For more than a century, the stock market has been the greatest wealth creator on the planet. While there have been short periods of time where commodities or housing have outperformed equities, the historic average annual return for stocks, including dividends, far exceeds all other assets.
That was until cryptocurrencies came along. Over the past decade, a handful of popular digital currencies have crushed the total return of the stock market. This includes the latest love of momentum-chasing retail investors, Dogecoin (DOGE 0.59%).
The joke's on you if you're buying Dogecoin here
If you thought the move higher in Bitcoin was impressive over the past year, get a load of Dogecoin. Whereas Bitcoin is higher by nearly 700%, Dogecoin has rallied more than 15,100% over the trailing year, through early morning April 22. That more than doubles up the best-performing stock over the trailing year (minimum market cap of $300 million).
Much of the fanfare surrounding Dogecoin has had to do with fear-of-missing-out (FOMO) euphoria, as well as regular tweets put out by influential Tesla Motors' CEO Elon Musk. Put another way, absolutely nothing about Dogecoin's move higher has occurred because of a tangible or fundamental event.
The reality for Dogecoin is that it's a joke cryptocurrency developed by two engineers in a matter of hours in 2013 as a response to the two buzziest trends at the time: A Shiba Inu dog meme and cryptocurrency. Eight years later, Dogecoin still lacks any real differentiation that would allow it to stand out in a crowded field of digital currencies.
To add, Dogecoin's real-world utility is virtually nonexistent. Depending on your preferred source, Dogecoin is accepted by 48 to around 1,200 businesses worldwide. By comparison, there are more than 32 million businesses in the U.S. alone, and hundreds of millions of companies globally.
Dogecoin isn't a disruptor -- but it does have all the hallmarks of a pump-and-dump asset.
These growth stocks are the real deal
Instead of putting your money to work in an asset that looks like a complete dart throw, consider buying innovative growth stocks that give you an opportunity to run circles around Dogecoin over the long-term. No joke, these growth stocks are the real deal.
How confident am I that Dogecoin is nothing more than hype? I believe that the third-largest publicly traded company in the U.S., Amazon (AMZN 0.73%), offers substantially more upside over the long run.
Most people are familiar with Amazon for its industry-leading online marketplace. An eMarketer report from March 2020 estimated that it would expand its online market share in the U.S. to 39.7% in 2021. To put this into an easy-to-understand perspective, approximately $0.40 of every $1 spent online in the U.S. routes through Amazon, and its share of U.S. online spending is 33 percentage points higher than the next-closest competitor. That's tangible dominance.
Despite retail margins being razor-thin, Amazon has been able to use it retail prowess to sign up more than 200 million Prime members worldwide. The fees the company collects from Prime memberships helps it to undercut brick-and-mortar retailers on price. It also doesn't hurt that Prime members are more loyal to Amazon's products and services, resulting in higher annual spending.
Over the longer-term, cloud infrastructure services segment Amazon Web Services (AWS) will be responsible for pumping up the company's operating cash flow. Last year, during the worst economic downturn in decades, AWS grew sales by 30% and generated 59% of Amazon's $22.9 billion in operating income. With its significantly higher margins, AWS could triple Amazon's operating cash flow over the next four years and drive its valuation significantly higher.
If smaller companies with quadruple-digit percentage upside is more your thing, consider buying companion animal health insurance provider Trupanion (TRUP -4.03%).
Americans really love their pets. According to data from the American Pet Products Association, an estimated $110 billion will be spent this year on companion animals, and it's been more than a quarter of a century since year-over-year spending on pets has declined. Owners are willing to spend freely to ensure the well-being of their furry family member, and that's good news for Trupanion.
Last year, the company ended with almost 863,000 enrolled pets. This helped sales climb 31% in a year where economic activity slowed to a crawl for months due to the pandemic. Since a majority of Trupanion's operating model is built off of subscriptions, the company typically has a good bead on its sales growth and cash flow potential well in advance.
Something else Trupanion has is a close-knit relationship with veterinarians and clinics. For two decades, Trupanion has been building invaluable rapport at the grassroots level. Veterinarians and their staff are effectively trusted partners that can help grow Trupanion's share beyond just 1% of the U.S. market. If the company were to achieve a 25% share, its total addressable market would be more than $32 billion a year.
As one final note, Trupanion is currently the only major pet health insurance provider with software that allows for payment at checkout. This convenience goes a long way with consumers and veterinary clinics.
Look for Trupanion to be a 10-bagger candidate this decade.
Another stock Dogecoin won't be able to hold a candle to over the long run is Teladoc Health (TDOC 0.00%).
As its name implies, Teladoc is a leading provider of telehealth services in the United States. With pandemic uncertainty pervasive throughout much of 2020, it saw virtual visits spike from 4.14 million in 2019 to nearly 10.6 million. Keep in mind that Teladoc's sales grew by an annualized average of 74% in the six years leading up to the pandemic. There's no question that the coronavirus disease 2019 (COVID-19) provided a boost, but Teladoc was crushing it well before the pandemic hit.
The beauty of telemedicine is that provides benefits up and down the healthcare treatment chain. It's much more convenient for at-risk or sick patients to remain home, and it's often easier for physicians to keep up with their patients via telehealth services. With virtual visits billed at a cheaper rate than office visits, insurers are certain to promote telehealth services as well.
Teladoc further differentiated itself from its competitors in November when it closed its acquisition of leading applied health signals company Livongo Health. Livongo is a company that collects copious amounts of patient data and, with the help of artificial intelligence, sends its members tips and nudges to help them lead healthier lives. It's already signed up more than 500,000 diabetes members and plans to expand its services to help patients living with hypertension and weight management issues.
We're witnessing the tip of the iceberg for telemedicine and applied health signals, which means Teladoc could be one of the fastest-growing healthcare stocks of the decade.