You've probably noticed that stock market volatility has picked up recently. That's especially true if you're invested in highly valued growth stocks, many of which have declined by 30%, 50%, or even more from their all-time highs.
While nobody enjoys watching the value of their investments go down, periods of volatility like this one can create opportunities to get into long-term winners at a discount. Here are two, in particular, that have 10X growth potential (or possibly much more) that are at the top of my watch list as we head toward 2022.
This healthcare innovator has unlimited applications for its data
Most people know 23andMe (ME) for its home genetic-testing kits. While this is certainly the most consumer-facing side of the business, there's a lot more to the company than that.
Specifically, the data that its core genetic-testing business provides makes the company so interesting. 23andMe has a data library from nearly 12 million genotyped individuals. The next closest competitor has less than one-tenth of that.
This data could be leveraged to develop therapeutics, and 23andMe is doing exactly that with a 50/50 partnership with pharmaceutical-heavyweight GlaxoSmithKline (GSK 0.92%). Even one successful therapeutic could be worth billions, and the company has a promising development pipeline already.
In addition, 23andMe is still in the early stages of building out personalized healthcare products. And 75% of consumers say that they wish their healthcare experience was more personalized, so there's a massive opportunity to disrupt the industry over time. Thanks to the recent market decline, investors can buy shares for about 25% less than SPAC investors like Richard Branson paid earlier this year.
Could this real estate disruptor change the way we buy and sell houses?
Offerpad (OPAD 0.78%) is an iBuyer. If you aren't familiar, an iBuyer (or instant buyer) is a company that buys homes directly from sellers. The general idea is that by doing so, it removes most consumer pain points from the home-selling process.
For example, when you sell to an iBuyer, you won't have to find a real estate agent, allow countless showings, stage your home, make cosmetic repairs, etc. And perhaps most importantly, you can control the timeline. iBuyers can close homes in as little as three days from making an all-cash offer or can wait months, if that's what the seller needs.
Offerpad is one of three companies that engage in iBuying on a large scale (the other two are Opendoor and Redfin, and although it isn't the biggest, it's found the best balance between growth and efficiency. Its unit economics -- the profit margin per home -- are the best in the industry.
The concept of iBuying is still pretty new, with less than 1% of all home sales in the U.S., but this is a multitrillion-dollar market. If Offerpad can grow its volume to several times the current level and do so profitably, it could easily grow 10X from here.
Expect a roller-coaster ride
As a final thought, it's important to emphasize that no stock with a 10X return potential is likely to be a smooth ride, and these two aren't exceptions. Even the now-huge tech behemoths like Amazon and Apple fell by more than 50% from their highs several times on the way to where they are today. Although both of these are down significantly in recent months, if market volatility continues, they could fall further.
Having said that, I own both of these in my own stock portfolio for one simple reason -- they have huge growth opportunities, and I feel the risk/reward dynamic makes a lot of sense. But I'm invested in these because I think they could be huge in a decade or two, not for what they could do in the coming months.