Tripling your money in a decade is an attainable goal, but it isn't without risks. It requires a compound annualized return of 11.6%, which is about the market's average return over the last few decades, and that level of return isn't guaranteed.
To make market-beating returns, investors need to find companies that are leaders in their industries, see a large potential market, and have solid financials. I think MGM Resorts International (MGM 1.60%), Spotify Technology (SPOT +0.37%), and Coinbase Global (COIN +5.06%) are stocks that could triple your money, or more, in the next decade.
NYSE: MGM
Key Data Points
MGM Resorts
The resort and casino business of today isn't anything like the casino business of the 1990s. The days of junk bonds and high leverage are over. This is a cash-flow business, and the Las Vegas Strip is generating more revenue than ever. In 2022 casinos generated $8.3 billion in gambling revenue, more than the $6.6 billion in 2019 and exceeding the all-time high of $6.8 billion in 2007.
And Las Vegas isn't just about gambling. Well over half of the revenue generated at resorts comes from non-gaming sources of revenue. You can see below that this has helped drive $4.1 billion in EBITDA over the past year for MGM Resorts.
MGM EBITDA (TTM) data by YCharts
The current numbers are good and the enterprise-value-to-EBITDA ratio of about 5 is relatively cheap, but there should be even more upside ahead. Macao, which generated 6x the gambling revenue of the Las Vegas Strip before the pandemic, has yet to fully recover, due in large part to China's zero-COVID policy. That policy has ended, and I think we'll see a surge in revenue in the next few quarters.
If the jump in activity is anything like Las Vegas, the near future is very bright -- and as a result, MGM Resorts should be a cash flow machine for investors over the next decade.
Spotify
Most people know Spotify as a music app that allows unlimited music listening for a flat fee. That's where Spotify generates a majority of its revenue. But the reason this stock could triple is advertising and podcasts.
Unlike music, where a small number of record labels control most of the supply, the podcast business comprises thousands of niche creators looking for an audience and a way to monetize their content. Spotify can help with both, and in the fourth quarter generated $449 million from the advertising business, up 14% from a year ago, despite a weak advertising market.
Spotify should be able to maintain a steady, albeit small, amount of profits in the music business, but its podcasts are where the future is. Spotify has the ad platform, creator tools, and audience to succeed in podcasts, and if it can keep growing at a double-digit rate a decade from now, this could be a huge financial success.
Coinbase
The current downturn in the crypto market, commonly known as a crypto winter, has been devastating for the crypto market and Coinbase's bottom line, but there's a silver lining. If the crypto market recovers in the next few years, there will be fewer competitors (see FTX's bankruptcy), and Coinbase will have solidified itself as one of the few reliable companies in the space.
Coinbase's business may not be in as bad a shape as you think, either. As I recently highlighted, Coinbase has a huge stablecoin business, or a token that tracks a traditional currency, with its 50% stake in the group that runs the U.S.-dollar-tracked USDC token. It's one of the biggest Ethereum (CRYPTO: ETH) staking platforms, and there's $5 billion of cash and equivalents on the balance sheet.
If crypto and Web3 become big business, which I think they will, Coinbase will be one of the clear leaders. We have seen as recently as 2021 just how profitable that business can be (see below). And if Coinbase gets back there, the stock could more than triple as a result.
COIN Net Income (TTM) data by YCharts
Leaders with growth ahead
MGM, Spotify, and Coinbase are all industry leaders with the potential for significant growth in cash flows ahead, and I think they could more than triple in value over the next decade. The ride may be volatile, but I believe in all three over a very long time period.
