The wait is nearly over for more than 100 million Americans. Following five months of negotiations, lawmakers on Capitol Hill reached an agreement on another round of fiscal stimulus.
The $892 billion coronavirus disease 2019 (COVID-19) relief package devotes $284 billion for the Paycheck Protection Program, adds $300 extra in weekly federal unemployment benefits through mid-March, and provides capital for the distribution of COVID-19 vaccines. Best of all, it provides a direct payment of up to $600 to qualified taxpayers. These payouts could begin hitting bank accounts as soon as next week, assuming Trump doesn't veto the bill.
For some working Americans, another stimulus check will help them make ends meet. For other recipients who don't have immediate cash concerns, a $600 stimulus check might be put to best use in the stock market. After all, the broader market has a habit of doubling about once a decade on average.
If you fall into the latter group and are seeking investment opportunities with market-topping potential, the following three top stocks just might triple your stimulus check money in the years to come.
The first "purrfect" opportunity is companion animal health insurance company Trupanion (TRUP 2.54%).
The U.S. pet industry is a seemingly unstoppable force, regardless of how well or poorly the U.S. economy is performing. According to data from the American Pet Products Association, year-over-year spending on companion pets hasn't declined in at least a quarter of a century. Meanwhile, since 1988, the percentage of U.S. households owning a pet has jumped from 56% to 67%. Today, nearly 85 million U.S. households own a pet. Each of these households is an opportunity for Trupanion.
Although it's the leading provider of health benefits for companion animals in North America, it's only penetrated about 1% of the addressable U.S. market and close to 2% of the Canadian market. That might sound disappointing, but it actually speaks to the company's incredible long-term opportunity. Trupanion believes its addressable market is worth nearly $33 billion if only a quarter of eligible pet owners in the U.S. buy insurance. A quarter might sound like a lot considering that only 1% of Americans have pet insurance at the moment, but companion animal insurance rates in the U.K. and Sweden are 25% and 40%, respectively. These are achievable numbers over time.
What's more, Trupanion has developed priceless relationships with veterinarians over the past two decades. It is currently the only health insurance brand in the U.S. with software that enables direct payment to veterinarians at the time of checkout. When coupled with a monthly customer retention rate of 98.7%, it's easy to see why Trupanion's growth arrow keeps pointing up.
Sustainable double-digit growth could easily allow Trupanion to triple your stimulus money.
Another top stock that can turn your $600 stimulus check into $1,800 or more is modular furniture manufacturer and retailer Lovesac (LOVE 0.71%). That's right: Out of the dozens of high-growth companies I could choose from, I believe a furniture company is one of the best bets to triple in value.
Lovesac stands out for its eco-friendly manufacturing process. The yarn used in the company's sactionals comes from 100% recycled plastic water bottles. Millennial and Gen X consumers looking to reduce their mark on the environment and investors who favor ESG investments are going to appreciate Lovesac.
Consumers are also clearly favoring Lovesac's versatility. The company's sactionals can be rearranged in countless ways to fit the needs of a customer's livable space. Further, the fabric covers are washable and easily interchangeable. At the moment, Lovesac has over 250 custom covers that buyers can order. It's worth pointing out that over a third of Lovesac's customers are repeat buyers.
The company has also done an excellent job of setting itself apart from the competition before and during the pandemic. Prior to COVID-19, Lovesac stood out for its focus on older millennials and its low overhead expenses. In the post-pandemic environment, Lovesac has shifted almost entirely to an online model, which has further lowered costs and improved margins.
In my view, Lovesac has the potential to double its sales by 2023. It looks very close to turning the corner to recurring profitability. It's a disruptive retail company in an otherwise stodgy industry.
Green Thumb Industries
Why Green Thumb? First, this company operates in the highly lucrative U.S. cannabis market. Though the global weed market should grow at a healthy clip throughout the decade, the U.S. is the unquestioned biggest market for cannabis consumption in the world. With 36 states having legalized medical marijuana, 15 of which also allow adult-use consumption or retail sale, Green Thumb has plenty of opportunity to grow.
Green Thumb's management team deserves credit for being picky about the states it's entered. It currently has 50 operational dispensaries, but holds licenses to open as many as 96 in a dozen states. It's been focusing its attention on Illinois, Nevada, and New Jersey, the last of which just voted to legalize recreational weed in the November election. By mid-decade, all three states should be generating north of $1 billion in annual cannabis revenue, with tourist-heavy Nevada leading the country in cannabis spending per capita.
However, Green Thumb's secret weapon is its product mix. Whereas most pot stocks focus on selling dried flower, approximately two-thirds of Green Thumb's sales stem from derivatives like edibles, vapes, and infused beverages. Derivatives are higher-priced products with significantly better margins than dried cannabis flower and will be key to Green Thumb's push to recurring profitability in 2021.
Look for Green Thumb Industries to hit $1 billion in annual sales in 2022 and for the company to potentially triple investors' money within the next five years.