It's hard to predict the market's movements during a short period, say, six months or a year. However, over longer periods of five years or more, broader equities generally deliver pretty good returns, allowing investors to increase their wealth. Buying the right stocks is key here since some companies will move in the wrong direction.
With that as a backdrop, let's look at two stocks worth serious consideration for investors looking to earn excellent returns in the next decade: CRISPR Therapeutics (CRSP 1.48%) and Shopify (SHOP 7.20%).
NASDAQ: CRSP
Key Data Points
1. CRISPR Therapeutics
CRISPR Therapeutics is a gene-editing-focused biotech that was founded in 2013. It took the company about 10 years to earn approval for its first product. In December, CRISPR got the green light from the U.S. Food and Drug Administration for Casgevy, a gene-editing therapy for sickle cell disease and beta-thalassemia -- the FDA has only approved it for the first of these two rare blood illnesses for now.
Casgevy, developed in collaboration with Vertex Pharmaceuticals, also got the nod in other countries, including the U.K. Casgevy's potential is stunning. It will cost $2.2 million in the U.S., a relatively average price for a gene-editing treatment. Assuming CRISPR Therapeutics and Vertex Pharmaceuticals earn the label expansions they will seek in the future, Casgevy could have a target market of well over 100,000 patients.
However, in the immediate future, the two partners will target 32,000 patients in the U.S. and Europe, which still works out to an addressable market of about $70 billion. Even with competition from the smaller Bluebird Bio -- which has competing treatments on the market -- CRISPR Therapeutics and Vertex should be able to make a fortune. In the meantime, launching a new product shouldn't take CRISPR Therapeutics another decade.
The biotech has several ongoing programs. CRISPR continues to go after difficult targets. For instance, it is looking to develop a functional cure for type 1 diabetes. Here is what investors can expect in the next 10 years with CRISPR Therapeutics. First, the company will eventually start generating solid sales from Casgevy. Second, the biotech will record clinical and regulatory progress. And third, CRISPR Therapeutics will launch new products on the market.
That's not to say the company won't encounter any issues. But in my view, it is well-positioned to deliver outsized returns in the coming decade, which makes it a top biotech stock to buy now.
NASDAQ: SHOP
Key Data Points
2. Shopify
Last year was an important one for Shopify, too, as it made some significant changes to its business. Most notably, Shopify decided to sell its logistics business and focus most of its energy on e-commerce. The change came as a bit of a surprise to investors since it went against what management had explicitly said on multiple occasions. However, the reception was positive overall -- investors love that Shopify will no longer spend billions on its logistics operations, which will help boost margins and profits and allow it to reinvest in other opportunities.
That's partly why Shopify's financial results improved last year. In the third quarter, the company's revenue of $1.7 billion jumped by 25% year over year, while its gross profit of $901 million was 36% higher than the year-ago period. Its gross margin also improved meaningfully -- from 48.5% in Q3 2022 to 52.6%. And importantly, Shopify turned a net loss per share of $0.12 into net earnings per share of $0.55.
It's hard to argue with results like those, even for investors who weren't too happy about Shopify's strategic maneuver. What's more, Shopify still has plenty of room to grow. The e-commerce industry should continue expanding through the end of the decade and beyond, and Shopify is one of its leaders. The company currently boasts a 10% share of the market in the U.S. and a 6% share in Western Europe.
Further, Shopify also benefits from high switching costs since merchants who have spent time and money building and customizing an online storefront with the company won't easily jump ship, especially not after attracting a large customer base. In short, Shopify has delivered excellent returns since its 2015 initial public offering, and the company should continue doing exactly that.
