Everybody loves a multibagger stock. Indeed, just a few of these gems in a portfolio can help turn modest regular contributions into life-changing totals.
So we asked a panel of Motley Fool contributing analysts which stocks they think are most likely to deliver serious multibagger growth from here. Their picks: Reddit (RDDT 3.27%), Roku (ROKU +0.13%), and SentinelOne (S +1.25%).
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Reddit stock is already up big, but it could have much farther to go
Jake Lerch (Reddit): I'm always on the lookout for potential multibaggers, and there are a few key factors that help me identify them. First, I look for a company that is rapidly growing its revenue. Second, I would like that company's market cap to still be small enough that it can reasonably double, triple, or quadruple in size. That rules out ultra-megacap stocks like Nvidia, Microsoft, or Apple, which already boast market caps in the trillions.
Narrowing my field with these two criteria led me to Reddit, a fast-growing tech stock with a reasonable market cap of only $40 billion.
NYSE: RDDT
Key Data Points
There are many things to like about Reddit, but let's start with my first key factor: revenue growth. Since late 2022, the company averaged a blistering 43% year-over-year revenue growth rate. What's more, its growth has been accelerating. In the second quarter, Reddit's top-line rose by 78% year over year -- its fastest growth ever.
Behind all this revenue is a tidal wave of new users, which, in turn, is attracting a substantial influx of new advertising dollars. The number of daily active unique visitors on the platform grew by 21% to 110 million in Q2. While that is a ton of people, Reddit remains early in its growth trajectory. For example, social media giant Meta Platforms claims more than 3.4 billion daily average users for its family of apps. In other words, there is still room for Reddit to massively grow its platform's audience -- and its revenue -- in the years to come.
I've said in previous articles that I believe Reddit's stock could increase in value by as much as 6 times over the next 10 years. Indeed, it's worth noting that the stock has already increased by more than 500% since the company's IPO in 2024. Given its impressive growth and modest market cap, I see Reddit as the next tech stock destined for serious multibagger status.
This connected TV stock is on track to stream major returns to investors
Will Healy (Roku): My prediction for tech's next multibagger is streaming giant Roku.
Admittedly, Roku may look like the last stock positioned for massive returns, since it has fallen by over 80% from its 2021 high and has yet to recover. Moreover, it competes directly in the ad market with some of tech's largest companies, which also host streaming platforms. These include Google parent Alphabet and Amazon.
NASDAQ: ROKU
Key Data Points
However, these tech giants failed to unseat Roku in North America -- it remains the No. 1 streaming platform in the U.S., Canada, and Mexico. It also continues making strides in regions like Latin America and Europe, and such gains led to hours of content streamed on its platform rising by 17% year over year in the second quarter.
Additionally, now that streaming viewership exceeds that of traditional TV in the U.S., it is poised to benefit from increased ad revenues in its home country and other regions as streaming becomes increasingly dominant in those markets.
Investors previously soured on this entertainment company due to its losses. Indeed, Roku was only profitable in Q2 because of unrealized gains on investments, not operations. Nonetheless, management forecast a full return to profitability in 2026, which should boost investors' confidence in the stock.
That improved financial outlook should highlight Roku's cheap valuation. Although past losses have left it without a P/E ratio, its price-to-sales (P/S) ratio of 3.2 closely approximates the S&P 500 average.
That is notable since many growth stocks have sales multiples in the double digits. If its P/S ratio rises above 10, that expanding multiple would turn Roku into a multibagger, possibly positioning it to revisit its all-time high.
This overlooked AI stock might be a coiled spring
Justin Pope (SentinelOne): It's harder to find potential multibagger stocks in a market that's already trading at all-time highs, but SentinelOne seems capable of multiplying in value over the coming years.
NYSE: S
Key Data Points
The cybersecurity company's Singularity technology platform uses artificial intelligence to proactively search for and mitigate threats across client endpoints, identities, and the cloud. The cybersecurity industry is highly competitive, but SentinelOne's high-end technology stands out in the field. It tested well in third-party evaluations, and Gartner named SentinelOne a leader in endpoint security for five consecutive years. Four companies in the Fortune 10, and hundreds more in the Global 2000, count themselves among its customers.
Despite all this, the stock hasn't performed well. Since going public in late 2021, SentinelOne is down 75% from its all-time high. The reason? Investors are likely worried about SentinelOne's competitive footing. The company's revenue of $864 million over its last four reported quarters is significantly smaller than that of its peers, and the business continues to operate at a loss.
Fortunately, SentinelOne has a substantial amount of cash on its balance sheet, which should buy investors some patience as the company continues to grow and progress toward profitability. If SentinelOne can instill confidence in investors that it can earn a profit in the competitive cybersecurity space, its upsides could be compelling.
SentinelOne trades at an enterprise-value-to-revenue ratio of roughly 5, a valuation that's a fraction of its peers, including CrowdStrike Holdings (24) and Palo Alto Networks (13). Continued business growth and a higher valuation, as profit margins improve, could send the stock significantly higher.
Nobody can guarantee that SentinelOne will deliver on its potential, but the stocks that eventually deliver home runs typically start off looking a bit more risky. SentinelOne's depressed valuation is a rarity in this market, making it a worthy candidate for a closer look.
