The market is rolling this year, but it won't always be that way. There will be corrections. There will be sell-offs. Thankfully there should also be recoveries and even more exhilarating rallies. Stocks don't go up in a straight line, but over time the gains can be substantial if you pick the right ones.
I feel that Disney (DIS -0.04%), Roku (ROKU -10.29%), and Celsius Holdings (CELH 2.12%) can be five-baggers in the next seven years, turning a $1,000 investment today into a cool $5,000. The starting lines are very different for all three names. Disney is out of favor. Roku is well off its all-time highs, but it has nearly doubled in 2023 to be one of this year's biggest winners. Celsius continues to be a rock star. Let's take a closer look at three very different names that can trounce the market starting today.
1. Disney
It's popular to hate on Mickey Mouse these days, so let's start with a contrarian play. Disney doesn't pack the prototypical traits of a growth stock that can appreciate fivefold by 2030. Organic growth has been unimpressive in recent years, and it's not at its best right now. It's a blue chip that has failed to participate in this year's run, trading barely higher in 2023.
Disney isn't firing on all cylinders. Its linear TV business is experiencing the same fade that you're seeing at rival media networks. The streaming business that was supposed to take the baton from traditional TV is a money pit. Disney's intellectual properties -- unmatched in historic appeal -- have been faltering at the box office lately. Even the theme parks that provided relief early in the pandemic recovery are proving fallible now, as Disney World experienced a surprising dip in performance in the family entertainment giant's latest quarter.
Image source: Getty Images.
Let's move seven years ahead in Princess Aurora's slumber. You won't have to wait that long for Disney+ to turn things around. The streaming segment's deficit was cut in half in its latest quarter, and CEO Bob Iger is still on track to make it profitable by the end of next year. Disney has always bounced back from lulls with its theatrical releases, and it has the franchises in its arsenal to do exactly that. Even Disney World is holding up better than you might think. Revenue and operating profits for the resort are up better than 20% from pre-pandemic levels.
Disney is currently embroiled in politically polarizing squabbles, but do you really think that this will be a thing in a few years? Analysts see the family entertainment leader more than doubling its profitability in the next three years. If it can repeat the feat again in the following three years, the stock as a five-bagger would have an earnings multiple in the 20s. Reality can be even more kind.
Streaming has the potential to be even more lucrative by 2030 than linear TV today. The ability to target ads more effectively through connected TV will find marketers paying up to reach ideal audiences. The media stock bellwether may not have any of this year's top draws at the multiplex, but movie studios have to be delighted to see folks returning to movie theaters again. Disney's theme parks have never been as profitable as they are right now. Just wait until the economic picture clears and international travel truly bounces back.
2. Roku
The path for $1,000 in Roku becoming $5,000 in seven years is even easier to illustrate. The shares can appreciate fivefold from here and still be lower than they were when Roku peaked two summers ago. Can the 2030 market believe that Roku is worth more than the 2021 market does? I think so.
Roku's popularity as a streaming video hub continues to grow. It has actually widened its market share since the frenzied days when its stock was approaching $500. Roku has a record 73.5 million active accounts on its platform, and engagement levels continue to improve. Red ink remains a problem, but Roku has now posted back-to-back quarters of sequential improvement on the bottom line, and gross profits have returned to peak levels.
Three of the major premium streaming services have announced double-digit percentage increases on subscriptions. This makes new viewers more valuable, boosting what they're willing to pay Roku to advertise on its platform.
3. Celsius Holdings
Disney and Roku are turnaround stories. Celsius just needs to keep rolling. The fast-growing company behind a widening line of functional energy beverages is one of the market's biggest winners. It's a forty-bagger over the last five years, soaring to new highs after last week's blowout financial results.
Revenue won't grow at today's ridiculous 112% pace, but the roadmap for superior market returns in the next seven years is pretty clear. With PepsiCo (PEP -0.62%) stepping up last summer as a new investor in Celsius and its new distribution partner, the company behind the popular fruit-flavored sparkling canned drinks is ready to shine overseas. There is still room for Celsius to keep growing in the U.S., where its market share has doubled over the past year. With international sales accounting for less than 5% of the top-line mix, the real opportunity awaits outside of its home turf.
