There's no question that the road to long-term wealth generation is paved with investments in quality stocks that were held for years, if not decades. That said, there's a rare breed of companies that have the potential to increase tenfold in value, becoming a "10-bagger" in the process. These elusive stocks are difficult -- but not impossible -- to find, if you know where to look.
On this clip from Motley Fool Live recorded on Feb. 5, "The Wrap" host Jason Hall and Fool.com contributors Danny Vena and Brian Withers offered up three companies that have the potential to join this exclusive 10-baggers club.
Jason Hall: I thought it would be fun to ask each of you to look at your portfolio. Brian, coming out of the last hour, we talked about some of our own 10-baggers that we've already had. I thought it would be fun for us to talk about stocks we own that haven't been 10-baggers yet, but we think could be our next 10-baggers. Danny Vena, I'm going to let you kick this one off too.
Danny Vena: I had to give this one very little thought. [laughs] Very little. You might be surprised at what the answer is, but I'm looking at what the next 10-bagger is going to be. Which one I think will hit 10-bagger status sooner than anything else and my portfolio. You might be surprised to learn as bullish as I am on a number of stocks, I think it's going to be Fiverr (NYSE:FVRR). Fiverr, to me, it seems like it's got all of the trappings of an e-commerce stock, it's got the online digital sales platform that connects businesses with freelancers, which is tapping right into the gig economy, which is becoming just such a big part of how people are working nowadays.
If you look at what the company has done, I mean just recently in the third quarter, for instance, its revenue grew by 88% year-over-year. While it's not profitable yet, its net loss improved to the tune of about 95%, and the company is just on the verge of being profitable.
I think it's got a massive addressable market somewhere in the neighborhood of, I want to say $115 billion, and the company only generated like a $163 million over the trailing 12-month period.
I think that this company really does have all of the elements in place that it could seriously be the next 10-bagger in my portfolio. I am watching it closely, but yeah, I'm going to go with Fiverr International.
Jason Hall: Well, I think you've got a good shot there. It's already a 12-bagger for me, so had to slide that in. I bought it one time and it was because I was recommended to buy it by somebody at the Motley Fool. I love that, Danny, I really do, and I think it's going to keep winning. Brian Withers, what about you? What's the next 10-bagger in your portfolio?
Brian Withers: This is always a tough one because you got to give it time. This isn't an overnight thing and a lot of my stocks have really taken off in the past year or so.
I got to look at the smaller market cap ones, and I'm thinking nCino (NASDAQ:NCNO) may be able to breakout.
nCino is about a $7 billion company right now, market cap. They serve the banking industry and has a back-office suite of products that are in the cloud, highly configurable that allow banks to put their operations in the cloud and get off of paper, or get off of legacy systems that have been dragging them down. It's built on the salesforce.com (NYSE:CRM) platform, so I think it's going to follow in the footsteps of Veeva Systems (NYSE:VEEV), which has done the same thing for the life-sciences industry.
But there's thousands of banks out there that are trying to compete against upstarts like Square (NYSE:SQ) and PayPal (NASDAQ:PYPL) and need to get more efficient with their office operations, and I think this is a way to do it.
Jason Hall: I'm going to take a little bit of a different approach here too. I think I'm going to go-
Danny Vena: Something named Brookfield?
Jason Hall: No. I'm actually not. That's crazy thinking about it. I'm going to take a different approach and I'm going to take stock that I've invested in quite a few times. It's also stock that pays a little dividend, so I'm dripping into this one. This is a stock that's only up 233 percent for me, but I think it's one that has a very good shot at 10-bagging over the next 10 years, and that's Kinsale Capital Group (NASDAQ:KNSL), KNSL. They're in the specialty insurance business, they're starting to leverage technology in some pretty smart ways. They're very, very well run. They've got a lot of insiders with a lot of skin in the game. You just start lining up the metrics and things to check-off that tend to correlate with market-crushing investments, and I really do, I like Kinsale Capital Group, ticker KNSL, to be my next ten-bagger.