There are some stocks everyone follows. Megacaps like Amazon and Apple are on most investors' radars, as are high-momentum stocks like Tesla. And let's not forget the short-squeeze stocks that have captured the market's attention recently.
On the other hand, there are some excellent companies with tremendous long-term growth prospects that aren't on the watch lists of many investors. Here are three in particular you might want to check out.
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A small-cap fintech with lots of room to grow
With a market cap of less than $3 billion, Green Dot (GDOT 0.17%) is much smaller than some of its better-known fintech peers, but it has tons of potential. If you aren't familiar, Green Dot's business has two sides: its own banking products and its banking-as-a-service (BaaS) platform. Both have exciting long-term potential.
Green Dot, which has a bank charter, is best known for its prepaid debit card products and GoBank nontraditional bank accounts. Banking is a declining side of its business, but Green Dot isn't just going to let it fade away. The company recently announced an innovative alternative checking account product, called Go2bank, that offers up to $200 in overdraft protection and the ability to access direct deposits two days before they arrive in the account. These qualities should help it stand out from the competition.
The BaaS side has just scratched the surface of its potential. In a nutshell, since Green Dot is a bank, it lets other companies use its infrastructure to offer custom banking products. As one example, Green Dot's technology allows Uber drivers to get paid instantly for rides through a custom, Uber-branded bank account. With the ongoing digital transformation, BaaS could become a much larger part of our financial ecosystem.
An early-stage conglomerate
Boston Omaha Corporation (BOMN 0.86%) is the smallest company on this list by a wide margin, with a market cap of about $800 million. But management has big ambitions.
A holding company, Boston Omaha doesn't actually do anything itself. Instead, it owns subsidiary businesses in billboard advertising, insurance, and rural broadband. It has several minority investments, including a roughly 5% stake in recent IPO Dream Finders Homes. Because it's 2021, Boston Omaha also sponsors a special-purpose acquisition company, or SPAC, called Yellowstone Acquisition.
The business model is simple: Boston Omaha aims to invest in cash-flowing businesses that generate capital to invest in additional businesses, equity stakes, or stocks. Boston Omaha is often compared to an early-stage Berkshire Hathaway (BRK.A 0.39%) (BRK.B 0.27%), which used a similar model (minus the SPAC) to grow into a half-trillion-dollar conglomerate.
The only REIT in Berkshire Hathaway's portfolio
Last but not least, real estate investment trust STORE Capital (STOR +0.00%) is worth a look for long-term investors. The REIT owns about 2,600 properties in the U.S., mostly occupied by single tenants in the retail and service industries. Restaurants, auto repair businesses, furniture stores, and day care centers are some of the major tenant types that you'll find in STORE's portfolio.
The idea is that STORE's tenants are generally businesses that aren't too recession prone, nor are they easily disrupted by e-commerce competition. The company's net-lease structure means that tenants commit to long-term leases and cover the variable costs of property ownership (taxes, insurance, and maintenance).
STORE Capital has grown tremendously since its 2014 IPO, but could just be getting warmed up. Management estimates that more than $3 trillion worth of existing properties could fit STORE's criteria. It could be a growth and dividend powerhouse for decades to come.
Invest for the long term
To be clear, I'm not suggesting investors put these stocks on their radar because I think they'll go up this month or even this year. These are stocks with tremendous long-term growth potential. It takes time to build out a leading banking service platform, to grow a conglomerate, or to pursue a $3 trillion market opportunity. However, if you have years to let these companies grow, they could produce excellent long-term results.
