On Friday, Aug. 27, the widely followed S&P 500 did something that's become all too familiar in 2021: It closed at an all-time high. It was the 52nd record close for the benchmark index this year, and there are still four months left before the calendar changes to 2022.
But if the market has taught investors anything, it's that there's no such thing as a bad time to put your money to work, so long as your investing timeline is measured in years.
If you've got $5,000 in cash at the ready, which won't be needed for emergencies or to pay bills, the following five perfect stocks offer the potential to double your money over the next five years, or perhaps even less.
At a time when growth stocks are all the rage, one of the most consistent return opportunities for decades has been Warren Buffett's conglomerate, Berkshire Hathaway (BRK.A 0.35%) (BRK.B 0.40%). The company's Class A shares (BRK.A) have averaged an annual return of 20% since the beginning of 1965. In aggregate, we're talking about a greater than 2,800,000% return with Buffett as CEO (through Dec. 31, 2020), and a doubling in value about once every 3.6 years.
Even though stocks don't adhere to averages, Berkshire Hathaway's investment portfolio is set up for long-term success. That's because the vast majority of Buffett's investment capital is tied up in cyclical industries, such as financials, technology, and consumer staples. The Oracle of Omaha knows that recessions are an inevitable part of the economic cycle. But he's also keenly aware that periods of economic expansion last considerably longer than recessions. Thus, by angling his investment portfolio to take advantage of these expansions, he's set Berkshire Hathaway up for sustainable success.
Berkshire Hathaway is also raking in an insane amount of dividend income. Including the company's preferred dividend from Occidental Petroleum, my back-of-the-hand calculation is for Berkshire to collect in the neighborhood of $5.1 billion in dividend income this year. That's a nearly 5% yield on cost. Suffice it to say, thinking long-term has made Buffett, and those who ride his coattails, a lot of money.
A handful of U.S. marijuana stocks also offer the perfect opportunity for investors to double their money in five years, or less. Topping the list, at least in my view, is the biggest bargain in the cannabis space, Jushi Holdings (JUSHF 1.57%).
Like most multistate operators (MSOs), Jushi Holdings is aiming to establish a fast-growing retail presence. It's slated to open its 21st dispensary today (Aug. 31), and has plans to open an additional half-dozen stores organically through the end of the year. Including existing retail licenses, the company will likely have north of three dozen dispensaries when fully operational.
But what makes Jushi such an intriguing pot stock is its focus on three core states: Virginia, Pennsylvania, and Illinois. Aside from each market having billion-dollar annual sales potential (Illinois hit $1 billion in weed sales in 2020), they're all limited license markets. Virginia assigns its retail licenses based on jurisdiction, whereas Illinois and Pennsylvania purposely limit the aggregate number of dispensary licenses issued, as well as how many licenses a single company can hold. Doing so helps to spur competition and ensures that Jushi won't be bulldozed by an MSO with deeper pockets.
Among cannabis stocks, Jushi will likely be one of the fastest growing over the next five years. With the company expected to turn the corner to recurring profitability in 2022, it's a good bet to show investors the green.
Another perfect stock that can double investors' money in five years is hosting and travel innovator Airbnb (ABNB 1.08%).
It's no secret that the pandemic at least temporary upended Airbnb's rapid growth. But with vaccines and coronavirus mitigation tactics offering some semblance of light at the end of the tunnel, Airbnb is once again thriving. The company's hosting marketplace has more than 4 million global hosts, and bookings more than quintupled in the three years leading up to the pandemic.
What's arguably the most-exciting thing about Airbnb is the stickiness of its brand-name and platform. Although the company is advertising in an effort to draw in more travelers and hosts, the vast majority of users booking on Airbnb find it organically, or through a referral. With long-term stays of 28 days (or longer) representing Airbnb's fastest-growing category, it's clear that hosting is a trend that's here to stay.
Further, don't overlook Airbnb's Experiences segment. By partnering with local experts to lead adventures, Airbnb is infiltrating more aspects of the travel experience. We're witnessing a disruptor with trillions of dollars in addressable opportunity in the very early stages of its growth.
The Original Bark Company
The pet industry may not offer the incredible growth potential of travel and hosting, but there's arguably not a more recession-resistant industry on the planet. That's why The Original Bark Company (BARK -1.86%), which folks might know best as BarkBox, is a perfect stock to double your money.
Just how steady are U.S. pet expenditures? According to the American Pet Products Association, it's been more than a quarter of a century since year-over-year spending on U.S. companion animals declined. This year, nearly $110 billion will be spent on our furry friends in the U.S., with a bountiful portion of that spending going to man's best friend.
Bark caters to dogs and their owners. Although its products can be found in more than 23,000 retail locations throughout the U.S., approximately 90% of its sales derive from its e-commerce subscription services. Operating on the subscription model generally leads to lower overhead costs, more predictable cash flow, and higher margins. In Bark's case, gross margin has consistently hovered around 60%.
However, innovation is a key driver for Bark. The introduction of Bark Home and Bark Eats in 2020 should perfectly complement its flagship BarkBox offering (i.e., monthly deliveries of toys and treats). Bark Home caters to basic needs, such as beds and leashes, while Bark Eats works with owners to craft personalized dry food diets. At its current trajectory, Bark's sales could triple by mid-decade.
Finally, e-commerce giant Amazon (AMZN -0.77%) is seemingly always a good way for patient investors to double their money. Despite its large market cap, the company's operating cash flow growth should yield plenty of upside.
Amazon's cornerstone segment has long been its online marketplace. This year, approximately $0.40 of every $1 spent online will route through Amazon, according to a report from eMarketer. For some context, this is more than 33 percentage points higher than the next-closest competitor in the U.S., based on online retail sales share.
Admittedly, retail margins are usually thin. To counter this, Amazon has used its dominant marketplace status to sign up 200 million people worldwide to a Prime membership. The fees collected from Prime help to buoy margins and ensure that Amazon can continue to undercut brick-and-mortar retailers on price. It also doesn't hurt that Prime members have extra incentive to spend more to get the most out of their membership.
Equally impressive is Amazon's fast-growing cloud infrastructure segment, Amazon Web Services (AWS). Since AWS generates significantly higher margins than online retail, it remains the company's ticket to rapid cash flow expansion.