3 Stocks That Can Turn $5,000 into $25,000 in 10 Years

Turning $5,000 into $25,000 or more in a period of 10 years isn't a pipe dream when investing in the stock market. It's an ambitious, but not unrealistic goal that can be achieved if you pick the right stocks and hold them for the long term. This type of growth will require slightly higher returns than the annualized average of 13.43% the S&P 500 index has offered over the last decade.

That means to achieve the 16.2% return that would be needed to turn $5,000 into $25,000, you'll want to focus on buying reliable stocks backed by long-term demand in high-growth industries. Three real estate investment trusts (REITs) that bill perfectly right now are Plymouth Industrial REIT (PLYM -0.89%), Independence Realty Trust (IRT -0.13%), and Invitation Homes (INVH 1.00%).

Plymouth Industrial REIT

Plymouth Industrial REIT is a smaller but fast-growing industrial REIT that directly serves the budding e-commerce, manufacturing, and omnichannel industries. The company, which went public in 2017, has acquired over $1.36 billion worth of warehouse, distribution, light manufacturing, and small bay industrial space for a total of 151 properties in 10 states.

Industrial real estate is one of the hottest real estate industries right now experiencing impressive rental growth and record occupancy levels. This is largely due to severely limited supply, but it's also due to the growing role this space plays in our global economy. E-commerce trends are expected to continue as does the growth of manufacturing back in the United States. These factors combined create long-term growth opportunities for the company.

Plymouth is still operating at a net loss, but its margins are improving with net operating income (NOI) improving each quarter. It made several notable moves over the past year to improve its financial position and increase its ownership share of its portfolio, all of which should pay off in the long run.

Since Plymouth is one of the new kids on the block, its price doesn't quite reflect its long-term potential. Today it's trading around 10 times its funds from operation (FFO), which is a key metric used to value REITs. This is a low price compared to its larger, more established industrial REIT peers that trade upwards of 15 to 30 times its FFO and gives the REIT more room for a higher return as the market recovers and the company grows.

Independence Realty Trust

Until recently, Independence Realty Trust wasn't on most investors' radars. The residential REIT, which invests and leases class B apartments in primary and tertiary markets across the United States, was small, achieving steady but slow growth since its IPO in 2013. That was until it acquired Steadfast Apartments in 2021, which more than doubled its portfolio and put it up there with the ranks of its more popular multifamily REIT peers. Since then, the REIT has soared.

The REIT has provided an 18% annualized total return since its IPO and is up 14% over the last year, an impressive feat given the volatile market we are in. Today the company has interest or ownership in 120 apartments with 70% of its NOI coming from the Sun Belt, the fastest-growing region of the United States right now. Its blended lease rate, which includes new and renewing leases has grown by 12.3% in the second quarter to date.

Even with Independence Realty Trust's newfound fame and impressive performance as of late, the company isn't immune to the market volatility. It's down 18% year to date, which means it's trading at a great price, around 11 times its FFO, with plenty of room for continued growth.

Invitation Homes

Invitation Homes, like Independence Realty Trust, is focused on rental housing. But instead of developing multifamily apartments, it's focused on renting single-family homes. The REIT has ownership and interest in over 75,000 single-family homes with 95% of the portfolio residing in the Sun Belt.

The desire for more space and privacy as a result of the pandemic has made single-family homes the preferred way for families to rent. The past two years have been absolutely stellar for Invitation Homes. Rents have grown consistently in the double digits for over two years now, with revenues and NOI following close behind. The company also has several promising partnerships that should help maintain its growth momentum in the future.

Since its IPO in 2017, the company has provided a 13.34% annualized return, outperforming the S&P 500 during that same period. Despite prices for the stock being down 21% so far this year, the company is still trading around 23 times its FFO, which is a bit of a premium in the current market. However, I believe in the future of the company and feel the stock is a great bet for helping turn that $5,000 into $25,000 ten years from now.