When you think of the best stocks over the last 20 years, which do you think of? Maybe the FANG stocks; Facebook, Apple, Netflix and Google?
If you had invested just $1,000 in shares of Apple 20 years ago, you would now have over $338,000!
Now when you think of the best stocks to buy for the next 20 years…what comes to mind? It’s not Apple is it?
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You are not going to get rich on shares of Apple…great company but the tragic fact is it’s a victim of its own success. For shares of Apple to produce that same return over the next 20 years, the company would have to grow to over $800 trillion-dollars…that’s nearly 9-times the size of the entire global economy.
Even for shares of Apple to grow your portfolio by 10-X, the company would have to overtake the U.S. economy in size.
And it’s the same problem in all the big tech stocks; Facebook, Amazon and Google. These stocks of yesteryear have become a victim of their own size and success.
In this video then, I’m going to show you how to find the stocks to buy today that could become the leaders of tomorrow, stocks with room to grow. I’ll show you how to narrow your list and then reveal the five stocks I’m watching for those triple-digit returns! We’re talking best stocks for tomorrow, today on Let’s Talk Money!
Hey Bow Tie Nation, Joseph Hogue here and you know we can’t get started without that special shout-out to all you out there in the Bow Tie Nation, thank you for spending a part of your day to be here. If you’re not part of the community yet, just click that little red subscribe button. It’s free and you’ll never miss an episode.
Nation, returns on shares of Apple and those other tech giants have been great over the last few years and I’m not saying you can’t still get ten- maybe even 20% a year on these big name stocks.
But those 10X stocks of tomorrow means looking for smaller companies with room to grow. For that, let’s start in the screener here on Stockcard, and I like the screener here for filters you don’t get with a lot of other sites.
We’ll start here by toggling on High Growth Potential, so those companies in industries with high sales growth. We’ll also filter for only micro cap and small cap companies or those with a market cap between $50 million to $2 billion.
Next, I want to toggle this Positive Track Record for sales growth and filter for companies with good cash availability, and I’ll explain each of these filters and why we’re screening for them next. I’ll also filter for good management and last here, I want to filter for only those stocks on the NYSE or Nasdaq stock exchanges. That will filter out the OTC stocks from the list.
Now that still leaves us with a list of 84 potential growth stocks so I’m going to sort the list from lowest to highest market cap, so starting our research with those smallest companies first.
I’ll leave a link to stockcard in the video description As a special bonus, I’ve negotiated an exclusive discount for everyone in the community. Use the promo code bowtienation for an exclusive discount beyond the free trial.
First on our growth stocks list is $94 million Franklin Wireless, ticker FKWL, at around $8 a share.
Franklin Wireless is a leader in hardware and software products for connectivity and business has exploded over the last year. It’s mobile hotspots and mobile device management drove sales in the pandemic and the internet of things products and machine-to-machine applications gives it that longer-term growth.
Revenue has surged over the last year, posting 105% sales growth in the fiscal year and 185% revenue growth last quarter. The communications equipment industry is expected to grow at an 18% annualized rate through 2027 so that growth is just getting started as mobile connectivity becomes more important for work.
The company has over $59 million in balance sheet cash and less than a million in debt, so nearly two-thirds of the market value backed by cash. Analysts have an average target of $28 per share, more than three-times the current share price so definitely one to watch.
Next on our list of stocks to watch before I show you a little more on how to find these is $233 million Co-Diagnostics, ticker CODX.
The company offers a unique platform for development of molecular diagnostics tests and those designed for detection of DNA or RNA sequencing. Over the last year, it’s benefited from the PCR tests for COVID detection but it also benefits from the growth in testing genetic markers which has been useful in vaccine development.
The diagnostics industry as a whole is expected to post growth of five- to 7% annually through 2025 but this part of it is likely to grow even faster.
Sales growth has exploded over the last year, up 34,000% in the last fiscal year on those PCR tests for COVID and diagnostics. And even as that growth rate slows, there is a lot of room here in the genetic testing space and the company is primed for it.
Co-Diagnostics has over $60 million in balance sheet cash and no debt, so this is another one where a lot of that market cap is backed by cash…25% in this case and the company is growing cash flow at $22 million a year. These stocks are not only strong growth stories but that cash stockpile makes them takeover targets as well because all that cash is like a discount off the acquisition price.
The average analyst price target for Co-Diagnostics is $23 per share, a potential return of 185% and this is a long-term growth story.
We’ve still got three more of those potential growth stocks to highlight but I want to show you why we screened for each factor and how it fits into this theme.
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First, I’m filtering for companies in high growth industries because we want to focus on the groups like tech and biotech leading us into those biggest trends.
I also want to limit our search to companies between $50 million and $2 billion in market size. Now two billion dollars market cap might not seem like much but if we’re talking about growing into the next trillion-dollar giant, that still leaves a 500-times growth potential. Even if it were to grow to a modest $30 billion company, that’s still 15-times your money.
With this next group, I’m filtering for stocks with a positive sales track record and good cash availability. One of the biggest reasons smaller companies fail is lack of funding and available cash so you want to start off only with those with the financial flexibility to survive.
I’m also filtering for effective management and what we’re looking for here is a high return on assets, ROA, compared to other stocks. That’s going to show us companies where management is doing the best job getting more from the assets.
And finally here, I’m limiting the list to only those stocks on the exchanges. None of the OTC or pink sheet stocks where you don’t get as much financial reporting.
Next on our growth stocks list, $673 million ChannelAdvisor, ticker ECOM.
So ChannelAdvisor is quite a bit larger than those other two stocks but still very much a small cap company with the growth we’re looking for. The company is an ecommerce platform, helping brands and retailers drive digital sales growth. ChannelAdvisor offers a one-stop channel management tool for retailers to sell on Amazon, eBay, Walmart and 140-plus other marketplaces. Really an end-to-end ecommerce service from digital marketing to analytics and fulfillment.
Sales growth in the last fiscal year was actually a little slower than I was expecting at 11.6% but it jumped 22% in the last quarter and should produce double-digit growth as ecommerce continues in that long-term growth trend.
This is another one with a strong balance sheet with $82 million in cash against just $9.5 million in debt and producing almost $30 million in free cash flow a year.
The average analyst target here of $32.50 per share is 44% above the current share price, so a solid double-digit return near-term on top of that long-term growth story.
Another smaller company here with $259 million healthcare services, Viemed Healthcare, ticker VMD.
VMD is the largest specialized provider of ventilation in the U.S. home respiratory market, focusing on the COPD niche where patients spend over $50 billion annually in the U.S. alone. The company provides 24×7 home care including devices and therapists serving 27,000 patients.
Spending on this market is expected to almost double by 2028 to $98 billion and that aging demographic is adding to covered patients with more than nine million Medicare beneficiaries through the five years to 2023.
Sales grew 64% last year and 20% in the most recent quarter and what I like about this one is a lot of that revenue is from recurring streams like monthly device rentals and services so it’s a sales base that just keeps growing.
The average analyst target of $13 per share is more than double the current share price around $6 each.
Next is a really interesting one, $361 million CollPlant Biotechnologies, ticker CLGN.
And CollPlant is one I’m personally rooting for, making us old-timers young again by developing technologies for tissue regeneration and organ manufacturing. The company creates soft tissue fillers in aesthetic procedures as well as 3D bioprinting of organs.
The company has a collaboration agreement with AbbVie for up to $103 million in payments along with royalties on sales, so very well funded, and already has $50 million in cash against just $3 million long-term debt.
Now as a biotech company, you’re going to see these crazy sales growth numbers like 2,280% revenue growth last quarter just depending on when those milestone payments come from partners like AbbVie but even the longer-term three-year growth of 136% annualized is really amazing here.
Now analysts do have an average target of $26 a share, which is 44% above the current price, but that’s only based on two analysts so a little more uncertainty but it’s hard to argue with that kind of sales growth.