Looking to Double Your Money? Start With These 3 Hot Growth Stocks.

Looking to Double Your Money? Start With These 3 Hot Growth Stocks.

Many investors dream of hitting a home run with stocks in their portfolio (in this case, a home run is defined as a stock that doubles or more after purchasing shares) and doing so in less time than average of the market. The market as a whole averages an annualized return of around 10% over time, meaning doubling your money would take around seven years on average.

These “home” investment opportunities are hard to find, but they exist and don’t require investors to take too bold a risk. Three Motley Fool contributors were asked to offer suggestions on potential growth stocks and landed on Metaplatforms (NASDAQ:META), Currently in portfolio (NYSE: NOW)And SentinelOne (NYSE:S). All three have 100% investment potential in the future.

Here’s what you need to know about each.

Investing in companies with high switching costs is a great way to double your money

Jake Lerch (Metaplatforms): For investors wishing to double their stake, Metaplatforms has shown his potential on several occasions. In the last 18 months alone, Meta shares have more than tripled value. That’s because Meta has become one of the best companies in the world at converting revenue into profits and profits into shareholder returns.

Over the past 12 months, Meta generated a staggering $143 billion in revenue. Of that $143 billion, the company recorded $46 billion in net profit. a profit margin of 32%. Meta used part of this net profit to strategically buy back $25 billion worth of its shares over the past year, reducing its outstanding shares by 1.4%. These buybacks strengthen the value of the remaining shares on the market. Along with the share price appreciation, Meta now also pays a quarterly dividend, a move that diversifies its shareholder returns and increases the appeal of its shares to a broader investor base.

Considering the scale of its business, Meta’s user base is huge, with over 3.2 billion daily active people using its platform – you would think that continued growth would slow down. However, the company remains well positioned to maintain the revenue streams increase and profits increase. One reason is that its platforms (Facebook, Instagram and WhatsApp) benefit from high switching costs. Social media platforms have high switching costs, as many users spend years or even decades refining their preferences on these social media networks. They follow the feeds of their family, friends, acquaintances and celebrities; they seek out hobbyist communities and local businesses.

Recreating this network established elsewhere is difficult. This can be a long process and most people are not willing to start from scratch. This gives an advantage to the established network and ensures that Meta is likely to stick around. For investors looking to double their money, this gives Meta an edge in its growth efforts.

Growth Investors Need to Stop Overlooking This Brazilian Fintech

Will Healy (Now in portfolio): This title of Latin American digital bank should at least double in value in the coming years, and not just because it increased by more than 80% compared to last year.

To be sure, parent company NuBank is not on the radar of most U.S. investors. Even if Warren Buffett’s team Berkshire Hathaway holds a position, the company is largely unknown in the United States and to win with this stock, investors must understand a different financial culture.

Unlike the United States, Latin America remains a predominantly cash-based society, in which hundreds of millions of adults do not have bank accounts or credit cards. NuBank, which is the largest digital banking platform outside of Asia, is changing the game. In one year, almost 6 million Brazilians obtained their first credit card through Nu, adding them to the credit market. Nu has just surpassed 100 million customers. At the end of the first quarter of 2024, 92 million of these customers were in Brazil, representing approximately 54% of the country’s adult population.

To maintain its rapid growth, Nu expanded into Mexico and Colombia. The company has more than 900,000 Colombian customers. Additionally, the company added 1.5 million customers in Mexico in the first quarter alone, bringing its total to more than 6.6 million. Such successes indicate that its business model works in more than one country.

Naturally, financial data reflects this growth. Revenue was $2.7 billion in the first quarter, an annual increase of 69%. Operating expenses increased only 48%, allowing net income to rise to $379 million, compared to $142 million in the same quarter last year.

Additionally, with the aforementioned gain over the last year, the fintech stock returned from an ill-timed IPO in late 2021.

Looking to Double Your Money? Start With These 3 Hot Growth Stocks.

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Despite Nu’s stock price rising, investors probably aren’t too late. Its P/E ratio is around 45, low given its massive growth. Plus, as it appears to be repeating its success in Brazil in other countries, doubling its stock price could be just the beginning for Nu Holdings.

SentinelOne’s small size but cutting-edge technology makes it a smart bet for a double

Justin Pope (SentinelOne): Cybersecurity stock SentinelOne was a pretty easy choice. Cybersecurity is vital to businesses and will likely become even more important as artificial intelligence (AI) and other technologies attract more businesses to the cloud. According to a study by Spherical Insights, the global cybersecurity market will experience double-digit annual growth to reach $501 billion by 2030. Today, SentinelOne’s trailing 12-month revenue amounts to $621 million, not even one percent of that figure.

How will SentinelOne make its presence felt? Well, it’s already starting. SentinelOne uses AI to run its security platform. It proactively searches for potential threats and often responds to them before they become a problem. Several third-party companies and testing agencies have praised SentinelOne technology. The company has also expanded aggressively outside of its core endpoint security market, launching products aimed at securing data warehousing, cloud and identity. It is also launching generative AI features to improve its existing products.

New products help fuel some of the best revenue growth you’ll find on Wall Street. Revenue grew 38% year over year last quarter, and SentinelOne’s profit margins are rapidly improving and moving toward profitability as the company grows.

S Free Cash Flow Chart (% of Quarterly Revenue)S Free Cash Flow Chart (% of Quarterly Revenue)

S Free Cash Flow Chart (% of Quarterly Revenue)

Ultimately, SentinelOne is a small (but cutting-edge) player in a huge market. The company is “only” worth $6 billion in enterprise value and is trading at its lowest valuation since its IPO. Strong revenue growth, an advanced AI-powered product and possible earnings should allow the stock to double or more from current levels. It is impossible to predict when this will happen, but it is clear that there is still much to do from here. This could mean big things for investors’ portfolios.

Should you invest $1,000 in meta platforms right now?

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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jake Lerch has no position in any of the stocks mentioned. Justin Pope holds positions within SentinelOne. Will Healy holds positions in Berkshire Hathaway and Nu Holdings. The Motley Fool ranks and recommends Berkshire Hathaway and Meta Platforms. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.

Looking to double your money? Start with these 3 high-growth stocks. was originally published by The Motley Fool

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