3 stocks that could double your money in 5 years
If you could double your money every five years for 30 years, you would multiply your initial investment by a multiple of 64. That’s the magic of compound interest. One of the surest ways to get these returns is to stick with strong brands that offer plenty of growth opportunities.
To give you some ideas, three Motley Fool contributors have come up with their top picks to double in value by 2026. Here’s why they chose Planet Fitness (NYSE: PLNT), Amazon (NASDAQ: AMZN), and Netflix (NASDAQ: NFLX).
This Gym Operator Can Double Their Store Base
Jean Ballard (Planet Fitness): Staying healthy, both mentally and physically, is something many people have taken more seriously during the pandemic. That’s why Planet Fitness, one of the leading fitness centers in the United States, retained more than 13 million members at the height of the pandemic when most of the company’s gyms were temporarily closed. It ended in July with over 15 million members, marking six straight months of net membership growth, and there is more to come.
In the past five years, the stock has almost quadrupled in value, with Planet Fitness nearly doubling its number of stores to 2,170. The chain has stood out for its “Judgment Free Zone” environment, which encourages all people, no matter where they are in their fitness journey, don’t hesitate to hit a gym.
Its past performance shows that the concept works. Ahead of the pandemic, Planet Fitness had 53 straight quarters of positive same-store sales growth through the first quarter of 2020, and it is expected to pick up where it left off now that 98% of its locations are open.
One of the main features of the business is the high recurring revenue stream, where around 90% of the store’s revenue comes from royalties, vendor commissions, and membership fees. Additionally, franchisees are required to purchase new fitness equipment from Planet Fitness every five to seven years.
Management is targeting 4,000 stores in the United States alone, which is nearly double the current number of stores. More store openings, growth in memberships, and increased revenue per customer – as more members switch to a Black Card membership which offers additional benefits – are expected to keep the value of the growing company alive. so that investors can potentially earn double that growth stock over the next five years.
The king of e-commerce is only getting stronger
Jennifer Saibil (Amazon): If you bought Amazon stock when it was just starting out, you’re already sitting on a nice pile of cash. But if you haven’t, don’t worry; Amazon’s story is far from over, and there’s no better time to buy stocks than now.
2020 was a pivotal year for the internet giant as it faced unprecedented demand as people stayed at home. It demonstrated how important Amazon has become to the US economy, and it is becoming even more entrenched.
Amazon sales exploded last year, increasing 38% from 2019 sales. For comparison, they grew 20% in 2019 year over year.
But we’ve got past that and things are starting to slow down. In the second quarter of 2021, growth slowed to 27%, and the company is targeting an increase from 10% to 16% in the third quarter. While this may seem disappointing at first glance, it’s important to remember that this comes on top of the huge growth last year – 37% in the third quarter. After surpassing the 2020 results, we could experience more serious growth in 2022. And there is plenty of reason to be confident about Amazon’s continued success.
While there has been some slowdown in digital growth as people return to stores, the change is permanent and Amazon will continue to benefit from it. He’s also been pushing hard to get into physical retail as omnichannel is becoming the new way to build customer loyalty and people want more options. He is investing in streaming through his purchase of MGM studios and he has started selling his release technology to corporate clients. And of course, there’s the cloud computing company Amazon Web Services, which continues to add new customers and contributes about half of total profits.
Finally, let’s not forget that Amazon is the ultimate disruptor and has the means to engage in whatever business it wants. It doesn’t always end up being the leader, as with its efforts to compete with the creative market. Etsy and its streaming devices that face its competitors Roku. But it has gained a foothold in both of these areas and is a top competitor in many other areas where it focuses its investments, such as grocery shopping and streaming content.
Amazon stock has gained nearly 350% in the past five years, and you can easily double your money again with Amazon stock in the next five years.
The streaming content pioneer with plenty of room to grow
Parkev Tatevosian (Netflix): The streaming content pioneer Netflix is a stock that can double your money in five years. After all, over the past five years, Netflix stock has earned shareholders 499%. Of course, past performance is not guaranteed to be repeated in the future, but it indicates what might be possible.
The business had thrived since the start of the pandemic, when people stayed home more often and the demand for home entertainment increased. Netflix has 209 million paying subscribers. The large base of members who enjoy the company’s content enabled it to generate $ 7.3 billion in revenue in its most recent quarter ended June 30.
On an annualized basis, Netflix is on track to generate more than $ 29 billion in revenue. It is an important base from which it can increase content budgets, add total movies and shows, and improve the quality of productions. All in all, Netflix’s business will be difficult to compete on this grand scale.
As it builds its treasure trove of content assets, Netflix is an even more attractive option compared to traditional cable TV. According to Nielsen, streaming still only represents 27% of listening time against 63% for linear television. However, the trend is in the direction of streaming. Compared to linear TV, streaming is more convenient, often costs less, and is more portable. For example, you can use your Netflix subscription on your TV, smartphone, tablet, and laptop, while in most cases you can only watch linear TV on your TV.
If you’re looking for a business that can double your money in five years, be sure to put Netflix on your list. The company is making excellent progress in its attempt to become one of the most dominant media companies in the world.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.