Wall Street has consistently demonstrated throughout history that it pays to be patient. For instance, each and every one of the 38 double-digit percentage corrections the benchmark S&P 500 has navigated its way through since the beginning of 1950 has eventually been wiped away by a bull-market rally. In fact, the bounce back from the coronavirus bear market is the strongest Wall Street has ever witnessed.
But even with the S&P 500 near an all-time, bargains can still be found. The key, though, is investors have to be patient and willing to allow their investment theses to play out over time.
If you have $200,000 to invest and won't need this capital to pay bills or cover emergencies through at least 2030, the following five stocks have the real potential to make you a millionaire.
Buying and holding disruptive companies is often a good way to build wealth over time. One such company that could quintuple in value by 2030 and make investors millionaires is travel and hosting platform Airbnb (ABNB 1.96%).
Airbnb is best known for providing a platform that connects travelers with over 4 million hosts worldwide. This represents just a fraction of what the host total will likely be come 2030. In the three years prior to the pandemic, bookings on Airbnb's marketplace more than quintupled to over 250 million. That's because Airbnb bookings are often cheaper and more convenient than comparable hotel stays.
Equally exciting, the company's fastest-growing category is long-term stays, which are defined as 28 days or longer. Not only does growth in long-term stays demonstrate Airbnb's operating model isn't a fad, but it ties in perfectly with an increasingly mobile/remote workforce.
However, Airbnb isn't satisfied just disrupting the hotel industry. It's also angling for more of consumers' travel dollars with its Experiences segment. By working with local experts, Airbnb has the potential to set up adventures and travel arrangements beyond just stay bookings. It's a true disruptor in every sense of the word.
PubMatic is a sell-side programmatic ad platform that utilizes machine-learning algorithms to buy, sell, and optimize ads. In plainer English, the company's clients are publishers looking to sell their display space. PubMatic's platform allows these publishers to set certain parameters on its cloud-based platform, such as the lowest price they'll accept for selling display space. Beyond these inputs, PubMatic handles matching up ads with its clients to keep all parties happy.
Clearly, the company is doing something right. Net dollar-based retention was 157% in the third quarter, up from 150% in the sequential second quarter. What these figures tell us is that publishers who were with PubMatic in Q2 and Q3 of 2020 spent a respective 50% and 57% more in Q2 and Q3 of the current year.
What's more, PubMatic's organic growth rate completely blows away the 10% annualized sales growth expectation for the digital ad industry through mid-decade.
Another game-changer with the potential to turn a $200,000 investment into $1 million by the turn of the decade is social media company Pinterest (PINS 0.36%).
Much has been made over the past six months of Pinterest's sequential decline in monthly active users (MAU) from 478 million to 444 million. However, this decline seems to be more in line with vaccination rates ticking higher and people getting out of the house more often than anything truly wrong with Pinterest's operating model. A longer-term look at MAU growth shows the company to be well within its historic norms.
What's truly impressive is how effective Pinterest has been at monetizing its users. Even with global MAUs increasing by less than 1% in the September-ended quarter from the prior-year period, global average revenue per user (ARPU) and international ARPU soared 37% and 81%, respectively. This shows that merchants are willing to pay big bucks to get their products in front of Pinterest's motivated shoppers.
This leads to the other key point: Pinterest is perfectly positioned to become a major e-commerce hub over time. No other social media platform spells out what customers like or want better than Pinterest, which makes it easy for merchants to target their ad spending.
The U.S. cannabis industry should deliver plenty of green for patient investors this decade. One such company with the potential to quintuple by 2030 is multi-state operator (MSO) Columbia Care (CCHWF 5.66%).
Marijuana stock Columbia Care is a beast in the cannabis space (it holds nearly 100 retail licenses) that's leaning on two growth objectives. First, the company is not afraid to make acquisitions to expand its reach. It recently acquired Colorado-based Medicine Man, and in June completed its buyout of Green Leaf Medical. While the downside of an inorganic-heavy expansion strategy is higher short-term costs, it should set the company up for superior growth prospects and recurring profitability in 2022.
The second key cog for Columbia Care is focusing on limited-license markets. By this, I mean states where regulators purposely limit how many dispensary licenses are handed out in total, as well as to a single business. Operating in limited-license states like Illinois, Pennsylvania, and Virginia ensures Columbia Care can build up its brands without being steamrolled by an MSO with deeper pockets or a more established brand.
Last, but certainly not least, e-commerce kingpin Amazon (AMZN 2.11%) has all the tools necessary to turn a $200,000 investment into $1 million by 2030.
Most people are probably familiar with Amazon because of its dominant online marketplace. An August report from eMarketer estimates the company will account for 41.4% of all online sales in the U.S. this year. Being the go-to source for online purchases has helped Amazon sign up over 200 million people to a Prime membership. The fees the company collects from Prime members help it to consistently undercut brick-and-mortar retailers on price.
But Amazon's real growth opportunity has nothing to do with retail. Rather, leading cloud infrastructure segment Amazon Web Services (AWS) will be its long-term cash cow. AWS accounts for almost a third of global cloud infrastructure spending, and the margins at AWS run circles around the margins Amazon collects from its marketplace.
Since 2010, Wall Street and investors have been comfortable valuing Amazon at a median of 30 times its operating cash flow. By 2024, the company is expected to hit $314 in cash flow per share, per Wall Street consensus estimates. It's not out of the question that Amazon hits $500 in cash flow per share by 2030, which would place its shares at $15,000.