Prediction: 3 Stocks That Will Turn $250,000 Into $1 Million by 2030

Last year's 33% plunge in the Nasdaq-100 technology index was a reminder to investors that focusing on the long term is the best way to generate positive returns in the stock market.

Since the inception of the Nasdaq-100 in 1985, it has delivered a positive annual return 81% of the time. There's no perfect time to buy; however, the index has only declined in consecutive years on one occasion -- during the dot-com bust from 2000 to 2002 -- which suggests buying technology stocks after a down year tends to work really well. 

With that in mind, let's explore three stocks with the potential to generate a fourfold return by the end of this decade. That means any one of them -- or a combination of all three -- could turn a $250,000 investment into $1 million. But you don't need a starting balance that large to reap the benefits. These stocks could lead a growth-oriented portfolio of any size. 

1. Uber Technologies

Uber Technologies (UBER 0.56%) is the leading ride-hailing (mobility) company globally, and one of the top food delivery providers, too. If you haven't used one of Uber's platforms before, chances are you know someone who has because they serve 131 million people every month.

After a two-year hiatus due to the pandemic, Uber's mobility segment is once again its largest driver of bookings, overtaking food delivery in the fourth quarter of 2022. Last year was Uber's biggest year ever -- customers booked $115 billion worth of services, and in Q4, they were taking an average of 1 million trips per hour.

But Uber never stands still. It's working on growing its Uber Freight brand, which has already become the largest logistics network in the world; think ride hailing but for commercial delivery. It has already attracted 200,000 users with $17 billion in freight under management, but the company estimates the U.S. trucking industry alone presents an $884 billion opportunity.

Uber stock currently trades at a price to sales (P/S) ratio of 2, based on $31.8 billion in 2022 revenue and its $62.8 billion market valuation. Assuming that P/S ratio remains constant, the company will have to grow its revenue by 21.9% per year between now and 2030 for its stock to deliver a fourfold return. 

History suggests it's more than capable. Uber generated $11.2 billion in revenue in 2018, so it grew at a compound annual rate of 29.6% over the last four years, which is comfortably above the threshold.

But as the effects of the pandemic wore off, Uber grew its 2022 revenue by a whopping 82% compared to 2021, which is significantly above its four-year average.

2. Datadog

Cloud computing has been nothing short of revolutionary for businesses. The technology allows them to create digital sales channels for consumers (like websites and mobile applications), and it also streamlines their operations, from banking to bookkeeping to employee communication. But it does come with challenges, and that's where Datadog (DDOG -1.43%) comes in.

While the cloud can provide a business with the opportunity to sell to a global audience, one downside is that those customers can very quickly and easily shop with a competitor. As a result, the business needs to ensure its online infrastructure is operating at peak performance around the clock, in every geographic location, and for every customer. Monitoring that manually can be an impossible task, and technical glitches often go unnoticed until sales are lost. 

Datadog's cloud monitoring platform is designed to quickly alert organizations to technical problems across their entire cloud network, from the back end to the customer-facing sales channels, before they infiltrate the user experience.

The company serves a range of industries including retail, gaming, financial services, and entertainment. Its platform is popular with large organizations given they tend to have more complex cloud networks, and as a result, it had amassed 2,780 customers spending at least $100,000 per year by the end of 2022. And 317 of them were spending at least $1 million per year, up 47% from 2021. 

Datadog generated $198.1 million in revenue during 2018, which had grown to a whopping $1.68 billion in 2022. That's a compound annual growth rate of 70.5%. Remember, the company only needs to grow its revenue by 21.9% each year until 2030 for its stock to see a fourfold gain (assuming its P/S ratio remains constant), so it could slow down significantly and still meet the threshold. 

3. Zscaler

Cybersecurity has become one of the most critical industries in the world. The abovementioned rush to cloud computing means organizations are storing their valuable assets and applications online, making the attack surface larger than ever before. A report by McKinsey & Company suggests the corporate sector spent $168 billion on cybersecurity in 2022, but that it should be spending as much as $2 trillion.

Companies wanting to protect critical infrastructure from malicious access have probably considered zero-trust security leader Zscaler (ZS -1.45%). Say, for example, a company has a global workforce with many of its employees accessing their jobs remotely. Without physically watching each staff member sign in, it's impossible to know it's really them, or if their login credentials have instead been compromised.

Zscaler treats all sign-in attempts as hostile. Rather than just assessing their username and password, it also analyzes the device being used, and the person's location, to verify it's an authorized user. But it goes a step further; once employees are logged in, they can only access the applications assigned to them, so even if a hacker successfully breaches the login process, they can't compromise the entire network by jumping to other valuable assets.

Zscaler's annual revenue has grown at a compound annual rate of 54.7% over the last four years, from $190.1 million in 2018 to $1.09 billion in 2022. That's more than double the 21.9% rate it needs (if its P/S ratio remains constant), and with the cybersecurity industry continually growing in importance, there might even be an opportunity for Zscaler's revenue to accelerate in the future. 

Plus, Zscaler stock is down 71% from its all-time high amid the broader sell-off in the technology sector, so by simply recovering those losses, it would generate the majority of the gain it needs to turn $250,000 into $1 million by 2030.