The metaverse revolution is still just getting started, but talk about the new technology medium suddenly seems almost inescapable. The promise of virtual worlds as new settings for digital commerce and socialization could deliver big wins for leading companies, but investors shouldn't fixate on the metaverse to the complete exclusion of other powerful growth trends.
With that in a mind, a panel of Motley Fool contributors has profiled three hot investments for growth-focused investors willing to take on risk in pursuit of market-crushing returns. Read on to see why they think Bitcoin (BTC -3.35%), IQVIA Holdings (IQV 0.19%), and MercadoLibre (MELI -0.36%) can deliver potent performance for your portfolio.
Bitcoin's growth is far from over
Daniel Foelber (Bitcoin): Don't get me wrong, the "metaverse industry" has some hidden gems that could be 10-baggers in the years to come. But when scanning markets for places that offer the best risk/reward profile, the unproven nature of the metaverse makes it arguably not as appealing as many cryptos, growth stocks, and blue-chip stocks. While meme stock moguls may make you feel as if you need a home run to hit your long-term financial goals, getting on base and avoiding strikeouts is really the most important thing.
Industry leaders have a knack for growing over time and outperforming the market. If you're considering the metaverse, chances are you have a high-risk appetite and don't want to go with a traditional growth stock that's on sale like PayPal or MercadoLibre (although both look great right now). Rather, I think one of the best options for risk-tolerant investors is simply Bitcoin.
There are very few assets that can realistically gain tenfold or more in the coming years. Despite its monster 13-year performance, Bitcoin could feasibly still increase a lot from here. The reason is that Bitcoin gains from so many global trends such as decentralized finance, the need for a hedge against inflation, a store of value with a limited supply, a means of exchange in countries that lack a stable fiat currency, and an easily tradeable and secure asset.
Like any risky asset, it's important to remember that the most you can lose is 100%, but the most you can gain is a whole lot more. Seeing as we could be on the brink of a crypto winter, it wouldn't be surprising if Bitcoin suffered a 50% or higher drawdown. That kind of volatility is something investors should be comfortable with before investing in crypto. It's likely to be a bumpy ride. But for those who can stomach the turbulence, simply dollar-cost averaging into Bitcoin seems like a simple and effective strategy.
At the intersection of technology and healthcare
James Brumley (IQVIA Holdings): It's anything but a household name, but that doesn't make IQVIA Holdings any less enticing. In fact, the lack of attention it's been given makes it an even more compelling prospect.
In simplest terms, IQVIA helps a variety of healthcare companies make better use of technology. That idea in and of itself isn't anything new. What is new, however, are the capabilities new technologies can offer. IQVIA can supply everything from artificial intelligence to best manage clinical trials, data-driven treatment guidance tailor-made for individual patients, and even clinical trials of new drugs with patients who aren't all in the same place. These are things that just weren't feasible a mere few years ago.
And the healthcare industry loves it, if the numbers are any indication. Revenue is on pace to improve 22% for the current fiscal year, and while that growth will likely to slow to only 8% next year, per-share earnings are still expected to grow by 14% in 2022 after this year's 39% bump.
IQVIA has a 95% accuracy rate in predicting outcomes for heart failure patients and many drugmakers are using its platform to handle more than 80 different decentralized clinical trials. The company is really striking a chord with a bunch of healthcare companies that have been waiting a long time for this sort of tech.
This fast-growing e-commerce and fintech leader looks cheap
Keith Noonan (MercadoLibre): While e-commerce is already pretty well established in markets including the U.S., Europe, and China, it's at a much earlier growth stage in Latin America. Card and mobile-based payment and banking services are also at much earlier stages of adoption but are rapidly gaining ground in the territory. MercadoLibre is an Argentina-based company that provides online retail and fintech solutions to the Latin American market, and it stands out as a great play for long-term investors aiming to capitalize on these unfolding trends.
With inflation, political instability, and other economic headwinds creating challenges in Brazil and other key markets, it's admittedly been a tough year for the company in some respects. MercadoLibre has managed to put up strong business performance despite these factors, but that hasn't stopped the company's share price from falling. The stock trades down roughly 44% from its 52-week high, and it's time to pounce on this one.
For a company that has leading positions in two of Latin America's most attractive growth markets, MercadoLibre's roughly $57 billion valuation still leaves plenty of room for growth. Despite facing a difficult macroeconomic backdrop and lapping 2020's record-setting, pandemic-driven quarter, MercadoLibre managed to increase sales 73% year over year in Q3, and its growth story is still in early innings.
E-commerce and fintech services have runways for growth in Latin America, and MercadoLibre has solidified itself as a leading player in both categories. The company's strong business performance, resilience, and flexibility haven't been reflected in its recent stock performance, and investors should consider buying the stock before that starts to change.