- Cardlytics (NASDAQ:CDLX)
- Inseego (NASDAQ:INSG)
- Nio (NYSE:NIO)
- Plug Power (NASDAQ:PLUG)
- Stitch Fix (NASDAQ:SFIX)
- Tabula Rasa Healthcare (NASDAQ:TRHC)
- Health Catalyst (NASDAQ:HCAT)
- InMode (NASDAQ:INMD)
- LivePerson (NASDAQ:LPSN)
- Maxar Technologies (NYSE:MAXR)
If you’re looking for explosive stocks that could rise by 1,000% or more over the next 10 years, then you need to start by looking at hyper-growth small-cap stocks aligned with tomorrow’s biggest megatrends.
What exactly does that mean? It’s a simple two step process. Let’s break it down.
First, you need to find small-cap stocks. Those are stocks with market caps of $2 billion or less. Why? Because the smaller the company, the more upside potential it has. There’s simply more room left to grow. Also, it’s easier for small-cap stocks to roar higher. That is, it’s easier for a small-cap stock to go from $1 billion to $10 billion, than for a large-cap stock to go from $100 billion to $1 trillion.
Second, you need to find small-cap stocks that are aligned with megatrends. Why? Because megatrends are the key to unlocking huge revenue and profit growth. And those are the keys to unlocking 1,000%-plus gains.
To be sure, these small-cap stocks aren’t “sure things”. If anything, they are quite the opposite. They are high-risk, high-reward plays that could go boom… or bust.
But they are also the stocks which are most likely to rise by 1,000% or more over the next decade.
So with all that in mind, let’s take a closer look at 10 of my favorite small-cap stocks to buy for potentially explosive gains over the next 10 years.
Small-Cap Stocks to Buy for the Next 10 Years: Cardlytics (CDLX)
Megatrend: Big Data
The bull thesis on $1.2 billion payment card data company Cardlytics is very simple.
Big data equals big money. This is a proven maxim in the investment world. Facebook (NASDAQ:FB) leveraged big data on billions of social media users to turn into a $550 billion global digital advertising empire. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) leveraged big data on billions of search queries a day to turn into an $850 billion company.
Therefore, the blueprint is simple. One, collect big data. Two, use analytics and insights to turn that big data into big money.
That said, the payment cards world has a ton of data. About 180 million Americans collectively own over a billion credit cards. They use those credit cards every day — and often, several times every day — equating to billions of consumer purchase data-points every week.
Cardlytics is tapping into all that data. The company is partnering with banks to run their loyalty programs in exchange for access to banks’ payment card data, which Cardlytics leverages to pair the right products and promotions with the right consumers. The more successfully the company does this, the more consumers spend — and the more marketers the platform attracts.
Collectively, over the next decade, Cardlytics new, data-driven approach to creating bank loyalty programs will go from niche to mainstream. And as it does, CDLX stock will follow in the footsteps of previous big data stocks like FB and GOOGL and soar.
The coming 5G revolution of the 2020s is going to change a lot of things. Arguably one of the most meaningful changes it will have is the introduction of truly wire-free internet.
That is, today we use long coaxial cables to shoot internet service into our homes and offices. But the 5G technological breakthrough will allow us to connect to the fastest internet ever without needing any cables or cords.
The process is simple: Ditch the coaxial cable, and buy a 5G Fixed Wireless Access (FWA) router — which will allow you to receive ultra-high-speed 5G internet connectivity without any cables — or a 5G mobile hotspot device — which will allow you to turn your phone’s 5G reception into ultra-high-speed internet connectivity for all your WiFi devices.
That said, who sells those 5G FWA routers and mobile hotspot devices? Inseego.
As a small, nearly $1.1 billion telecom infrastructure company, Inseego already has big partnerships with the likes of Verizon (NYSE:VZ) to create 5G components like hotspot devices.
It should be no surprise, then, that INSG stock is up nearly 150% over the past year alone.
And with all of this in mind, this red-hot rally in INSG stock will continue over the next few years as demand for the company’s 5G products soars alongside the 5G boom.
Megatrend: Electric Vehicles
One of the better known small-cap stocks on this list thanks to it often being labeled as the Tesla (NASDAQ:TSLA) of China is premium Chinese electric vehicle (EV) maker Nio.
The bull thesis on NIO stock boils down to three things.
One, the EV market is going to explode higher. That’s because of a shift in consumer preference (consumers are increasingly demanding products and services which are socially and environmentally positive), lower prices (battery costs continue to come down, and production scale will allow for steeper price cuts) and government support (most governments around the globe are doubling down on EV incentives).
Two, the premium EV market in China will be huge. Chinese consumers have an inclination for luxury items. They accounted for one-third of global personal luxury goods spend in 2018, with that share expected to rise to nearly 50% by 2025. Naturally, this inclination for luxury items implies that as the EV market scales in China, consumer demand for premium (or luxury) EVs will be quite robust.
Third, Nio is the unparalleled leader in the premium China EV market. Yes, there are lots of EV companies in China. However, they all operate at the lower end of the price spectrum. Nio stands on its own when it comes to delivering high-quality, high-performance and luxury EVs in China. Tesla will provide some competition, but there will likely be a Chinese consumer affinity for the “home grown” product.
Big picture: over the next decade, the EV market will boom, the Chinese premium EV market will boom more and Nio will sell a ton of cars. This dynamic, in turn, will propel TSLA-like growth in NIO stock during the 2020s.
Small-Cap Stocks to Buy for the Next 10 Years: Plug Power (PLUG)
Megatrend: Hydrogen Power
One of my favorite small-cap stocks to buy for the next 10 years is hydrogen fuel cell (HFC) maker Plug Power.
Much like the bull thesis on NIO, the bull thesis on this $1.3 billion alternative fuel company boils down to three things.
First, for various reasons, companies across the globe are feeling an increasing amount of pressure to “go green” on all fronts. That said, consumers want companies to go green — as do shareholders and governments. That said, all of this pressure will result in a huge push from corporations into alternative fuel solutions over the next decade.
Second, going green isn’t cheap. Many alternative fuel solutions are more expensive than traditional fuel solutions, with huge upfront installation costs. Not to mention, many of these companies have designed their infrastructure to accommodate traditional fuel solutions. Reworking infrastructure to fit with new energy isn’t cheap.
Third, Plug Power’s HFC forklifts provide companies a cost-effective way to go green. That is, Plug Power has developed hydrogen-powered forklifts that reduce operating costs, have low replacement and upfront installation costs and don’t require a reworking of infrastructure to implement at scale.
Consequently, as companies increasingly look for cost-effective ways to deploy alternative fuel solutions over the next decade, they will increasingly turn towards Plug Power to deploy cost-effective HFC forklifts in their warehouses. And Plug Power’s sales, profits and stock price will all accordingly soar in the 2020s.
Stitch Fix (SFIX)
Megatrend: Curated Shopping
The bull thesis on $1.6 billion online personalized styling service Stitch Fix boils down to one very simple idea: there is such a thing as too much.
Specifically, science experiment after science experiment have confirmed the Paradox of Choice. That paradox states that while people are drawn to the idea of greater choice, too much choice can ultimately cause customer anxiety and paralysis. In this sense, too much choice will lead to lower sales and satisfaction.
In other words, there indeed does come a point when too much is too much.
Apparel shopping is at that point today. Hundreds of fashion brands out there offer thousands of different products, and consumers are paralyzed in a world of seemingly infinite choice.
Stitch Fix solves that problem for consumers using data. By combining a customer’s preferences with a world of apparel product and style data, Stitch Fix shrinks each apparel shopping trip from a few million random choices scattered across various websites or stores, to a few dozen choices, made just for the customer and mailed directly to their home.
That said, over the next decade, this data-driven approach to simplify the shopping process will go from niche to mainstream.
As it does, Stitch Fix will see its customer base grow by leaps and bounds. Revenues will roar higher, and so will profits and SFIX stock.
Tabula Rasa Healthcare (TRHC)
Megatrend: Big Data / Healthcare
Small health-tech data company Tabula Rasa Healthcare is one of my favorite small-cap stocks to buy for one very simple reason: the company is leveraging Big Data to save money and lives.
Adverse drug events — or ADEs, wherein someone is harmed from misuse of a medicine — are a big problem. There are over 50 million ADEs every year, and they cost the healthcare systems upwards of $130 billion per year. They also result in 150,000 deaths every single year — making ADEs the third leading cause of death in the U.S.
With all of that in mind, Tabula Rasa Healthcare is attempting to solve America’s huge ADE problem with big data.
Specifically, the company has created a proprietary subscription software solution — the Medication Risk Management Matrix — which combines drug safety and composition data, with patient health and vital data, to create optimal medication regimens which match the right medicines, to the right patients, at the right doses.
The big idea is simple: Data-driven, optimized medication regimens will result in fewer bad prescriptions and inappropriate drug uses. That means fewer ADEs, less ADE-related deaths and lower ADE-related costs.
Over the next decade, Tabula’s Medication Risk Management solutions will go from having a few customers today, to being the standard for issuing medication across the entire U.S. healthcare industry. And as they do, both money and lives will be saved.
And Tabula’s revenues, profits, and stock price will all roar higher.
Small-Cap Stocks to Buy for the Next 10 Years: Health Catalyst (HCAT)
Megatrend: Big Data / Healthcare
Another small health-tech data company that I like as an explosive small-cap stock to buy for the next 10 years is Health Catalyst.
Health Catalyst is all about turning big data into big savings for healthcare providers at the perfect time.
Context is important here. The healthcare provider-insurer relationship is shifting from volume-based to value-based care. That is, as opposed to compensating providers for quantity of work, insurers are compensating providers for quality of work. This pivot is negatively impacting reimbursement rates since providers can no longer run up the bill by performing surgery after surgery. It’s also consequently putting huge downward pressure on healthcare provider profit margins.
Therefore, these providers are looking to cut costs — and Health Catalyst is here to help them do just that.
The company offers a comprehensive, end-to-end software solution which enables healthcare providers to: 1) capture, store and organize healthcare data, 2) leverage AI to turn that data into actionable insights and 3) couple those actionable insights with expert advice to implement optimized, cost-saving solutions across every vertical in the business.
The results speak for themselves. Allina Health, who owns 13 hospitals and 90 clinics throughout Wisconsin and Minnesota, generated annual savings of up to $125 million with Health Catalyst.
Therefore, as value-based care becomes the norm over the next decade, more and more healthcare providers will turn towards Health Catalyst’s solutions to generate data-driven cost savings. And as they do, Health Catalyst will sustain huge growth that will propel huge gains in HCAT stock.
Megatrend: Medical Aesthetics
InMode is a small, $778 million medtech company using proprietary radiofrequency (RF) technology to address the enormous “Treatment Gap” in cosmetic surgery, and create minimally invasive cosmetic procedures that yield significant results.
That may sound like a mouthful. So, let’s break it down.
The legacy medical aesthetics markets is comprised of two polar opposite ends of the same spectrum. On one end, you have a bunch of minimally invasive “starter” solutions like laser hair removal and acne scar minimization. They work, but they don’t do wonders. On the other end, you have a bunch of highly invasive, super expensive solutions. Think breast augmentation, face lifts and tummy tucks. They work wonders. But they can be dangerous, require a lot of downtime and aren’t cheap.
There is no “middle of the road” solution. Until now.
InMode’s new and proprietary Bipolar Radio Frequency technology — which the company packages into its Bodytite and Facetite solutions — essentially use energy and heat to “shrink” the skin, and perform things like face lifts and tummy tucks without needing full-on plastic surgery.
That’s a big deal. And over the next decade, InMode will take this new class of minimally invasive yet effect cosmetic surgeries and expand them from a niche subset of the $50 billion medical aesthetic markets, to the heart of the market. As that happens, INMD stock will fly higher.
Megatrend: Conversational Commerce
Small, $1.45 billion conversational AI solutions provider LivePerson is a pure-play on the conversational commerce market, which is set to boom over the next decade.
Long story short, e-commerce has been around forever. However, 90% of U.S. retail sales still happen in stores. Why?
One of the bigger reasons is because there are no sales reps in the online channel. According to a 2017 survey from Tulip Retail, about 80% of consumers believe that in-store associates are either “important” or “very important” to the shopping process.
From this lens, what will drive the next wave in e-commerce adoption? AI-powered chat-bots. These chat-bots will replicate in-store sales reps, and cause a boom in the conversational commerce market over the next several years.
LivePerson will be at the center of this boom. They leverage Natural Language Processing (NLP) and AI technologies to power smart, dynamic and reactive chat-bots across the digital world. Think websites, social media channels and communication apps. All of it. LivePerson creates bots which help make the shopping process feel more natural and personal.
Over the next decade, as the conversational commerce market matures and LivePerson’s chat-bots get smarter and better, you will see more and more companies turn to LivePerson to deploy AI-powered chat-bots on their sites. You will also see more companies deploy LivePerson chat-bots through messaging platforms, like Messenger and WhatsApp.
As all that happens, LivePerson’s growth narrative will only accelerate. And accelerating growth will power LPSN stock to huge gains over the next 10 years.
Maxar Technologies (MAXR)
Last, but certainly not least, on this list of small-cap stocks to buy for big gains over the next 10 years is space-tech company Maxar.
The bull thesis on MAXR stock comes in three parts.
First, Maxar is an industry veteran that’s been around since Neil Armstrong landed on the moon. That means the company has a ton of expertise in all things space related, robust space infrastructure production capacity and a huge existing satellite network that is rotating the Earth. The company will rely heavily on these advantages to grow with the booming space industry over the next 10 years.
Second, the company is better now than ever before. That is, a few years back, Maxar was a heavily indebted company spread too thinly across too many projects. Ultimately, this caused the company to lose a big satellite in early 2019. But, over the past 12 months, Maxar has down-sized its operations, paid down debt and focused the business model around its strengths: Earth Intelligence and Space Infrastructure.
Third, huge investment into 5G and autonomous driving technology will propel big demand for Maxar’s space-tech solutions over the next few years. On the 5G front, Maxar’s Space Infrastructure business will get a big boost as companies pour money into building out non-terrestrial 5G networks. Meanwhile, autonomous driving technology requires granular, 30-centimeter imaging data — the likes of which only Maxar can produce thanks to its existing constellation of imaging satellites. Demand for this granular imaging data will explode higher over the next decade.
As all that happens, MAXR stock will explode higher, too, alongside the Space Age boom of the 2020s.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been recognized as one of the best stock pickers in the world by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he was long NIO, PLUG, SFIX, FB, and TSLA.