WWhether you’re a new investor or an established investor, you’ve got a wake-up call in 2022 that stocks can go down just as easily as they can go up. Since the beginning of the year, it has been extensive Standard & Poor’s 500 And almost 126 years Dow Jones Industrial Average It has fallen more than 10% from its all-time high. Things have been more difficult for technology Nasdaq Compositewhich is down as much as 24% since its peak in November and has been in a strong bear market as of early last week.
But where there is short-term pain, there is also an opportunity for long-term gains. This is because every stock market correction and bear market is eventually wiped out by a bull market rally. When you invest in innovative stocks at a discount and allow your investment thesis to work over time, there is a good chance that you will make a fortune.
All of the following three proven stocks are trading at a discount during market sell-offs and have both the catalysts and intangible assets needed to turn a $200,000 investment into $1 million by 2030.
The first innovator with the potential to multiply investor money five times over the next eight years is the China-based electric vehicle (EV) manufacturer. New (NYSE: NIO).
Auto stocks like Nio compete with challenging environment. Semiconductor chip shortages and supply shortages caused by the coronavirus have caused most automakers to scale back production on select models. In the case of Nio, the company delivered just 5,074 electric vehicles in April, which is less than half of what it was delivering on a monthly basis in November and December. Nio is being hit harder than most automakers given that some Chinese provinces have undergone strict COVID-19 lockdowns.
While the supply chain concerns are never positive, the important thing to note here is that Nio’s near-term struggles have absolutely nothing to do with demand. This means that opportunistic investors have the opportunity to purchase this innovative electric car maker at a huge discount at an all-time high.
Nio’s innovation comes in two forms. The first is easily obvious: its introduction of new vehicles. For example, the company’s ET7 and ET5 sedans offer up to 621 miles of range with the higher battery option. These sedans are direct competition to TeslaThe flagship sedans, the Model S and 3, offer superior range (again, with a battery upgrade). China is the world’s leading auto market, giving Nio a large runway in which to capture market share with luxury sedans and SUVs.
Another way Nio innovates is with her service. In August 2020, the company introduced its Battery as a Service (BaaS) subscription, which allows electric vehicle buyers to charge, swap or upgrade their batteries. Signing up for BaaS also provides a discount on the purchase price of the Nio EV. Despite giving up some short-term sales with BaaS, Nio maintains long-term subscription revenue and the loyalty of its early adopters.
Based on the changing forecasts of Wall Street, Nio is on track to quadruple its sales by 2024, as well as turn back into recurring profitability. By 2023, most of the company’s supply chain problems should be in the rearview mirror. This makes it a good bet to achieve 400% returns for shareholders by 2030.
The second proven inventory that could drive impressive sales and profit growth throughout the remainder of the decade is the cloud-based lending platform. upstart holding (NASDAQ: UPST).
The big blow against an upstart is that historically high inflation in the US is forcing the country’s central bank to act aggressively while raising interest rates. As a lending-based service, there is a clear concern that higher interest rates will significantly slow loan processing activity, which would be bad news for the company.
But the cocky has a few tricks up his sleeve. First of all, its lending platform is based on Artificial Intelligence (AI). While the traditional loan screening process can take weeks, nearly 70% of Upstart loan applicants are fully automated and approved immediately. This helps save time and money for lending institutions.
What is interesting is that Upstart’s AI-powered lending platform helps democratize access to loans without negatively impacting lending institutions. Although the average credit score for Upstart approvals was lower than the average credit score for traditional loan approvals, there was no difference in late payment rates. With interest rates rising and the sheer number of loan requests to address the dips, we are likely to see banks turn even more cocky than they are now in light of the success of the AI-backed lending platform.
Another thing investors should note is that Upstart has no credit exposure and generated 94% of its revenue from fees and services. This means that if a recession occurs and loan defaults rise, Upstart will not have to allocate capital to cover loan losses.
Looking further afield, Upstart should also benefit from its push for AI-based auto lending. The auto loan creation market is seven times larger than the personal loan market it has focused on for years. cocky in the very early roles of what should continue rapid growth.
The third sure-footed stock that could turn a $200,000 investment into $1 million by 2030 is a social media company Pinterest (NYSE: PINS).
The pandemic has prompted Pinterest to take a quick ride. It initially rose with significant gains from users, as people stuck in their homes during the early stages of the pandemic. But since the end of March 2021, the drop in monthly active user numbers has left Wall Street skeptical about the future of Pinterest. To add, there is also a concern about that appleiOS privacy changes, which allow app users to turn off data tracking, could prevent ad-driven businesses like Pinterest.
However, none of these near-term headwinds should bother long-term investors. For example, although Pinterest’s total MAUs have fallen from a peak of 478 million to 433 million over the past year, in four or five years it shows a steady upward trend in total MAUs. In other words, the decline in MAU in recent quarters is simply user growth returning to historical norms after the unsustainable boost associated with the pandemic.
Additionally, regardless of whether MAUs increased or decreased year-over-year, Pinterest had no problem monetizing its user base. The most recent quarter, which saw 45 million MAUs less than the same quarter last year, saw global average revenue per user (ARPU) rise 28%, with Europe’s average revenue per user (ARPU) up an even more impressive 40%. This shows that merchants are willing to pay a premium to reach the Pinterest user base. It also clearly indicates that international markets are where the biggest opportunity for Pinterest lies.
You don’t have to worry about iOS privacy changes from Apple either. While other social media platforms have some guesswork to be made to help advertisers target users, the whole premise of the Pinterest platform is for users to freely and willingly share the things, places, and services that matter to them. This makes Pinterest incredibly valuable for merchants wanting to target specific interests.
After a downtrend of nearly 15 months, Pinterest appears ripe for choice and fully capable of five times investors’ money by the end of the decade.
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Shawn Williams holds positions on Pinterest. Motley Fool has positions at Apple and Nio Inc. and Pinterest, Tesla, and Upstart Holdings, Inc. The Motley Fool recommends the following options: long calls in March 2023 worth $120 on Apple and short calls in March 2023 worth $130 on Apple. Motley Fool has a disclosure policy.
The opinions and opinions expressed here are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.
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