Although Wall Street offers no guarantees, a common theme is that patience pays. Despite undergoing 38 double-digit percentage corrections or crashes since 1950, the broad-based S&P 500 has eventually erased each and every one of these downturns with a bull-market rally.
Buying great companies and allowing your investment thesis to develop over many years has consistently been a pathway to wealth creation on Wall Street.
The same holds true if you want to become a millionaire. If you have $250,000 ready to invest, which won't be needed to cover emergencies or pay bills, and you're willing to hold what you buy until 2030, the following trio of game-changing stocks have all the tools necessary to make you a millionaire.
The past couple of months have been nothing short of a roller-coaster ride for social media platform Pinterest (PINS 8.99%). Shares of the company were shellacked after reporting a surprise sequential quarterly dip in monthly active users (MAU) in the June-ended quarter, and they've been whipsawed in October after rumors swirled that PayPal may have had interest in purchasing Pinterest. These rumors have since been put to bed by PayPal.
But if investors look past a lot of this recent white noise, they'll see a steadily growing platform in the early stages of monetization that could very easily become a core e-commerce player by the turn of the decade.
A lot of focus has been placed on Pinterest's MAU decline to 454 million in the second quarter from 478 million in Q1 2021. But if investors pull back and look at MAU growth over a three-, four-, or five-year period, they'll notice the MAU growth trajectory is still well within historic norms. It was inevitable that accelerated net MAU growth during the pandemic would wane as vaccination rates picked up globally. This slowdown doesn't change the fact that the company's MAUs continue to march higher over time.
Arguably far more important than simply growing its user base is monetizing its MAUs. Even though its user base grew by a modest 9% in the second quarter from the prior-year period, Pinterest's average revenue per user (ARPU) jumped 89% as a whole and 163% internationally. This tells us merchants are more than willing to pay up to reach Pinterest's MAUs.
Speaking of its MAUs, the company has what I'd describe as the most-targeted user base of any social media platform. Whereas data collection can somewhat help advertisers target users on other social media sites, Pinterest's users are willingly sharing the things, services, and places that interest them. There's no need for second-guessing, which is what allows Pinterest to act as a middleman platform to connect users with merchants that specialize in their interests.
Pinterest is profitable, growing its ARPU at a rapid rate, and can sustain double-digit sales growth throughout the decade. It's a good a good bet to turn a $250,000 investment into $1 million by 2030.
Green Thumb Industries
The U.S. cannabis industry should also be minting millionaires over the coming decade. Investors with a long-term mindset have the opportunity to quadruple their money with marijuana stock Green Thumb Industries (GTBIF -2.37%).
You'll note that most pot stocks have been nothing short of a buzzkill for the past eight months. Initially, it was expected that the Biden administration would move quickly to legalize cannabis at the federal level or enact some level of reform that would ease the financial restrictions facing the industry. Because this hasn't happened, marijuana stocks have been clobbered. However, this short-term pain is investors' opportunity to land some serious long-term gains.
The fact is that 36 states have legalized marijuana in some capacity, and the federal government is allowing states to regulate their own pot industries. Federal reform would be a positive, but it's simply not necessary for well-funded multistate operators (MSOs) like Green Thumb Industries to succeed.
There are two factors that should allow this company to deliver the green to its shareholders. First, Green Thumb is primarily targeting limited-license cannabis markets. These are legalized states that purposely limit how many retail licenses are issued in total and to a single business. While this license limitation might sound burdensome, it's actually beneficial in that it allows Green Thumb the ability to build up its brands and garner a following in a number of potential billion-dollar markets without being overrun by more-established MSOs.
The second, and arguably more important, factor that can help make investors rich is Green Thumb's product mix. More than half of the company's revenue is generated from derivatives, such as edibles, vapes, and oils. Derivative pot products sport higher prices, juicier margins, and are less prone to oversupply, compared to dried cannabis flower. Derivatives are the reason Green Thumb has already hit recurring profitability.
The Original Bark Company
Though there are a number of industries growing by a double-digit percentage at the moment, there may not be a more recession-resistant industry in North America than the pet industry. Based on data from the American Pet Products Association (APPA), it's been at least a quarter of a century since year-over-year pet expenditures have declined in the United States.
At the same time, we've watched the percentage of households that own a pet climb from 56% in 1988 to 70% by the APPA's 2021-2022 survey. To put this succinctly, pet owners will spare no expense to ensure the happiness and well-being of their four-legged, scaled, and feathered family members.
What makes Bark such an intriguing company is its reliance on the direct-to-consumer subscription model. About 90% of the company's revenue derives from subscription services, with the remaining 10% generated from having its products in more than 23,000 retail stores nationwide. The beauty of this approach is the lower overhead costs, relative to traditional brick-and-mortar retailers. Not having to operate physical stores has lifted Bark's gross margin to approximately 60%.
The company is also leaning on innovation to drive high-margin add-on sales. The company's monthly toy-and-treat BarkBox should remain its key subscription service for the foreseeable future. However, the introduction of Bark Home and Bark Eats last year gives customers added incentive to spoil their dog or improve his/her well-being. Bark Home provides basic need accessories like leashes, collars, and beds, while Bark Eats works with owners to develop a specific dry-food diet for their pooch.
The Original Bark Company has the potential to triple sales over the next five years and shouldn't have any trouble carving out a niche in the highly lucrative pet industry.