Many investors dream about finding the next growth stock that could climb tenfold over the next 10 years. But for every stock that becomes a 10-bagger, plenty of other hopeful stocks fizzle out. Therefore, it's smarter for investors to spread out those long-term bets across some of the market's speculative plays instead of getting too attached to a single growth story.
I won't pretend that I know which growth stocks will net 10-bagger gains over the next decade, but those potential winners should have disruptive advantages and growing moats. I believe three underappreciated growth stocks fit that description: Symbotic (SYM +8.59%), Serve Robotics (SERV +3.04%), and Nio (NIO +2.03%).
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1. Symbotic
Symbotic, which went public by merging with a special purpose acquisition company (SPAC) in 2022, develops fully autonomous warehouse robots for processing pallets and cases. It claims a $50 million investment in one of its modules (which include its robots and software) can generate $250 million in savings over 25 years.
NASDAQ: SYM
Key Data Points
Walmart is Symbotic's largest customer. The retail giant accounted for 87% of its revenue in fiscal 2024 (ended last September), which mainly comes from a long-term contract to automate all 42 of its U.S. regional distribution centers by 2034.
That customer concentration is worrisome, but Symbotic has also been providing robots for Target, Albertsons, C&S Wholesale, and GreenBox -- a warehouse-as-a-service joint venture it formed with SoftBank. Those newer deals could gradually reduce its dependence on Walmart's massive automation project.
From fiscal 2024 to fiscal 2027, analysts expect Symbotic's revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at a CAGR of 24% and 71%, respectively. But it still trades at just 24 times next year's adjusted EBITDA. That modest valuation suggests that investors aren't convinced that Symbotic can diversify its business away from Walmart and maintain its current momentum. But if it proves the bears wrong, it could defend its early-mover advantage in the warehouse automation market and generate big multibagger gains for patient investors over the next decade.
2. Serve Robotics
Serve Robotics, which went public via a reverse merger in 2023, develops autonomous delivery robots. It was founded as a subsidiary of Postmates, became a part of Uber (UBER +2.50%) after its takeover of Postmates in 2020, and was spun off as an independent company in 2021.
NASDAQ: SERV
Key Data Points
However, Serve's top customer is still Uber Eats. Its newest Gen 3 delivery robots can travel up to 11 miles per hour, last up to 48 miles on a single charge, and carry 15 gallons of cargo. They're also resistant to extreme weather conditions. Serve initially only provided deliveries in the Los Angeles region, but it now operates in Dallas, Miami, Atlanta, and Chicago. It expects to enter another major metro area by the end of this year.
Serve plans to have 2,000 robots deployed for Uber Eats by the end of 2025, a near 20-fold increase from roughly 100 robots at the end of 2024. Over the next few years, it could reduce its dependence on Uber by striking similar delivery deals with other businesses or delivery services.
From 2024 to 2027, analysts expect Serve's revenue to surge at a CAGR of 241% from $2 million to $71 million as its scales up its business. Serve's stock might seem a bit pricey at 11 times its projected sales for 2027, but it's clearly established an early-mover advantage in its niche market -- and the stock could soar even higher if it attracts more partners and expands into more markets.
3. Nio
Nio is a major producer of electric vehicles (EVs) in China. It sells a wide range of sedans and SUVs, but it differentiates itself from its competitors with removable batteries that can be quickly swapped out at its own battery-swapping stations. That makes it a much faster alternative to traditional charging stations.
NYSE: NIO
Key Data Points
Nio's annual deliveries more than doubled in both 2020 and 2021, then rose by more than 30% in 2022, 2023, and 2024. Its recent growth was driven by its robust sales of its higher-end ET-series sedans, Onvo mid-sized SUVs, and Firefly compact cars in China. It also continues to expand in Europe, even as its margins get squeezed by higher tariffs.
From 2024 to 2027, analysts expect Nio's revenue to grow at a CAGR of 30% as its adjusted EBITDA turns positive by the final year. That's an impressive growth trajectory for a stock that trades at less than 1 times next year's sales, but its valuations are likely being compressed by the persistent trade tensions between the U.S. and China. But if those tensions finally ease, Nio's stock might command a much higher valuation and deliver massive multibagger gains over the next decade.
