5 STOCKS THAT COULD DOUBLE IN 2021!
After the success of 10 STOCKS THAT COULD DOUBLE IN 2021, I have compiled a new list of 5 more stocks that I believe have the potential to at least double in value THIS YEAR!
As you can see below, despite only being 4 months into the year - 5 stocks on my previous list have already more than doubled and all except 1 are higher.
In fact, if you had invested $100 in each of those stocks when that post was released in December then your $1000 investment would already be worth $2500. This doesn't quite top my efforts in 2020 where all 10 stocks grew by 100-1000%... However there's still 7 months to go!
Right now I see numerous opportunities in the stock market and I've compiled a new list of 10 stocks that I believe will ATLEAST DOUBLE before the end of the year. I've outlined 5 of these stocks below and stay tuned because I will be releasing the second part of this list next week!
So without further adoo, here are 5 stocks that I believe could double your investment in 2021!
1. LEMOMADE (currently $81)
"Forget everything that you know about the insurance industry"
That’s the strap line that Lemonade uses as they aim to disrupt the $5 trillion insurance industry thanks to their unique business model and use of AI, data & behaviour economics!
Unlike their rivals in the insurance space, Lemonade reinsures what customers pay them thereby largely removing the conflict of interest that has forever plagued the insurance industry. By removing this conflict of interest between insurer and customer, Lemonade is able to garner much more trust from it's customers and this is visible from their Net Promoter Score of 70 (the industry average is 20).
Not only does their business model encourage fairness but Lemonade's use of AI to automate their processes also allows the business to pay out claims in as little as 3 seconds! No only has this been a huge hit with their customers but this streamlined automation process also allows the business to keep operating costs down. In fact, Lemonade claims to employ 1 person for every 2000 customers versus the industry average of 400 customers per employee (500% efficiency improvement).
Despite a recent correction in the share price, Lemonade is still very expensive based on it's current price-to-sales ratio of 64. That said, the company has a huge runway ahead of them as they expand into more countries & new areas of the insurance market!
Lemonade recently launched in France before announcing that they would be bringing out a car insurance product towards the end of this year! The combination of these 2 recent developments will increase Lemonade's total addressable market by 70X and therefore I'm expecting to see extraordinary revenue growth in the business over the next 12 months! If Lemonade can execute on their expansion plans correctly and become a future insurance leader then the company will almost certainly be worth more than the $5 billion it's valued at today.
2. UNITY (Currently $93)
Right now, it's estimated that over half of all video games are being built using Unity’s software engine! They do have competition from rival Unreal Engine however the latter currently only has a 13% share of the market. Although Unreal is behind hit's like Fortnite & Rocket League, Unity is the top choice amongst young developers who prefer to code in C# over C++.
This programming language (C#) is more modern than C++ having been developed by Microsoft in 2000. As Microsoft continues to grow and further integrate within our lives, it seems like C# is quickly becoming the standard and this is great news for Unity!
Therefore, Unity looks set to remain at the heart of a gaming market that is expected to grow into a $4 trillion industry over the next 5 years. Although the market is expected to grow at a 14% compound annual growth rate (CAGR) until 2025, Unity is expecting to grow it's own revenues at over 30% per year during this time thanks to it's expansion beyond gaming. Unity is serious about growing it's not gaming revenues and has partnered with the likes of Snapchat, Samsung, BMW & Keyframe Studios across VR, animation, automotive & engineering!
Not only is Unity well diversified within the gaming sector having established itself as the software developer of choice for students and hit studios like EA & Take Two, but it's clear to me that Unity is evolving beyond gaming and into one of the most diversified technology companies out there.
After rallying almost 300% since it's IPO, the stock is down almost 40% since it's high in December. Although the correction was due, the fall came as Unity published decelerating revenue growth in their most recent earnings report (39% year over year vs 43% last year). I'm not worried by this slow down in growth as I've watched many times in the past as high growth tech stocks like Shopify and Square have dropped +20% on underwhelming reports.
These high quality companies all have blips, yet they tend to pull it out the bag and continue to rip higher. That's exactly what I think will happen with Unity and so does Cathie Wood who has added Unity to her ARK Next Gen Internet & Innovation ETF's.
In summary then, I believe that Unity Software is a well diversified, market leader in a huge growth industry and therefore not only do I believe that the stock will double in value but it's also a lot less risky than other highly volatile growth stocks!
3. CRISPR THERAPEUTICS (Currently $115)
2020 was a huge year for crispr gene-editing technology as many came to realise the true potential of this breakthrough treatment! Before I get onto CRISPR, I want to point out that gene-editing is something that has been around for decades! For many years now, scientists have altered the DNA of plants and crops to produce foods with less fat, gluten, seeds and greater shelf-life!
In 2012 though, Jennifer Doudna & Emmanuelle Charpentier discovered CRISPR-Cas9 (gene-editing tool) and laid the foundation for gene-editing in humans! Despite claims that this tool could be used to eliminate diseases including forms of cancer & blindness, the industry was still very much seen as a speculative play on the future of medicine.
Last year however, both Doudna & Charpentier were awarded the Nobel prize in Chemistry for their development of the technology and this affirmation was enough to send all stocks associated with CRISPR through the roof. Stocks including CRISPR-Therapeutics, Editas Medicine & Intellia rose 100%, 300% & 400% respectively between November & December last year!
Although Intellia has held up rather well, both CRISPR-Therapeutics & Editas have suffered huge corrections in 2021 and I think this represents a huge opportunity for growth investors seeking big returns over the next 12 months!
CRISPR-Therapeutics (CRSP) is still the most valuable gene-editing specialist out there with a market cap greater than Editas, Intellia & Sangamo combined! The business is valued so highly thanks to it's partnership with Vertex Pharmaceuticals which has allowed CRSP to invest far heavier in it's pipeline than it's competitors.
Unlike most industries, the performance of stocks within the gene-editing sector relies less on earnings & cash flow and almost entirely on the results of clinical trials! CRSP has a more advanced pipeline than it's competitors and it looks like they will only extend this lead given that they have the largest team of scientists and balance sheet in the space! Therefore although CRISPR-Therapeutics is hard to value at this early stage, I think the industry in which they remain the leader has enormous growth potential and therefore I think the stock could quite easily double from where it trades today!
4. CANOPY GROWTH (Currently $25)
So what is so special about Canopy and what makes it the most valuable cannabis company in the market? The short answer is Canopy's partnership with the world's third largest beer producer Constellation Brands! In return for a 38.5% stake in the business, Constellation Brands has invested over $4 billion in Canopy Growth.
This investment has given Canopy a huge advantage over their rivals allowing the business to rapidly expand and become the dominant player in the Canadian cannabis market via aggressive marketing & pricing. The funding has also allowed the business to expand internationally via acquisitions including BioSteel, Acreage, Supreme Cannabis & Spectrum Therapeutics.
For example, Canopy's acquisition of Spectrum Therapeutics means that they are the first company in the UK to hold a license to build a storage and distribution facility dedicated to medicinal cannabis products. This facility is the first of its kind and a key development as the company establishes its footprint in the UK. The licence also allows Canopy to import Cannabis based medicinal products (CBMP) to the UK & Europe without need for third-party suppliers.
Canopy seems to be doing a great job at expanding into all areas of the cannabis market thus far however perhaps it's biggest opportunity is still ahead of them! CBD infused beverages are expected to be one of the fastest growing sub sectors of the cannabis market over the next 5 years with the industry expected to be worth $2.5 billion in the US alone come 2025. (40% CAGR).
The fact that Canopy is part owned by one of the largest beverage companies on the planet means that they will have access to a distribution and partnership network across 150 countries! This should increase the speed at which Canopy can enter newly legalised markets and significantly reduce overheads leading to pricing power against competitors.
With all of this in mind, Canopy seems like the safest company for investors to gain direct exposure to the cannabis market. My only concern with Canopy is that the business is currently worth up to 5x more than some of it’s closest competitors. Therefore many of Canopy's advantages seem to be reflected in the share price however I believe that the growth of the cannabis sector will lift all boats and despite a 70% rise over the past 12 months, I think Canopy Growth will be worth over $50 per share in 2022!
5. COUPANG (Currently $40)
Currently leading the ecommerce transformation in South Korea is Coupang! The company has been dubbed the Amazon of south Korea for obvious reasons but I want to point out just how well Coupang is doing in replicating the success of the worlds 3rd largest company!
Unlike Alibaba, Mercado Libre & many other ecommerce businesses, Coupang operates a similar end to end model to what Amazon offers. Rather than acting like a market place or intermediary, Coupang has spent billions of dollars over the past decade building it's own logistics and delivery network. Establishing this fulfilment infrastructure has taken precedent over research development & marketing during the past 10 years but this will help Coupang in the same way it did for Amazon.
Thanks to it's logistics network, Coupang now offers an end-to-end ecommerce solution that allows for lower prices and faster delivery than it's competitors. Similar to Amazon Prime, customers can subscribe to Coupang "Rocket" or "Dawn" in order to get items ordered before midnight to arrive by 7am the following day! Members can also return items by simply clicking 1 button before leaving the product on their doorstep!
Outside of it's core e-commerce offering, Coupang is attempting to emulate Amazon by building out it's ecosystem to include food and grocery delivery. The company is however thinking beyond just groceries and is planning to utilise it's 15k delivery drivers to run a food delivery platform similar to Uber Eats. Alongside this venture, Coupang is releasing a software service similar to that of Shopify that will allow users to build digital stores online. These are highly competitive markets however Coupang's logistics network will give the business a big competitive advantage in any space it's looking to disrupt.
Right now the stock is trading at a market cap of $70b which is very similar to another large ecommerce player "Mercado Libre" which is probably the best comparison given that neither company is profitable. Mercado Libre has a Price-to-sales ratio (P/S) of 20 whereas Coupang is trading a PS of 5.5 despite growing revenue faster than it's Latin American peer!
Therefore despite a hotly anticipated IPO in March, I think that this Asian e-commerce stock could outperform other investments in the space over the next 12 months which could lead Coupang to double it's market cap in 2021.
As much as I like the prospects of all 5 stocks on this list, I believe that the partially speculative nature of many of these companies brings significantly more risk than the average investment. However with risk comes greater reward and given my research into these 5 stocks I believe that they all represent excellent investment opportunities that can more than likely double in value over the next 12 months!
I hope you enjoyed the article and don't go anywhere as I will be releasing the second part to this list where I outline 5 stocks that I think have even greater potential than those above... So stay tuned for 5 stocks that can TRIPLE in 2021!
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