Although the year isn't even halfway over, it'll almost certainly be remembered as the year retail investors firmly asserted themselves on Wall Street.
Since January, retail investors have effectively banded together to buy shares and out-of-the-money call options in stocks with very high levels of short interest. The intent of these retail groups is to effect a short squeeze -- a short-term event that sees pessimists (short-sellers) run for the exit at once, causing a company's share price to skyrocket -- and send these stocks "to the moon."
Unfortunately, nearly all of the companies retail traders have targeted have poor fundamental track records and/or frightening balance sheets. In short, these gains aren't going to be sustainable.
If you want to own stakes in companies with a real chance of "going to the moon," you have to buy into innovative businesses with tangible growth prospects. The following five supercharged stocks fit the bill perfectly.
Growth stock investors who are patient will likely watch Singapore-based Sea Limited (SE -2.14%) go to the moon over the next decade. That's because Sea brings not one or even two, but three rapidly growing and differentiated operating segments to the table.
For the time being, Sea's digital entertainment division is generating all of its earnings before interest, taxes, depreciation, and amortization (EBITDA). The company ended March with almost 649 million quarterly active gamers, 12.3% of which were paying customers. What's notable is that the number paying customers jumped from 8.9% in the year-ago quarter to 12.3%.
However, the segment that'll create far more long-term value is its e-commerce shopping platform Shopee. The most downloaded e-commerce app in Southeastern Asia saw gross merchandise value more than double to $12.6 billion in Q1 2021, with gross orders up 153% to 1.1 billion. Even though the ongoing pandemic is helping funnel consumers into online channels, it's the rise of the middle class in emerging markets that'll be responsible for Sea's ascent.
To round things out, Sea also has over 26 million paying mobile wallet customers. Since it operates in a number of underbanked countries, offering access to digital financial services could be another game-changer for the company and its consumers.
By 2025, New Frontier Data has forecast more than $41 billion in annual U.S. weed sales. Like other multistate operators, Jushi is angling for its piece of this fast-growing pie. But it's doing so a bit differently. Most of its revenue is expected to come from Pennsylvania, Illinois, and Virginia. Why these three states? The answer is they all limit the number of retail licenses they issue. This is to say that Jushi is going to face limited or nonexistent competition in these states, which'll allow it to successfully build up its brand awareness and create a loyal following.
Jushi is also well capitalized and not afraid to make acquisitions to bolster its retail or cultivation presence. It boosted its presence in Pennsylvania and Virginia earlier this year and recently closed on the purchase of two dispensaries in California. The Golden State is the largest pot market in the world, by annual sales.
Most marijuana stocks are valued at anywhere between 3 and 7 times forward-year sales. As for Jushi, it can be scooped up for less than 2 times forward-year sales, which is a big-time bargain.
Another innovative business that can moonshot higher over the long-run is stay-and-hosting platform Airbnb (ABNB -3.19%).
Airbnb has the potential to completely transform the traditional hotel and travel industry. By the company's own admission, it has about 4 million hosts worldwide. But this is just the tip of the iceberg. There are around 130 million households just in the U.S., and likely well over 1 billion worldwide. Once people become aware of the cash flow potential of listing their property on Airbnb, we'll likely see this 4 million figure double many times over.
Don't overlook Airbnb's role outside of its foundational hosting marketplace, either. The company's Experiences -- activities led by local experts -- represents just one of the many ways Airbnb can partner with hosts or popular travel destination businesses to sell inclusive packages and build customer loyalty.
Maybe most impressive of all is how many people are familiar with Airbnb and its marketplace. Word-of-mouth advertising is a cheap yet powerful tool, and Airbnb has harnessed it perfectly to build a strong brand identity.
The Original BARK Company
The Original BARK Company (BARK -3.62%), which officially completed its merger with a special purpose acquisition company (SPAC) last week, is another supercharged growth stock that has moonshot potential written all over it.
The BARK Company, which is probably best known as BarkBox, provides dog-focused products and services to pet owners. Though you'll find its products in 23,000 retail doors, it's predominantly an e-commerce company that relies on high-margin subscriptions. As of the end of March, it had 1.2 million subscribers, which was up 91% from the prior-year period. What's more, the company's S-1 filing notes that monthly product retention is higher than it's ever been, which signifies that a high percentage of subscribers aren't cancelling.
Innovation is also important for BARK. Last year, it introduced Bark Home, which allows dog owners to purchase basic-need accessories like collars and beds, and Bark Eats, a program that personalizes and delivers a high-quality dry food diet to dog owners.
If this isn't convincing enough, consider that it's been more than a quarter of a century since year-over-year pet expenditures declined in the United States. This year alone, the American Pet Products Association expects nearly $110 billion will be spent on companion animals, $44.1 billion of which is on food and treats, which is BarkBox's specialty.
Last but not least, e-commerce giant Amazon (AMZN 0.73%) can still go to the moon. You might be skeptical of one of the world's largest companies delivering outsized returns, but a closer inspection at its e-commerce dominance and cash flow will turn that skepticism into optimism.
As you're likely aware, Amazon is the 800-pound gorilla in the U.S. online retail space. A recently released report from eMarketer estimates Amazon will control 40.4% of all e-commerce sales in the U.S. this year. Despite retail margins generally being razor thin, the company has been able to boost its revenue and grow its online dominance by selling over 200 million Prime subscriptions. The revenue collected from these memberships helps Amazon undercut brick-and-mortar retailers on price. And it certainly doesn't hurt that Prime members are incented to stay within the company's ecosystem of products and services.
But Amazon's biggest growth driver looks to be its cloud infrastructure segment Amazon Web Services (AWS). During the worst economic downturn in decades in 2020, AWS grew its sales by 30%. AWS currently has an annual revenue run-rate of $54 billion, and it's generating the bulk of Amazon's operating income despite accounting for only around an eighth of total sales.
Here's the kicker: Amazon ended every year in the 2010s at a multiple of 23 to 37 times its cash flow. With its operating cash flow expected to more than double by 2024 (thanks to AWS), Amazon is valued at just 10 times future forecasted cash flow. Moon launch imminent, folks.