It can be difficult to identify winning stocks early. More important, it takes a lot of conviction to stay invested through thick and thin as a company grows and establishes itself. Even then, some of your investments may not evolve as you expected, resulting in a loss of capital.
Still, if you stay focused on the trends of the future and select companies with solid growth plans, leading-edge technologies, and superior offerings that have robust demand in the market, you just might have discovered a winning investment.
Here are two such stocks that could make you a fortune over the next 10 years.
Rivian Automotive
There are several reasons to like electric vehicle (EV) maker Rivian Automotive (RIVN -2.21%). The very first is its products. Rivian's electric vehicles have performed well in real-world conditions. In fact, Rivian's R1T was named the 2022 MotorTrend Truck of the Year for its design and technology. Having a solid product is a prerequisite for the long-term growth of any company.
Second, Rivian's vehicles find a very robust demand in the market. The company had more than 90,000 preorders for its trucks and SUVs as of May 9. Further, it has an initial order of 100,000 electric delivery vans from Amazon. For context, Rivian has so far delivered fewer than 5,000 vehicles.
On the flip side, Rivian is finding it challenging to meet its production plans, due largely to supply-chain constraints. In March, Rivian slashed its production target for the year in half, from 50,000 down to 25,000. However, the company maintained its revised production target for the year when it announced first-quarter results in May. So, things are likely moving as per Rivian's plans.
Rivian had $17 billion of cash and equivalents as of March 31. The company believes that this cash would be enough to launch its future vehicle platform, R2, in 2025 from a new plant outside Atlanta, Georgia. Rivian currently has an installed capacity of 150,000 units at its plant in Normal, Illinois. For its R2 platform in Georgia, the company plans to begin with a capacity of 200,000 units in 2025, doubling it later. Between the two plants, Rivian plans total capacity of 600,000 units.
For perspective, in 2020, when Tesla churned an annual profit for the first time, the company delivered around 500,000 vehicles. If Rivian progresses well on its plans, keeping costs under check, it may not be too difficult to raise needed funds at an opportune time, before it becomes profitable. Note, however, that this is a long journey from 25,000 units that Rivian plans to deliver in 2022.
Rivian stock has pulled back significantly this year due to the challenges that the company is facing in ramping up production, as well as a weakness in broader markets. Moreover, increasing competition in the EV market could add to Rivian's woes. The stock was recently trading at a forward price-to-sales ratio around 4. Though it looks high, it would not be when Rivian's production gets ramped up. Over time, Rivian is targeting more than 10% of the global electric vehicle market share. If it gets anywhere near that goal, you can surely make a fortune on your investment in the stock.
Bloom Energy
Bloom Energy (BE -1.93%) is a clean-energy company that provides solid oxide fuel cells to generate power. It also makes electrolyzers to generate green hydrogen. Apart from power generation, Bloom Energy is exploring the use of fuel cells in the marine segment.
Bloom Energy's solid oxide fuel cells convert fuel into electricity without combustion. Its fuel cells are fuel flexible and can run on natural gas, biogas, or hydrogen. The company has been growing its revenue impressively in the last few years.
BE Revenue (TTM) data by YCharts.
In 2021, all of Bloom Energy's revenue came from its solid-oxide fuel cells used in stationary power generation. Bloom Energy captures 80% of the stationary fuel cells market in both the U.S. and South Korea.
Image source: Bloom Energy.
By 2026, the company expects revenue from its solid-oxide fuel cells to fall in the range of $2.5 billion to $3 billion. By 2031, Bloom Energy expects revenue between $8 billion and $10 billion. The company sees a huge total addressable power generation market of $1.4 trillion -- from microgrids to utility-scale power.
Additionally, the company expects electrolyzers, carbon capture technologies, and marine business to collectively add $7 billion to $10 billion in revenue by 2031. Bloom Energy sees a total addressable market of $340 billion in the hydrogen and carbon capture segment, while it believes marine market size to be around $70 billion. In all, Bloom Energy expects to grow revenue at a compound annual growth rate of 30% to 35% through 2031.
In addition to sales growth, Bloom Energy expects to generate positive operating margin (excluding stock-based compensation) and cash flow from operations for 2022. In the long term, it targets gross margin of 30% and operating margin of 15% by 2025. With a gross margin of 22% in 2021, Bloom Energy seems to be on its way toward its goal. The company's operating margin was -3.9% for 2021, and it expects it to be positive 1% for this year.
In all its businesses, Bloom Energy has a long growth runway. The company's focus on growth, while keeping costs in check, bodes well for its long-term success, as well as the price of its stock.
