Baker Hughes, a GE Company (NYSE:BHGE) has been an abysmal investment since industrial giant GE (NYSE:GE) combined its oil and gas business with the legacy oil-field service operations of Baker Hughes in July 2017, as shares have fallen more than 40%. For comparison's sake, the S&P 500 has gained about 5% over that time frame. Because of that, the company's investors have a long way to go to get back to even, let alone see their investment enrich them.

However, for investors who are buying at today's beaten-down price, Baker Hughes offers compelling upside potential, given the view that the oil market should improve in the coming years. Still, it's hard to see this stock turning a small initial investment into a million-dollar payday, given what it would take to achieve that lofty aim.

One hundred dollar bills spread out on a flat surface.

Image source: Getty Images.

The math to $1 million

It's possible for a small investment to grow into $1 million given enough time and rate of return. For example, a $1,000 investment can become $1 million in 45 years if it generates an annualized return of 16.6%. However, it would need to significantly outperform the market over many years to achieve that lofty goal, since the S&P 500 has typically produced a 9.8% total annualized return. At that rate, it would take 75 years to turn $1,000 into $1 million, assuming the market kept up its pace going forward.

Meanwhile, a larger upfront investment that generates a higher total annual return could cut down that time frame considerably. For example, $10,000 could turn into $1 million in about 27 years if an investment doubled the market's total return over that time frame. However, very few investments can sustain that type of growth rate over the long haul, while few investors would likely be willing to put up that kind of cash in what would probably be a higher risk/higher reward opportunity.

Baker Hughes: A look at the upside potential

Baker Hughes' stock has been under significant pressure since GE took control last year. For starters, the oil-field service industry hasn't rebounded as quickly as many expected. A combination of overcapacity issues, pipeline problems, and a recent slump in oil prices has put downward pressure on oil-field activity levels and service prices, which has hurt Baker Hughes' financial results. Those issues could persist for the next several quarters.

However, better days appear to be ahead for the oil patch. Baker Hughes anticipates that global spending by oil and gas companies should expand at a 9% compound annual growth rate through 2021 as oil companies ramp their activity levels to make sure there's enough oil to meet market needs. That trend could continue for more than a decade, considering that the industry needs to keep investing in new oil supplies to offset the depletion of legacy fields, as well as meet steadily growing demand, which should expand until at least 2040, according to the International Energy Agency's latest forecast. This outlook suggests that Baker Hughes should be able to grow revenue and earnings at a healthy pace for at least the next decade or two. Add that upside to the company's beaten-down stock price and investors could make a lot of money in this oil-field service company's stock in the coming years.

The math doesn't add up

While Baker Hughes has lots of upside potential, it's hard to imagine the company generating the market-beating returns required over the next several decades to turn a small investment in its stock into $1 million. For starters, Baker Hughes is already one of the three largest oil-field service companies in the industry, which makes it harder for the company to grow at a high rate for a long period of time since it already controls a large share of the market. Further, while oil demand is expected to grow for more than a decade, it could plateau and start declining after 2040 -- especially given the rapid shift away from fossil fuels and toward renewables -- which clouds the longer-term outlook for oil-field services. Because of these factors, it doesn't look like Baker Hughes has the potential to be a millionaire-maker stock.

Matthew DiLallo owns shares of General Electric. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.