Individuals who got in on Google's -- now Alphabet's (NASDAQ:GOOGL) (NASDAQ:GOOG) -- IPO are sitting on a 2,400% gain, so it's no wonder that finding "the next Google" is a major goal for many investors. While there's no way to know for sure what companies will deliver such outstanding gains, there are some companies with the potential to achieve similar results. Here's why our contributors believe BofI Holding (NYSE:AX), Roku (NASDAQ:ROKU), and Intuitive Surgical (NASDAQ:ISRG) could deliver Google-like returns for those who get in now.
The early Google of the banking industry
Matt Frankel (BofI Holding): Over the past few years, online-only bank BofI Holding (BofI stands for "Bank of Internet") has grown impressively. In the past five years, the bank's assets have increased by 256%, its net interest income has grown by 264%, and EPS have improved by 213%, just to name some of the most impressive metrics. And while I don't think the bank will quite get to Alphabet's size anytime soon, the online-only banking business is about as mature as internet search was in 2004.
There are several good reasons to believe in the bank's long-term potential. First of all, despite its growth, BofI is still a small bank. With $8.5 billion in total assets at the end of fiscal year 2017, BofI isn't even in the top 100 nationwide.
Second, the bank has tremendous cost advantages over its brick-and-mortar peers. Its overall non-interest expense is 1.44% of its assets annually, less than half of its peer group average. BofI's returns on equity and assets are both more than twice the industry benchmarks.
Furthermore, the bank continues to grow and is adding new revenue streams that could take its business to the next level. For starters, the bank recently rolled out auto lending and unsecured personal lending, to complement its core business of mortgage loans. And for the 2018 tax season, BofI will handle all of H&R Block's refund anticipation loans, which not only will boost revenue but also creates lots of opportunities to cross-sell the bank's deposit and other products.
To sum up, BofI has cost advantages over its competitors and has barely tapped into its growth potential, the combination of which could translate into big profits down the road.
Roku is to Google as 2017 is to 2004
Does that sound like any other recent IPOs you know? It does to me. It sounds a lot like Roku.
Like Google in 2004, Roku is a recent IPO, having come public just two months ago. Like Google, it's market value is questionable. Since its IPO at $14 per share on Sept. 28 , Roku has doubled in price, lost 30% of that double, and then gained it all back again. At last report, Roku's stock was spotted shooting past $46 in value -- more than triple its IPO price. Yet with no profits to its name, and just $436 million in trailing revenues, the stock's $4.6 billion market capitalization exceeds 10 times sales and seems to fit the definition of "overvalued" to a "T."
Yet just like Google in 2004, Roku dominates its market. According to market researcher Parks Associates , Roku boasts a 37% market share in "over the top" streaming devices. Amazon's Fire TV, Apple TV -- even Google's own Chromecast -- don't even come close.
Will Roku maintain its lead in the years to come? Can it translate wild consumer popularity into cold, hard cash profits? That remains to be seen. But if Google's performance offers any example, I'd say Roku's chances look good.
Similar numbers and more
Keith Speights (Intuitive Surgical): Alphabet is such a monster now that it's easy to forget where it was back in 2004. At that time, Google's market cap hovered around $50 billion. The company's trailing-12-month revenue stood just under $3 billion. But Google clearly dominated its market as the leading search engine. I think robotic surgical systems maker Intuitive Surgical looks a lot like the Google of 13 years ago.
Intuitive Surgical's market cap currently stands at around $45 billion, not too far below where Google was in 2004. The company made nearly $2.9 billion over the past 12 months. And Intuitive Surgical is the hands-down leader in the robotic surgical systems market.
I think the similarities between the two companies go beyond just numbers, though. Like Google in 2004, Intuitive Surgical should be in store for tremendous growth ahead. There's an unstoppable trend that I believe will drive demand for the company's surgical robots much higher in the years to come: aging populations. As individuals in the U.S. and across the world age, they're more likely to need the types of surgeries for which da Vinci is most used.
In 2004, Google didn't face the competitive threat that it did just a few years later when Microsoft launched Bing. Intuitive Surgical is likewise something of a monopoly now, but faces stiffer competition over the next few years. Still, I think the stock is poised to follow a similar path as Google did -- an upward one.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights owns shares of Alphabet (A shares). Matthew Frankel has no position in any of the stocks mentioned. Rich Smith owns shares of Alphabet (C shares). The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), BofI Holding, and Intuitive Surgical. The Motley Fool has a disclosure policy.