While turning $150,000 into $1 million in a decade may sound overwhelming, aiming for the 21% annual returns necessary to make this happen helps reframe things.

By focusing on healthcare businesses showing substantial growth potential along with robust profitability and free cash flow (FCF) generation, we significantly improve our odds of success.

Here are three stocks that demonstrate these two key attributes but also own unique moats that make them candidates to become multi-baggers over time -- potentially helping investors reach their $1 million goal.

1. Doximity

Driven by its simple mission "to help every physician be more productive and provide better care for their patients," Doximity (DOCS 1.83%) and its social platform for medical professionals exploded onto the market.

Rising nearly 100% shortly after its initial public offering (IPO) in mid-2021, Doximity shares dove 60% below their 52-week highs. This volatility makes the company a perfect case study for why investors should wait a few quarters before investing in a new IPO -- allowing for time to accumulate precious financial and qualitative data.

So what have we learned about Doximity?

First, it has capitalized on the incredible fact that over 80% of physicians in the United States are members of its platform. Thanks to this broad adoption, the newsfeed on Doximity's platform is a precious advertising opportunity for pharmaceutical companies, hospitals, and healthcare service providers.

By offering subscription-based marketing packages to these medical companies for exposure to physicians, Doximity has built a powerful moat. Considering that 73% of healthcare spending stems from decisions made by doctors, this marketing is wildly valuable.

Furthermore, Doximity's widespread uptake by the medical community makes it a priceless provider of hiring solutions, acting as a healthcare-specific LinkedIn (owned by Microsoft). This hiring segment is Doximity's second-largest source of revenue and highlights the company's powerful network effects.

Cinching up its robust ecosystem, Doximity also has a telehealth service, Dialer, which has hosted over 100 million virtual visits since its launch. Thanks to its newsfeed, vast network, and productivity tools, Doximity's ecosystem is nearly essential for healthcare workers.

Posting revenue and net income growth of 40% and 39% year over year for the fourth quarter of 2021, Doximity is a rare high-growth company offering great profitability right after its IPO. Sporting a massive 45% profit margin -- and posting these incredible growth rates -- Doximity's higher price-to-earnings (P/E) of 59 could prove to be a bargain over the long term. 

With analysts expecting 33% and 29% sales growth in 2023 and 2024, Doximity looks to be on its way to delivering 21% annual returns over the next decade. This short-term outlook and the company's long-term optionality potential from its ecosystem could help investors meet this $1 million goal.

2. Veeva Systems

Tripling the returns of the S&P 500 index over the last five years, Veeva Systems (VEEV 9.37%) and its cloud solutions have become a dominant force in the life sciences industry.

Operating in two business segments, Commercial and R&D, Veeva offers software, data, and consulting solutions to its life sciences customers -- regardless of where they are in their product or business life cycles. With dozens of solutions across both segments, Veeva sees powerful network effects as enterprise customers come onboard, incrementally strengthening its budding ecosystem.

A great example of this ecosystem is the Veeva Vault eTMF, an application that manages documents for active and archival purposes. Quickly becoming the go-to solution in this niche, 18 of the top 20 pharmaceutical companies now use eTMF, as it has become the most trusted solution. 

Not only does this show how sticky Veeva's sales could be, as its customers will want to remain a part of this network, but it also highlights the immense land-and-expand potential, as these enterprises could consider adding other products.

Guiding for 17% revenue growth for 2023, Veeva's 40% FCF margin (27% if you back out stock-based compensation) and sticky sales look attractive after the stock's recent sell-off.

VEEV Price to Free Cash Flow Chart

VEEV Price to Free Cash Flow data by YCharts

Trading near all-time lows on a price-to-free cash flow basis, Veeva is positioned to thrive. Market analytics firm Grand View Research projects the life sciences industry will grow by 8% annually through 2030 -- providing a tailwind for Veeva to grow alongside as it continues to vacuum up market share. 

With analysts predicting 14% sales growth annually over the next five years, Veeva's land-and-expand potential could be the catalyst that helps it beat expectations and bring investors up to the 21% needed to meet our goals.

3. Medpace

As a clinical research organization, Medpace (MEDP 1.17%) guides biotech companies through the drug development phases that lead to potential commercialization. While Medpace works with companies of all sizes, it focuses on the small biopharmaceutical industry -- which accounted for 79% of its total sales as of the second quarter of 2022.

This niche focus makes Medpace unique in that it offers a full suite of products to its relatively small clients -- offering anything necessary to go from phase 1 of a clinical trial to global commercialization. Ranging from study start-ups to biometrics and data sciences and a variety of laboratory services, the company's value proposition to its clients has been an investing success in the markets.

Having grown sales by 28% annually over the last five years, Medpace extended its strong track record of increases, seeing Q2 sales jump 26% year over year. Best yet for investors, its earnings per share grew at an even faster clip, rising 37% over the same time frame, thanks to a massive share buyback in early 2022 that saw Medpace retire roughly 14% of its total shares outstanding. 

With the biopharma industry projected to double in size by 2030, according to Statista, Medpace should continue to see incredible growth as biotechnology only becomes more critical over time.

Despite this substantial track record of sales increases and intriguing growth runway remaining ahead, the company's P/E ratio of 29 nears all-time lows since its IPO. 

MEDP PE Ratio Chart

MEDP PE Ratio data by YCharts

Anytime a stock's historical growth rate is as close to or higher than its P/E ratio, it catches my attention, highlighting growth at a reasonable valuation -- making Medpace's stock a strong candidate to deliver 21% returns over the next decade.