Since the end of the Great Recession in 2009, growth stocks have been a powerful force on Wall Street. Historically low lending rates and the Federal Reserve's easy money policies have allowed fast-paced companies to hire, innovate, acquire, and invest in their businesses.
Even with the Fed hinting at raising rates to control runaway inflation, these dynamics are unlikely to change to a large degree anytime soon, which makes growth stocks still a good bet to continue to outperform.
With the S&P 500 still setting new all-time highs, the following pair of hypergrowth companies have what it takes to make you richer in the years to come. So long as you invest with money you don't need to pay bills or set aside for unforeseen emergencies and won't need for three to five years -- a decade or more is even better -- a $10,000 investment today in these stocks could turn into $50,000 by 2025.
Image source: Getty Images.
1. Teladoc Health
Just how big of an opportunity is virtual healthcare? Market researchers at McKinsey peg telemedicine as a quarter-billion-dollar market, and Teladoc Health (TDOC -2.40%) is in the vanguard of changing the way healthcare consumers see this emerging trend.
Already a growing phenomenon before the pandemic, global lockdown orders showed just how effortless, convenient, and effective virtual visits and consultations could be. And Teladoc reaped the rewards.
Revenue soared 75% in 2020, compared to a 32% increase in 2019, as virtual visits rocketed to 10.6 million from 4.1 million the year before. This trend continued into 2021, with visits over the first three quarters of the year up 20% vs. the same point in the prior year.
However, that's why the short-term thesis surrounding Teladoc has sent its stock falling more than 70% from its high point in March. Analysts worry it won't be able to maintain the same rate of growth it enjoyed during the pandemic, which is short-sighted considering Teladoc didn't lose customers after global economies reopened. Instead, the company kept adding customers, though admittedly not at the same frenetic pace.
The real growth driver for Teladoc is its $18.5-billion acquisition of Livongo, which it forecasts will allow revenue to grow between 20% and 24% annually through 2024. By creating a virtual healthcare giant, revenue will reach $4 billion a year.
Livongo is enjoying rapid growth of its own, with the number of customers surging 31% through nine months of 2021 while targeting new classes of customers who suffer from hypertension and weight management issues.
The acquisition increased Teladoc's debt load significantly, which at the end of the third quarter swelled to $1.2 billion. Its net loss rose to $84 million at the end of the quarter from $36 million, though the company did end the quarter with over $800 million in cash and short-term investments.
Wall Street is still looking for Teladoc Health's stock to double to $180 per share in the next year, and revenue is expected to jump from $1.1 billion in 2020 to $5 billion for a 35% CAGR. So an investment in virtual healthcare could get your $10,000 investment to $50,000 in a hurry.
Image source: Getty Images.
2. Jushi Holdings
It's hard to believe the marijuana story is just getting started. Still, Colorado and Washington became the first states to legalize adult-use less than 10 years ago, and to date, only 18 states have legalized marijuana possession for adults. Some of those have created bureaucratic nightmares, as occurred when Canada legalized cannabis.
Virginia, for example, made it legal to possess and use marijuana last year, but lawfully buying and selling it won't be allowed until 2024. Taxes are another problem since pot stocks can't deduct many normal business expenses because of marijuana's classification as a Class I controlled dangerous substance.
Yet some marijuana companies, like Jushi Holdings (JUSHF 5.02%), are making a go of it regardless and have a phenomenal outlook before them. According to FactSet, the multi-state operator (MSO) is expected to generate $391 million in sales in 2022, an 86% increase over the $210 million Jushi forecasts for this year. Then it should continue to grow at a 66% compounded annual rate through 2025, to $1.6 billion, while per-share profits will rise at a 51% annual clip.
To achieve this, Jushi will continue expanding its dispensary footprint from its 26 operating dispensaries in a half-dozen states. It will add a handful more in Nevada when it closes on the acquisition of NuLeaf in the next few months.
Key to its growth and success is its primary focus on limited license states, those that dole out operating licenses to just a few select companies, limiting the total supply and the competition Jushi can face. Pennsylvania is Jushi's biggest market, with 16 retail locations open. With the number of licenses Jushi has been awarded, it can open as many as 18 more stores in the coming years, though it will expand into additional markets too.
It's still a relatively small operator in the marijuana industry, but by targeting states that limit its competition, it can rapidly grow without having to worry about deep-pocket rivals. With a discounted share price that analysts have set an $8 per share consensus price target on, there is at least 150% upside modeled into its stock over the next year, and it could gain even more by 2025.