There are some high-potential growth stocks on the market, but only a few that have the potential to fundamentally change an entire industry. Two in that category are Lemonade (LMND -1.93%), which aims to change the way we buy and use insurance, and Upstart (UPST -0.44%), which wants to democratize access to credit.

Neither of these are low-risk investments, but both have massive market opportunities and the early results have been quite strong. Here's a rundown of the potential of both businesses, and the returns investors could see if they're successful.

Lemonade's potential to change the insurance industry

There are few industries more in need of disruption than insurance. The process for obtaining insurance is clunky at best, and the claims process can be an absolute nightmare. Lemonade aims to change the game by making insurance easy to buy, and by processing claims in seconds and with minimal hassle. It operates an artificial intelligence (AI)-driven platform that automates much of the process.

To date, much of Lemonade's success has come from lower-cost forms of insurance, specifically renters insurance, which makes up the bulk of the company's premiums. However, the company has found traction in homeowners and pet insurance in recent years and is in the process of a wide-scale launch of its highly anticipated Lemonade Car auto insurance product.

If Lemonade is successful, the potential here is huge. Even after closing on the recent acquisition of Metromile, Lemonade's total in-force premium is about $568 million. The company's net earned premium in the first half of 2022 was $58.6 million. For context, Progressive's (PGR 0.37%) net earned premiums for the same period were $24 billion. The auto insurance market in the United States alone is about $316 billion in size, and is expected to reach about $1.6 trillion worldwide by 2028 (Lemonade does business in international markets as well).

Upstart's algorithm could change the way loans are made

Most loans are approved or denied based on the applicant's FICO credit score, which has been the industry standard for assessing default risk for decades. And to be fair, the FICO model does a pretty good job for those in the upper credit tiers, but not so much for those in the mid-range.

Upstart is a fintech company that aims to incorporate far more data into its algorithm to do a better job of assessing risk. It partners with banks to make loans, and the idea is that by improving risk assessment, its partners can make more loans without increasing their risk of loss, and therefore make more money.

Upstart has had tremendous success in the personal loan industry, but is starting to expand into much larger markets -- specifically auto and small business lending, which combine for about $1.4 trillion in total annual loan volume in the U.S. If Upstart's methodology is proven to be effective in both good and bad economies, this could be a major disruptor.

Which will produce 5x returns first?

To be sure, both of these stocks have tremendous execution risk. If it were easy to create a better way to buy and sell insurance, it would have been done a long time ago. And the same can be said about disrupting the time-tested FICO credit scoring model. However, both have massive opportunities, and if they can execute on their respective visions, the payoff for investors could be huge.

In fact, Lemonade could 5x from here and still have a market cap that's less than 15% of Progressive's, and Upstart trades for about one-fifth of the valuation of FICO score owner Fair Isaac (FICO 0.05%), despite having far more potential upside if its model is successful.

It's also worth noting that both of these stocks have been beaten down in the recent market downturn. Upstart is about 91% below its 2021 high, while Lemonade is trading for more than 80% below its peak. So, both stocks could 5x from here and still not get back to the levels they already attained within the past year.

The bottom line is that both companies have the potential to produce 5x returns, or potentially much more, over time. But how quickly they get there will depend on several factors, and there's no telling which one will be the fastest to appreciate. Because of this, I own both in my own stock portfolio and can't wait to watch these exciting businesses evolve.