This Low-Risk Tech Stock Could Double in the Next 5 Years

Intuit (INTU 0.28%) may not be the most exciting tech company, but this financial software specialist has been an incredibly rewarding investment. The stock is up over 400% in the last five years, meaning investors saw their wealth grow fivefold in a relatively short period of time.

More importantly, I think Intuit can maintain that momentum. The company has established itself as a market leader, and management is executing on a smart growth strategy. Both factors could help this stock double by 2026. Here's what you should know.

Image source: Getty Images.

Intuit has a solid competitive position

Intuit provides a range of accounting software to small- and medium-size businesses (SMBs), individual consumers, and tax professionals. And each of the brands in its portfolio -- QuickBooks, TurboTax, Mint, and Credit Karma -- has become synonymous with finance. In fact, chances are that many readers have used at least one of these products. But just in case you have no idea what I'm talking about, let's run through the primary money makers.

QuickBooks helps SMBs (and self-employed individuals) manage their finances, including tools to track sales and spending, manage payroll, and process payments. This product suite integrates with popular commerce platforms like PayPal, Shopify, and Square, and it currently leads the industry with 80% market share in the U.S.

Meanwhile, TurboTax might actually be the better known brand. This product helps millions of consumers prepare and file state and federal income taxes each year. During the 2021 tax season, TurboTax captured an industry-leading 73% market share, up from 63% in 2019, according to Bloomberg. By comparison, second-place H&R Block lost 10 percentage points of market share over the same period.

Collectively, Intuit puts its U.S. market opportunity at $141 billion, though that figure jumps to $248 billion when including regions like the U.K., Canada, Australia, France, and Brazil. In short, this tech company leads its industry while still having plenty of room to grow.

Image source: Getty Images.

Intuit is building an AI-powered expert platform

For many business owners and consumers, bookkeeping and tax preparation are complicated and stressful. Hoping to ease that burden, Intuit leans on artificial intelligence to automate repetitive tasks and reduce friction. For instance, TurboTax and QuickBooks use AI-powered chatbots to provide customer assistance in real time.

If that's not enough, both QuickBooks Live and TurboTax Live offer access to expert advice, meaning customers can discuss specific situations with accounting and tax professionals with the click of a button. Management attributes roughly $30 billion of its market opportunity to these services.

Last year, Intuit acquired online finance platform Credit Karma, which connects consumers with products like credit cards, personal loans, and high-yield savings accounts. In the short term, this move adds a substantial amount of user data to Intuit's AI models as Credit Karma has over 110 million members (at 2,600 data points per person).

However, in the long term, Intuit CEO Susan Goodarzi says this move will allow the company to "create a mobile, personal financial assistant for consumers to help solve their most pressing financial problems." And there's certainly a big opportunity for such a product as roughly 50% of Americans live paycheck to paycheck, and U.S. households have a collective debt burden of $14.1 trillion.

Intuit is growing quickly

Excluding the Credit Karma acquisition, Intuit currently serves 57 million customers, nearly double its user base from a decade ago. And product upgrades like QuickBooks Live and TurboTax Live have fueled significant growth in recent years.

Data source: YCharts. CAGR = compound annual growth rate. Note: Fiscal 2021 ended July 31, 2021.

Looking ahead, management hopes to grow its customer base to 200 million by 2025. And over the long term, Intuit believes it can grow revenue at 10% to 15% per year for its SMB and self-employed products, and 8% to 12% per year for its consumer tax preparation products. Meanwhile, Credit Karma could also become a meaningful portion of the company's top line over time.

All things considered, I wouldn't be surprised to see Intuit deliver annualized sales growth of 15% over the next five years. If that happens, the stock could double without any change in its price-to-sales ratio, which currently sits at a pricey 16. Also noteworthy, Intuit's leading competitive position, strong financial performance, and large market opportunity make it a relatively low-risk investment. That's why I think investors should consider adding this growth stock to their portfolios.