Tesla shares have climbed more than 1,200% since the company's 2010 initial public offering and more than 900% over the last five years thanks to investor confidence in its ability to revolutionize the automotive and battery industries.
To give readers some leads on stocks that have the potential to match, and perhaps even exceed, Tesla's incredible performance, we assembled a team of three Motley Fool investors and asked each member to spotlight a company that could deliver tremendous returns going forward. Read on to learn why they think SunPower Corporation (SPWR 7.63%), TrueCar (TRUE -0.40%), and BofI Holding, Inc. (AX 4.48%) have serious breakout potential.
Let this stock shine for you
Dan Caplinger (SunPower): The solar industry has cooled off considerably in recent years. Falling oil prices have had a negative impact on the industry, because alternatives to solar power are less costly when prices of fossil fuels used to generate electricity are low. Nevertheless, the long-term future for solar power looks bright, especially as the need for renewable energy becomes more extreme. SunPower has built its business as a leader in the solar industry, and it has some of the best prospects to shine in the decades ahead.
SunPower's main challenge recently has been figuring out how to make its groundbreaking technology more affordable. The company is the undisputed leader among major industry players for producing the most efficient panels, but their efficiency advantages aren't substantial enough to outweigh the higher cost compared to lower-efficiency products that its rivals produce. However, SunPower hopes to use its Oasis platform to make it far easier for its large-scale utility customers to improve their solar plants as technology improves.
For now, SunPower stock is stuck in a slump, trading near its lowest levels in more than five years. Given the current negative environment for solar, even a glimpse of a turnaround could reverse sentiment and send SunPower shares higher. When you add to that the potential for increased awareness of the need for renewable solutions, investors could well see the same future returns for SunPower that Tesla shareholders have already enjoyed.
No haggling over its potential
Rich Duprey (TrueCar): If there was one thing GM's old Saturn car company had going for it, it was its no-haggle pricing policy. You simply paid the stick price on the windshield, and you couldn't go across town to another dealer and try to get something better. Unfortunately, the policy was applied to subpar cars such as the Outlook, Sky, and Vue. While car buyers don't like haggling, they will do it if it means they can save money on a good-quality car.
TrueCar takes that policy and does it one better so that you don't even have to change out of your pajamas and leave your house to do it. Working with a network of over 11,000 new-car dealers, car buyers select the vehicle they want from TrueCar's website and discover the average price others paid for that same car. They can then be connected to local dealers who will provide their best price on the vehicle that the buyer can accept or continue shopping.
TrueCar gets paid when a deal is accepted, and in the first quarter of 2017, that amounted to $324 per vehicle on average. Although that's down slightly from last year's $328 monetization average, it facilitated 24% more transactions than the year-ago period and saw a 10% bounce in the number of unique visitors to its site.
The car-buying portal is not yet profitable, but losses narrowed in the period from $0.14 per share to $0.08 and revenues rose 22% year over year. It has several new initiatives it is launching to make its service invaluable to car buyers, such as an ad-free platform for carmakers to showcase all their vehicles to buyers as well as reviews of cars from verified owners.
The stock has more than doubled over the past year, but with analysts forecasting it to grow earnings 53% annually for the next five years, it looks as though the car-buying portal won't be dickering over its long-term potential.
This company could change banking
Keith Noonan (Bank of Internet Holding): The trend of retail migrating to the internet is already well documented, but there hasn't been as much coverage of industries like banking moving away from brick and mortar and toward the web. Sure, banking stalwarts have successfully rolled out online banking apps, but Bank of Internet's online-only model has revolutionary potential that could supercharge your portfolio.
In the last quarter, the company's efficiency ratio, or expenses as a percentage of revenue, came in at just 31.7%. That's significantly below its long-term target of an efficiency ratio between 35% and 36% and dramatically below the 50% ratio that's viewed as the optimal standard for the traditional banking industry. Its low operating costs also allow it to offer its customers lower lending rates -- an advantage that could facilitate explosive growth and create a long-term moat.
BofI is already profitable and has grown net income roughly 14% over the last nine months compared to the prior-year period. That might not sound like the the sort of high-flying growth that points to a stock with explosive potential, but the fact that its business isn't built around brick-and-mortar locations means that it has the potential to expand quickly and inexpensively.
With a market cap of roughly $1.5 billion, the company still has plenty of room to run, and the stock looks inexpensive with a forward P/E or of roughly 10. The downside is that BofI Holding is currently being investigated for money laundering but, for investors looking for massive returns, the risk could be worth it.