Realizing a 10x return or better in just 10 years is no easy feat, but it does happen. For example, investors who plunked $100,000 down on the semiconductor giant Broadcom in 2013 are sitting on around $1.8 million at the moment. A similar investment in the diabetes device manufacturer DexCom would be worth around $2.8 million today.
Now that they've already grown up, expecting either of these highfliers to produce another 10x return in the coming decade isn't realistic. Luckily, there are at least three exceptional growth stocks in a position to turn $100,000 into more than $1 million.
Whether you have $100,000 to invest or just $100, a 10x gain from these stocks in the coming decade is a possibility. Here's how it could happen.
1. Doximity
Doximity (DOCS +0.37%) runs a social media platform for doctors, nurse practitioners, and physician assistants. By its own estimate, around 80% of America's doctors are members.
NYSE: DOCS
Key Data Points
If you've watched any television lately, you know that pharmaceutical companies spend lavishly to get their messages in front of potential patients. With this in mind, imagine how eager they are to get their messages in front of physicians who can prescribe their products.
The last three months of 2022 were a disaster for general social media businesses that rely on ad sales. Facebook and Instagram's parent company Meta Platforms reported revenue that fell 4% year over year during the last three months of 2022.
Doximity reported softening demand for digital ads, but the business is still growing at a rapid pace. While revenue from Facebook and Instagram contracted, Doximity's specialized social media business reported total sales that rose 18% year over year.
Doximity is currently trading at around 38.2 times trailing free cash flow. There's a lot of growth already baked into this price, but a lack of competition now suggests it can remain a top destination for pharmaceutical ad buyers for at least the next decade.
2. TransMedics Group
TransMedics Group (TMDX +1.80%) is single-handedly changing the way hospital systems manage solid organ transplantation. The company's claim to fame is an organ care system (OCS) approved by the Food and Drug Administration (FDA) to rejuvenate and maintain donated lungs, hearts, and livers.
NASDAQ: TMDX
Key Data Points
TransMedics' OCS constantly perfuses organs with warm, oxygenated blood, which is heaps better than standard care, which is typically limited to a cooler and some ice. Since the OCS allows hospitals to deliver organs anywhere in the U.S., TransMedics is able to become more than just a manufacturer of organ care equipment.
TransMedics' national OCS program is an end-to-end service that handles organ retrieval and delivery to transplant centers. Expansion of the national OCS program drove fourth-quarter sales 225% higher year over year, and there's plenty of room for further growth in the years ahead. The company's OCS isn't approved to transport kidneys yet. Kidneys are transplanted more often than hearts, lungs, and livers combined.
TransMedics doesn't have profits to report yet, and it's trading at 23 times trailing sales. Investors should understand that this is a sky-high valuation, and any stumbles in the decade ahead could lead to heavy losses.
With heaps of unmet demand for transplantable organs, this stock is worth the risk its lofty valuation presents. That said, investors should only add it to well-diversified portfolios.
3. ShockWave Medical
ShockWave Medical (SWAV +0.00%) is another manufacturer of devices nobody wants to think about until they need them. Its lead products are used by cardiovascular surgeons to soften blocked arteries hardened by calcium deposits.
NASDAQ: SWAV
Key Data Points
ShockWave's devices are single-use catheters that deliver powerful sonic waves via a process called intravascular lithotripsy (IVL). This is similar to the method healthcare providers have used to pulverize kidney stones for decades.
Using ShockWave's IVL devices to soften blocked arteries before stretching them out and inserting stents greatly reduces the risk of dangerous complications. Cardiovascular surgeons are catching on so quickly that revenue more than doubled last year to $490 million.
ShockWave estimates the addressable market for products it sells now, plus one on the way, at more than $8.5 billion annually. Without any competitors developing IVL devices of their own, there's plenty of room for this business to grow.
Shares of ShockWave are down by more than a third from the peak they reached last summer. Despite the drop, the stock is still trading at around 35 times last year's earnings. That's more than reasonable for a business that doubled revenue last year and expects total revenue to grow 35% to 39% in 2023.
An unexpected slowdown over the next several years could lead to losses, but it's probably worth the risk. With the only IVL devices on the market, ShockWave has an excellent chance to produce a 10x return for patient investors.
