Market volatility will come and go, but the companies you invest in now could serve as the base of your portfolio for years to come. Building wealth takes time, patience, and effort.
You need to understand the companies you own, and make sure they align with your portfolio goals and risk tolerance. It’s also important to review your portfolio regularly so you can adjust where needed as well as ensure you have exposure to a properly diversified basket of companies and sectors.
If you have $1,000 to invest in stocks this month, there are plenty of wonderful businesses to consider. Here are three that could even potentially double your initial investment in the years ahead.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.22%) continues to forge its own path in the rare disease drug market, a space valued at roughly $200 billion. The company is known for its cystic fibrosis drug franchise, a group of four medicines that are the only approved products on the market to treat the underlying genetic factors that cause the disease.
This distinction has enabled the company to grow revenue, profits, and cash steadily through the years. Over the trailing-three-year period alone, Vertex has grown its revenue, net income, and liquidity by 44%, 23%, and 75%, respectively. It’s using this financial bastion to fuel what looks to be the next era of growth for the business from new cystic fibrosis drugs as well as other therapies targeting rare, underserved diseases.
For example, Vertex is developing an mRNA-based drug with Moderna for cystic fibrosis patients whose mutations make them ineligible for its existing lineup of drugs. Exa-cel, the drug that could be next to market, is a CRISPR therapy that may offer a functional one-time cure for sickle cell disease and transfusion-dependent beta thalassemia.
The company is also working on the first-ever drug to treat the underlying causes of APOL1-mediated kidney disease, as well as a therapy to treat the genetic disorder Alpha-1 antitrypsin deficiency. Both of these genetic diseases have patient populations numbering in the hundreds of thousands and could individually represent multibillion-dollar market opportunities for Vertex.
The stock is up by about 30% just from the beginning of this year. Given the growth story that looks to be in its very nascent stages, it’s not a stretch of the imagination that the stock could double a $1,000 investment in the next five years or so. Right now, a $1,000 investment in Vertex Pharmaceuticals would get you about three shares.
2. Upstart
Upstart (UPST) has jumped 90% from the start of this year, so it’s already close to doubling its price from January. This is largely because the stock has been heavily shorted by some investors amid the backdrop of a tough macro landscape that has seen lending volumes decline, and driven Upstart’s top and bottom lines downward.
Upstart facilitates lending transactions and decisions using its proprietary platform that revolves around artificial intelligence and machine learning, including over 70 billion cells of performance data. In fact, 87% of all loans processed through Upstart are approved on an automated basis, while its platform has historically approved 43% more loans than than the credit-score only model. This has not only expanded the pool of credit-worthy lendees, but opened up a whole new market of consumers to banks, credit unions, and other traditional lending institutions.
Because Upstart’s platform is constantly adjusting to the environment at hand, it’s been approving fewer loans than usual. Its lending partners are also more hesitant to fund loans, and even consumers are shying away from applying for loans like normal. All of that has contributed to the unprofitability and decline in revenue that Upstart has contended with lately.
Even so, more lending partners continue to sign up with Upstart. It now has 100 banks and credit unions in its partner network compared to just 10 when it went public in late 2020. Its auto lending program is exploding, with 61 dealerships now offering Upstart-powered loans across the nation. The company also recently entered the mortgage lending market, a multitrillion-dollar addressable opportunity.
Analysts think that Upstart could grow its earnings by 30% on average over the next five years alone. The lending environment will likely continue to be slow and gradual in its recovery. Still, the potential of this platform along with its continued adoption by lending partners and consumers could drive its financials and share price back skyward with time. At the time of this writing, a $1,000 investment in Upstart would leave you with about 40 shares.
3. Airbnb
Airbnb (ABNB -1.27%) is up more than 40% since the start of this year, a solid clip considering the S&P 500 is looking at an increase of about 11% in the same period of time. The global travel and tourism sector is on track to balloon to a $16 trillion addressable market in the next decade.
Airbnb’s platform, which caters to just about every type of traveler and travel stay, is ideally poised to benefit from this continued boom. Guests booked 115 million nights and experiences on Airbnb in the second quarter of 2023 alone, generating gross booking value of $19 billion for the three-month period.
Those two figures were up 37% and 94%, respectively, compared to the second quarter of 2019. Net income for the quarter totaled $650 million, while the company’s net income margin reached an all-time high of 26%. Revenue, which totaled $2.5 billion for the quarter, was up 18% year over year and 105% from four years ago.
Airbnb is one of many companies looking at ways to use artificial intelligence to streamline and grow its business. The company already uses AI for use cases like party prevention and matching people with listings, but CEO Brian Chesky gave some additional insight into some of the ways the company could leverage this technology in the future during the second-quarter earnings call. He said:
We’re investing more and more in account profiles, personalization, really understanding the guests. We want to know more about every guest in Airbnb. Any travel company knows about their customer in the world. And if we do that, we can provide much more personalized service, and that our app can almost be like an AI concierge that can match to the local experiences, local homes, local places all over the world.
Looking over the next five years alone, analysts are forecasting that the company could grow its earnings by 20% annually. Considering the pace at which Airbnb has been growing revenue and profits, even this possibly conservative estimate could be a broad impetus for the stock and its shareholder returns. It’s definitely conceivable that Airbnb could double a $1,000 investment or more in the next several years. Putting $1,000 in Airbnb right now would give you about eight shares.
