Despite the volatility in recent weeks on the tech-heavy Nasdaq Composite, the catalysts are in place for a major bull market to take shape under the new administration.
It's no secret that President Biden inherited an economy that's attempting to claw its way back from a once-in-a-generation pandemic. However, both the Federal Reserve and the Biden administration have demonstrated that they'll do what's necessary to support businesses, working Americans, and financial markets. Another round of fiscal stimulus coupled with ongoing quantitative easing measures from the nation's central bank should be the perfect recipe for equities to shine.
If a Biden bull market does emerge, the following five stocks would all offer millionaire-making upside potential.
Historically, a stronger economy bodes well for the housing market. That would make up-and-coming disruptor Redfin (RDFN -4.00%) a potential millionaire-maker in the real estate space.
Aside from historically low mortgage rates driving interest in homeownership, it's Redfin's tech-driven operating model and unique services that really allow it to stand out from the pack. For example, Redfin's listing fees range from 1% to 1.5%, which can be as much as 2 percentage points lower than traditional real estate agencies. With home prices soaring in the wake of historically low mortgage rates, the commission fees Redfin can save prospective sellers is magnified.
Redfin is also attempting to revolutionize the buying and selling process. The company's RedfinNOW service, which is offered in select cities for the time being, allows people to sell their homes directly to Redfin for cash. The company also offers the ability to handle home inspections, title, and appraisal paperwork for their customers.
Redfin looks to be just scratching the surface, and it could well be one of the fastest-growing real estate companies this decade.
Marijuana stocks should absolutely thrive under the Biden administration, but probably not for the reason you're thinking. Federal legalization probably isn't in the cards. However, there's a growing possibility we could see banking reform and a continued hands-off policy from the U.S. Justice Department on state-level regulation. This would all be excellent news for small-cap pot stock Jushi Holdings (JUSHF -0.53%).
What makes Jushi such a special cannabis company is its focus on limited license states. This year, three states -- Pennsylvania, Illinois, and Virginia -- are expected to make up 80% (or more) of the $205 million to $255 million in sales Jushi generates. Pennsylvania and Illinois cap how many retail licenses they'll issue, whereas Virginia assigns dispensary licenses by jurisdiction or territory. The point is, Jushi is choosing to operate in states where competition will be minimal or nonexistent. This'll give it an opportunity to build up its brands and create a loyal following.
Jushi also hasn't been shy about using acquisitions to further its footprint. Since the year began, it's expanded its retail presence in Pennsylvania and California, the latter being the largest cannabis market in the world.
With Jushi expected to turn the corner to recurring profitability this year, investors should be seeing a lot of green.
Another innovative small-cap that can make investors millionaires in a Biden bull market is furniture designer and retailer Lovesac (LOVE -5.32%). Yes, I did just say "furniture designer and retailer."
Traditionally, we don't think of innovation when it comes to furniture companies, but Lovesac is changing the mold. This millennial-focused company designs modular furniture that can be rearranged in dozens of ways to ensure that it fits all livable spaces. The company's sactionals -- its top-selling item, accounting for more than 80% of sales -- come with over 250 machine-washable cover choices, all of which use yarn made from completely recycled plastic water bottles. It's functionality, choice, and ESG investing all rolled up in one.
Arguably even more impressive has been Lovesac's ability to pivot how it sells to the public during the pandemic. Whereas most furniture retailers have seen a huge drop-off in business and foot traffic, Lovesac was able to shift from a showroom/pop-up showroom model to one that predominantly emphasizes online sales. Lovesac's low overhead was already a key competitive edge, and this emphasis on e-commerce has only further boosted margins.
Lovesac may be just a furniture company, but it could easily double its annual sales with Biden in the White House.
Northern Star Acquisition
If completely off-the-radar stocks are your thing, Northern Star Acquisition (STIC) has all the tools necessary to make its shareholders millionaires. Northern Star is a special-purpose acquisition company (SPAC) that's currently in the process of merging with dog-focused product and services company BarkBox.
Perhaps the safest growth trend in the entire country is U.S. companion-animal spending. At no point over the past quarter of a century have we witnessed a year-over-year decline in U.S. pet expenditures. More households than ever own dogs and cats, which are frequently viewed as members of the family. Translation: Pet owners will pay big bucks to ensure the happiness and well-being of their four-legged family members.
BarkBox ended its most recent quarter with 1.1 million subscribing members, which is up from 663,000 just nine months earlier. It's also working with a retention rate of nearly 95%, which is the highest since the company's inception. By BarkBox's own estimates, its sales could nearly double to more than $700 million by 2023. That would put BarkBox's multiple relative to sales among the lowest in the industry.
What's more, this data-driven company is leaning on new offerings to drive repeat business and higher tickets. In particular, the addition of Bark Home (essential accessories, such as collars and dog beds) and Bark Eats (personalized, high-quality dry food diets for dogs) should grow subscribers and keep gross margin north of 60%. Northern Star, soon to be BarkBox, has the true look of a millionaire-maker.
Finally, social-media company Pinterest (PINS -2.44%) could make investors a boatload of money if a Biden bull market takes shape.
Pinterest was one of a handful of growth stocks that undeniably benefited from the pandemic. Last year, the company added 124 million net monthly active users, representing a 37% increase from the prior-year period. But keep in mind that average annual net user growth before the pandemic was 30% between 2017 and 2019. In other words, Pinterest has never been a slouch in the user growth department.
In particular, Pinterest has seen a big uptick in new users from international markets. Although U.S. users provide significantly higher average revenue per user (ARPU), another way to look at Pinterest's user growth is that it can double international ARPU numerous times this decade, thereby perpetuating its market-topping growth rate.
Investors should also look for Pinterest to continue emphasizing its e-commerce platform. With users willingly sharing the things, services, and places that interest them, Pinterest merely needs to connect these motivated shoppers with businesses that cater to their needs. In a way, you could say that Pinterest is the ultimate platform for targeted ads.