Although investing offers no guarantees, history has proven time and again that patience pays off.
Since 1980, the benchmark S&P 500 has navigated its way through the Black Monday crash, the dot-com bubble, the Great Recession, and most recently the coronavirus crash. Despite this four-decade rollercoaster, patient investors have been rewarded with an annualized total return in the S&P 500, including dividends, of more than 11%. That's the power of long-term investing in action.
The best part of about thinking long-term is that you don't need a mountain of money to generate life-altering returns. If you have $10,000 in cash, which won't be needed for bills or emergencies, the following four stocks have the potential to turn it into $100,000 in the next 10 years, or less.
It's not often investors are given a gift, but the shellacking social media stock Pinterest (PINS -1.48%) has taken since reporting its second-quarter operating results is the proverbial red carpet for growth stock bargain hunters.
One month ago, Pinterest was clobbered after reporting a sequential monthly active user (MAU) decline of 24 million to 454 million in the second quarter. Considering how fast MAUs grew during the pandemic, this decline surprised some folks on Wall Street -- and not in a good way. Nevertheless, Pinterest's user growth remains within historic norms, if we pan out three years.
What's far more important than Pinterest's MAU growth is how effectively it's monetizing its user base. Even with a sequential quarterly MAU retracement, global average revenue per user (ARPU) rose 89% year over year, with international ARPU skyrocketing 163%. These overseas users are the company's key to sustainable double-digit growth throughout the decade. If Pinterest's ad pricing power continues to improve, its valuation can soar with even modest MAU growth.
It's also important to realize that Pinterest's user base is arguably the most targeted in the social media space. These are people who are willingly sharing the things, places, and services that interest them. Pinterest simply needs to keep its users engaged while acting as the middleman platform for merchants who can cater to these interests. It's a pretty foolproof plan that should reward patient investors.
On one hand, skeptics believe that Teladoc was simply in the right place at the right time when the coronavirus pandemic struck. On the other hand, Teladoc offers a service focused on personalization that should be a benefit to all facets of the treatment care chain.
For example, telehealth services are significantly more convenient for patients than having to secure transportation to a hospital or doctor's office. It's also considerably easier for physicians to virtually connect with chronically ill patients who may require regular oversight. Even though telehealth isn't appropriate for all consultations, it should lead to improved patient outcomes, and therefore less money out of the pockets of health insurers. That's a win up and down the treatment chain.
And don't forget, Teladoc Health acquired leading applied health signals company Livongo Health. Livongo uses artificial intelligence to send tips to members with chronic illnesses to help them lead healthier lives. It ended June with 715,000 chronic care diabetes members, and has plans to ramp up its service offerings to people coping with hypertension and weight management issues.
As a clear-cut innovator in the healthcare space, Teladoc has a real shot at turning $10,000 into $100,000 in 10 years or less.
When you think of innovation, the insurance industry probably doesn't come to mind. It's a profitable industry, but one that's fairly stodgy and hasn't changed in a long time. Online insurance marketplace EverQuote (EVER -3.25%) aims to show investors that high growth is possible in an industry begging for disruption.
According to EverQuote, the total U.S. insurance distribution and ad market is valued at $154 billion, and it'll grow by approximately 4% annually through 2024. Meanwhile, digital insurance ad spending in the U.S. is a $6.5 billion market with 16% annualized growth over the next four years. EverQuote operates almost exclusively in this digital ad spend space.
The company's online insurance marketplace is making things easier for consumers and its clients (the insurance companies). It's designed to allow consumers to price, compare, and purchase insurance policies with ease. On average, 1 in 5 consumers who prices a policy ultimately makes a purchase through the marketplace. It's also helping insurers get more bang for their advertising buck. Since the consumers using EverQuote's marketplace are motivated to buy, insurers are getting a juicier return on their investment.
Although EverQuote is best known for marketing auto policies, it's been expanding into new verticals for the past couple of years. Being able to offer life, health, rental, home, and commercial insurance provides new channels of sustainable double-digit growth opportunity. It's a good bet to reward patient investors with life-changing returns.
A fourth stock that can turn a $10,000 investment into $100,000 or more within the next 10 years or less is programmatic advertising technology company PubMatic (PUBM -0.33%).
The advertising industry is constantly evolving. Since the invention of the internet, humans have mostly removed themselves from the laborious process of pricing, selling, and optimizing ads, and now rely on companies like PubMatic to handle this optimization via machine-learning algorithms. Specifically, PubMatic is a sell-side platform, which is a fancy way of saying that it's focused on selling display space for publishing companies.
The great thing about PubMatic's cloud-based ad-tech infrastructure is that it's designed for efficiency. Instead of always picking the highest-priced ad to fill a display space, it works to put the optimal ad in front of users. The platform also allows publishers to control certain inputs, such as the minimum price they'd accept for selling display space.
As cord-cutting continues, PubMatic foresees a sustainable double-digit growth opportunity in video, mobile, and connected TV (CTV)/over-the-top (OTT) programmatic ads, at least through 2024. CTV and OTT are the company's fastest-growing programmatic ad segment.
And if this still isn't enough evidence that PubMatic has a very bright future, take a closer look at its growth from existing clients. PubMatic's net dollar-based retention of 150% in the second quarter signifies that the company's existing publishers spent 50% more in Q2 2021 than they did in the comparable year-ago period. This small-cap growth stock is a screaming bargain for long-term investors.