, but silver is also a highly practical metal. It's a fantastic conductor of electricity, making it the perfect metal for the tech sector to use in integrated circuits. Specifically, silver could see its demand soar within the solar sector.
Finally, we have the low-yield environment. With no catalysts on the horizon to send lending rates higher, the opportunity cost of buying physical metals that don't pay dividends is relatively low. This all translates into one thing: the likelihood of sustained higher silver prices for Pan American Silver.
Beyond just higher metal prices, Pan American should be able to benefit from upcoming production expansions and further cost-cutting. The expansion of its La Colorada Mine by the end of 2017 will add 1,800 tons of production per day, and the expansion at Dolores remains on schedule. By the end of 2017, the pulp agglomeration plant and underground operations should be at full capacity. Assuming the company continues to invest in its most profitable projects, we could easily see a 20% to 30% expansion in production by 2019, in my opinion.
Mindful spending should also help Pan American Silver reduce its all-in sustaining costs by a single-digit percentage each year. The company's consolidated AISC (it also mines gold and other byproducts, which help lower its consolidated AISC) as of Q1 was $13.12 per silver ounce sold, down 8% from the prior-year quarter.
With catalysts a-plenty, Pan American Silver is my pick to leave Zillow Group in the dust.
A "cloudy" forecast with a chance for incredible growth
Shopify's business model is helping other companies sell their goods online. The company provides its customers with a wide range of mission-critical services that help them run their businesses, such as payment processing, sales tracking, inventory management, and more. Its products also allow users to easily sell their products on online retail platforms like eBay, Amazon.com, Facebook, and Pinterest.
And yet, despite its huge breadth of product offerings, its services can be purchased for as little as $9 per month, scaling up from there depending on the customer's needs. That's a terrific value proposition, so perhaps it's no surprise that more than 275,000 businesses around the world have already signed on as customers.
That number might sound big, but it's still just a drop in the bucket compared to the 10 million merchants that the company is currently targeting. Add that growth potential to the company's ability to up-sell its current customer base, and this company is primed for some serious growth.
In 2015 the company nearly doubled its annual revenue, and fast growth is expected in the years ahead. Right now analysts are expecting sales growth of more than 68% this year, which is quite a bit higher than the 28% projected growth at Zillow Group.
That's blistering growth, but I don't think it's out of the realm of possibility. If the company can deliver on its lofty expectations, I could easily see Shopify's stock screaming higher from these levels.
If you're looking for a company that offers up huge growth prospects, you might want to give Shopify a closer look.
Look for this stock to sizzle
Dan Caplinger: When growth stocks become good values, it can give investors an unparalleled opportunity. Chipotle Mexican Grill (NYSE:CMG) has faced far more adversity than Zillow has, having had to deal with foodborne illness scares that have led to a dramatic drop in revenue and customer traffic. As a result, the stock has lost nearly half its value from its all-time highs, and many investors remain concerned that the plunge in comparable-restaurant sales that Chipotle has suffered in the immediate aftermath of the scare could continue for several quarters to come.
However, Chipotle still has plenty of avenues for growth. Efforts to get customers back into its namesake Mexican food chain haven't yet succeeded entirely, but the company's reputation among the fast-casual crowd has the potential to pull them back in the doors. Moreover, Chipotle has a number of potential new store concepts that could boost its overall business. In addition to the ShopHouse Southeast Asian Kitchen concept, reports that Chipotle might open a burger-oriented chain could open up new opportunities for the company.
Zillow has unquestionably benefited from a strong housing market, but the danger of overheating home prices is starting to loom once again, and could threaten Zillow's future. By contrast, Chipotle has already suffered its worst-case scenario, and investors have a unique chance to buy shares at a huge discount to where they traded just a couple years ago.
Brian Feroldi owns shares of Amazon.com, Chipotle Mexican Grill, Facebook, Zillow Group (A shares), and Zillow Group (C shares). Dan Caplinger has no position in any stocks mentioned. Sean Williams has no position in any stocks mentioned.
The Motley Fool owns shares of and recommends Amazon.com, Chipotle Mexican Grill, eBay, Facebook, Shopify, Zillow Group (A shares), and Zillow Group (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.