3 Stocks That Could Double Your Money

I'm a firm believer that the majority of investors' money should be in relatively safe types of stock investments, such as rock-solid blue-chip companies or low-cost index funds. Having said that, it's perfectly fine to speculate with a small portion of your portfolio.

Here are three excellent candidates for investors who want to put some of their money to work in stocks that could double (or more) within the next few years. All three are down considerably from their IPO prices and have the potential to soar if things go well.

Image source: Getty Images.

Data source: TD Ameritrade. Prices as of Sept. 26, 2017.

Finally starting to grow again

Peer-to-peer lending platform Lending Club has lost roughly three-fourths of its market value since its first trading day in 2014, thanks to several quarters of stagnant growth and a scandal that worried investors.

However, the company's most recent earnings report shows that things may finally be starting to pick up, with 10% growth in loan originations, higher profit margins, and impressive revenue growth. In addition, the company said it could be on the verge of profitability by the start of 2018, and it expects double-digit sequential revenue growth in the third quarter of this year.

There's no doubt that the potential is there. Lending Club's current loan portfolio represents roughly 0.4% of the U.S. consumer lending market, and if the company could even manage to boost its market share to one or two percent, it could mean a big payday for the company's investors.

New products look promising

Wearable-technology company Fitbit has performed even worse than Lending Club, down 78% in its roughly two-year history as a public company, thanks to slowing growth, intense competition, and wider-than-expected losses.

However, there are reasons for investors to be positive and to see value in Fitbit stock. For starters, the company has $676 million in cash, equivalents, and securities on its balance sheet -- roughly half of its entire market cap. So not only is the company financially stable, but the business is also being valued at just over $3 per share by itself.

More importantly, Fitbit is finally about to roll out its long-anticipated smartwatch, the Ionic, which will be a direct competitor with the Apple Watch, and will have its own operating system and app platform. If those products and initiatives, especially the Ionic is a success, the stock could be a bargain at the current price.

A rapidly growing e-commerce play

As a final suggestion, online marketplace Etsy could be a big home run for investors if things continue to go well. Although Etsy is down significantly from its IPO price like the other two companies discussed here, it has already started a big rebound, more than doubling since the beginning of 2016.

The simple explanation is that Etsy's progress has been more impressive. Whereas LendingClub's growth has just resumed and Fitbit is relying on a yet-to-be-released product to save the company, Etsy's revenue has grown 19% over the past year, and there are 11% more active sellers on the site than a year ago -- and with 23% fewer employees. As a result, Etsy generated a profit for the quarter, whereas it was operating at a loss at the same time last year.

Despite the growth, Etsy feels that there could be a lot more room to go. The company estimates that it has only a 2% share of its top product categories, so it's not a big stretch to imagine the company doubling or tripling its revenue over the next few years.

A word of caution

To be clear, I'm saying that these stocks could double your money over the next few years, not that they will. No stock that is capable of doubling is without significant risk, and these are certainly no exception. My point is that although I believe these stocks have a favorable risk/reward ratio, be prepared to ride out some ups and downs along the way.