Broadly speaking, investors should seek out enduring businesses with a willingness to hold onto their stocks "forever."
Every now and then, though, a relatively shorter-term opportunity knocks. That is to say, a period of unusually high growth for a particular company surfaces. While these businesses may well end up thriving indefinitely, the next few years could prove very fruitful for them as well as for their risk-tolerant investors.
To this end, here's a closer look at three stocks with the potential to dish out monster-sized gains over the course of the coming five years.
Image source: Getty Images.
1. Joby Aviation
If you're not familiar with Joby Aviation (JOBY 2.75%), it's one of the few companies that's increasingly looking like it's going to make air taxis a reality. Its ultra-quiet four-passenger battery-powered aircraft can take off and land vertically -- like a helicopter -- making it perfectly suited to ferry people to and from crowded city centers. A trip to New York City from JFK airport that would normally take nearly an hour, for perspective, can be completed in less than 10 minutes.
It's not a mere concept, either. The aircraft exists. Several of them, in fact, which Joby has collectively flown for thousands of hours as part of the design's FAA certification process. Indeed, just last month, Joby completed its first-ever U.S. airport-to-airport flight (from Marina to Monterey, California), navigating airspace with other air-traffic-controlled aircraft in it.
Perhaps the most compelling investment aspect of Joby Aviation, however, is its partnerships and committed interest in its capabilities. In March of this year, U.K. airline Virgin Atlantic announced it would tap Joby to help get its passengers to and from some of its airport terminals. Carmaker Toyota became a major shareholder in May, setting the stage for a production partnership. The U.S. Air Force is also interested in the low-cost commuting aircraft, having taken delivery of two of them already. In the meantime, defense contractor L3Harris is looking to incorporate some of Joby's technology into a whole new kind of aircraft.
Airports and cities are on board, too. The company has completed several test flights in Dubai, while the groundwork for operations in Los Angeles and New York City is being laid. More will follow as the premise is proven.
Why the next 5 years: Time is of the essence for interested investors.
See, while Joby's got no commercial air-taxi service revenue or light battery-powered aircraft sales to speak of right now, the technology is ready, and the FAA's certification process is moving forward. This much-anticipated industry is ready to explode, in fact, with Mordor Intelligence predicting the global air taxi market will grow at an average rate of 23% per year through 2030. The world's just waiting for the aircraft it needs. It's apt to get them soon.
2. Dutch Bros
Starbucks (SBUX -1.88%) may have dominated the coffee shop business for the past few decades by providing a somewhat posh and elevated experience at all of its locales. At least in the U.S., though (where more than 40% of its stores are located), that's no longer what consumers want. They'd increasingly rather have a more casual and convenient coffee-buying experience.
Enter Dutch Bros (BROS -7.57%).
It's a completely different kind of offering. There's no customer seating; Dutch Bros only operates drive-thrus. That's not the most distinguishing factor, though. Unlike Starbucks, which offers a surprisingly polished but impersonal customer experience from one locale to another, each of Dutch Bros' coffee kiosks is bursting with its own unique personality, often reflecting those of the employees working there. In an environment where authenticity is quickly becoming a requirement for consumers, this is a huge deal.
Why the next 5 years: Dutch Bros has already seen some phenomenal growth in recent years, from 538 shops as of the end of 2021 to a little more than 1,000 as of June. This is still just the beginning, though. During the investor day event in March, the company upped its previous long-term target of 4,000 stores to more than 7,000. It's obviously not going to get there by the middle of 2030. In light of the growth it's already been able to muster of late, however -- and its still relatively small size -- its plans to have more than 2,000 shops up and running by 2029 certainly seems plausible.
Such growth, of course, could drive the stock considerably higher during this stretch.
3. MercadoLibre
Finally, add MercadoLibre (MELI 0.00%) to your list of monster stocks to buy and hold for (at least) the next five years.
If you've never heard of it, there's a reason. That is, it only does business in Latin America. And not even in all of Latin America. Its core markets are Brazil, Mexico, and Argentina.
Where it does do business, though, what a business it does!
But what exactly does it do? E-commerce, largely, although that description understates the company's reach. MercadoLibre also operates a digital payments platform, manages a logistics service, and offers a range of tools to businesses that operate online as well as offline. This breadth is why the company is often referred to as the Amazon of Latin America.
It's growing much like Amazon did in its early days, as well. MercadoLibre reported revenue of $6.8 billion last quarter, up 34% year over year, and had it not been for the free shipping it offered to many more of its Brazilian customers, its Q2 earnings would have grown accordingly rather than falling short of analysts' estimates. Like Amazon, though, MercadoLibre's management understands that it needs to sacrifice a little profit now in exchange for expanding its customer base, which will fuel future growth within the highly fragmented Latin American market.
Why the next 5 years: There's a confluence of factors coming together right now, creating an extraordinary opportunity within the geographical market. Chief among them is the relatively new but rapid proliferation of broadband connectivity there, and broadband-connected smartphones in particular.
Market research outfit GSMA expects the region's total number of mobile internet users to swell from last year's count of 413 million to nearly 500 million by 2030. And as was the case in North America, consumers are quickly embracing the online shopping that connectivity facilitates. That's why Payments & Commerce Market Intelligence believes the region's e-commerce industry is set to double in size between 2023 and 2027, when it could be worth more than $1 trillion.
MercadoLibre is already well positioned to capture more than its fair share of this growth that will certainly last well beyond 2027. It's just that the business's fastest and biggest growth is apt to materialize in the immediate future.
