For more than a year, investors have enjoyed a historic bounce-back rally. After watching the benchmark S&P 500 lose more than a third of its value last year in under five weeks, they've seen the widely followed index deliver gains of 85% since the March 23, 2020, bottom.
But even with the market ending this previous week at a new all-time high, bargains still abound. The secret to generating big-time returns in any environment is to buy unstoppable businesses that offer clearly identifiable competitive advantages. Each of the following five unstoppable stocks perfectly fits that description and can deliver 500% or greater returns this decade.
With people stuck in their homes through most of 2020, many looked online for engagement. This included Pinterest, which added 124 million net monthly active users (MAU) last year, up 37%. But keep in mind that Pinterest had grown its MAUs by an annualized average of 30% in the three years (2017-2019) before the pandemic. While people staying home gave the company a boost, the platform was already resonating with users well before the pandemic.
Pinterest should also generate enormous revenue growth from its international users. Of the 124 million net new MAUs added last year, over 90% hailed from outside the United States. The downside of this distribution is that average revenue per user (ARPU) is markedly lower outside the U.S. On the other hand, Pinterest has an opportunity to double international ARPU many times over, which will sustain its double-digit growth rate.
As one final note, don't overlook Pinterest's role as an e-commerce platform. With its users willingly posting about the products and services they like, Pinterest simply needs to connect merchants that specialize in these interests with these potentially motivated shoppers.
Another disruptive company that appears to have unstoppable qualities is technology-driven real estate stock Redfin (NASDAQ:RDFN).
To state the obvious, Redfin has been a clear beneficiary of historically low mortgage rates. But the red-hot housing market that's ensued as a result of record-low rates is far from the only reason to be excited about this company.
One of the ways Redfin helps to differentiate itself from the competition is by offering considerably lower listing fees. At Redfin, commissions tend to range from 1% to 1.5%, which can be as much as 2 percentage points lower than traditional real estate companies. Considering that home prices are rocketing higher at the moment, the savings that Redfin can offer sellers on commissions are amplified.
What's more, Redfin's personalized services have the potential to transform the buying and selling process. Even though it's only offered in select cities at the moment, RedfinNow allows people to sell their homes directly to Redfin for cash, which removes the hassles that often accompany selling a home. Redfin also offers packaged services to handle appraisals, home inspections, and title paperwork. It looks to be well on its way to becoming a real estate juggernaut.
Want to invest in a trend that pretty much never has a down year? Consider putting your money to work in companies that are focused on companion animals, such as animal health insurance provider Trupanion (NASDAQ:TRUP).
According to the American Pet Products Association, year-over-year U.S. spending on pets hasn't declined in at least a quarter of a century, and it's slated to hit almost $110 billion in 2021. Included in this total is an estimated $32.3 billion in spending on veterinary care and product sales. Suffice it to say, American households love their pets like family, and they're willing to spend a small fortune to ensure their well-being. That's the opportunity Trupanion is being handed.
Perhaps the craziest thing about Trupanion is that it ended 2020 with nearly 863,000 total enrolled pets, and this only represents about 1% of owned companion animals in the United States. If Trupanion can reach the 25% pet-insurance penetration rate seen in the U.K., its total addressable market would be north of $32 billion. For context, it generated $502 million in sales last year.
Trupanion has been forging invaluable connections at the clinical level for the past two decades, and it's the only major companion-animal health insurer with software in place to allow for payment at the time of checkout. It's a company that has its bases covered in what's become a surefire growth industry.
As you can imagine, the pandemic had a profoundly positive impact on Teladoc's business. Last year, it handled almost 10.6 million virtual visits, which is more than double the 4.14 million visits on its platform in 2019. With physicians wanting to keep sick and at-risk people out of doctors' offices and hospitals, if at all possible, virtual visits became the medium of choice.
The thing is, Teladoc's operating model shouldn't have a problem remaining a superstar well after the pandemic has ended. That's because telehealth offers benefits up and down the healthcare treatment chain. It's far more convenient for patients, and it allows physicians to keep better tabs on chronically ill people. As for insurers, they love the fact that virtual visits are billed at a cheaper rate than office visits.
And Teladoc acquired Livongo Health, a leader in applied health signals, in November 2020. Livongo gathers copious amounts of data on patients with chronic illnesses and uses artificial intelligence to send its members tips and nudges to help them lead healthier lives. It's enrolled well over 500,000 diabetes patients and plans to expand its services to include hypertension and weight management. With Livongo, Teladoc can produce eye-popping growth this decade.
Last, but certainly not least, investors seeking unstoppable stocks with 500% return potential this decade aren't going to want to overlook Singapore-based Sea Limited (NYSE:SE).
The craziest thing about Sea is that it has not one or two, but three exceptionally fast-growing operating segments. The one generating the best earnings before interest, taxes, depreciation, and amortization (EBITDA) at the moment is its gaming division. While quarterly active users (QAU) jumped 72% to 610.6 million in 2020, the number of QAUs who were paying customers catapulted by 120% to a little over 73 million. The combination of people being stuck in their homes due to the pandemic and the company's engaging games allowed its digital entertainment division to produce $2 billion in adjusted EBITDA last year.
The second segment, and arguably the most exciting for Sea, is the company's e-commerce platform known as Shopee. Sea's e-commerce focus is predominantly in fast-growing emerging markets, such as Southeast Asia, South America, and Latin America. Last year, with folks turning to online orders more than ever before, Shopee processed 2.8 billion global orders totaling $35.4 billion in gross merchandise value. For some context, orders rose about 133%, with gross merchandise value doubling.
And Sea's third segment offers digital financial services primarily in the underbanked regions where Shopee operates. It ended the year with over 23 million paying mobile wallet customers and saw total payments from its digital wallets hit $7.8 billion.
Between 2020 and 2024, Sea's sales could more than quadruple, making it a really smart place to put your money to work.