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2 Unstoppable Stocks That Could Turn $50,000 Into $250,000 by 2030

2 Unstoppable Stocks That Could Turn $50,000 Into $250,000 by 2030
Written by Publishing Team

History suggests that looking past short-term stock market volatility and focusing on the long term is a nearly surefire recipe for above-average investment returns. The technology-centric Nasdaq 100 index might be down 15% year to date, but over the last decade, it has risen by 404%. And it gained 84% in the decade before that, even though the financial crisis occurred in the middle of that period.

For investors feeling jittery about how rising interest rates and geopolitical tensions may impact their portfolios, it might be beneficial to turn your gaze to the end of this decade. Here are two companies whose stocks could rise fivefold by then, based on their innovative business models and soaring growth rates.

A person smiling while seated at their desk playing games on a computer.

Image source: Getty Images.

The case for Unity Software

Gaming, movies, and virtual reality — these segments are at the core of the new digital, and the creators who develop content for them are economy using Unity Software ( U -5.12% ) to do it. In fact, over 3.9 billion people consumed content built with Unity every month during 2021. That’s almost half the planet.

The company’s flagship platform, Unity Pro, is an end-to-end game development and management tool for creators. Not only does Unity Pro offer the technical tools to build games, but it also provides education, advice, and an advertising solution to assist with monetization.

The gaming industry as a whole was worth an estimated $173 billion last year, and could soar 81% to $314 billion by 2027. But that’s a fraction of Unity’s potential opportunity in the metaverse. Bloomberg Intelligence values ​​the virtual world at $800 billion annually by 2024, with a 13.1% compound annual growth rate that indicates it could be worth over $1.6 trillion by the end of the current decade. Consider that in the context of Unity’s current market valuation of just $26 billion.

Mathematically speaking, for Unity to turn a $50,000 investment into $250,000 by 2030, it would have to grow its revenue by 23% each year between now and then — assuming its current price to sales ratio remains constant. Over the last three years, Unity has crushed that mark.

Metric

2018

2021

CAGR

Revenue

$380 million

$1.11 billion

42%

Data source: Unity Software. CAGR = Compound Annual Growth Rate.

It comes on the back of Unity’s highest-spending customer base, who contribute $100,000 or more to Unity’s revenue annually, soaring by 33% to 1,052 in 2021, compared to 2020.

There are few stocks on the market today that provide better exposure to the future of technology than Unity Software. The company isn’t profitable just yet, which is a key risk, but that’s mainly because it’s spending over 60% of its revenue on research and development. As Unity achieves scale, it can pare that expense back to deliver positive earnings.

Since Unity stock is trading at a discount of 54% from its all-time high amid the broader tech sell-off, now might be the time to get involved.

A smiling gamer playing on their smartphone, with headphones on.

Image source: Getty Images.

The case for Sea Limited

Singapore-based Sea Limited ( SE -7.99% ) is a triple threat when it comes to the digital economy. It operates a successful digital entertainment segment, headed by its mobile game developer Garena, in addition to an e-commerce platform that is one of the largest in Asia. And the company is now trying its hand in digital financial services, which is its smallest but fastest-growing segment.

Garena is responsible for developing the Free Fire mobile game, which has remained the most downloaded title globally in each of the last three years. In 2021, it also maintained its status as the highest grossing game in Southeast Asia and Latin America, helping Sea Limited’s digital entertainment segment to $4.3 billion in full-year 2021 revenue, 114% growth over 2020.

Since mobile has grown to represent the lion’s share of total gaming revenue globally, Garena is in a great position even in the face of pandemic slowdowns in online engagement, thanks to societal reopenings as the threat eases.

The company’s e-commerce segment, led by its hybrid consumer-to-consumer and business-to-consumer shopee app, grew revenue by 136% for the year to $5.1 billion. It was the top-ranked app by downloads in the shopping category globally in 2021. But both the gaming and e-commerce businesses were crushed by the 672% growth in Sea Limited’s digital services financial segment, although it only generated $469 million in revenue.

As a whole, the company has expanded at a rapid clip not just in 2021, but since 2018 in particular when it crossed $1 billion in (non-GAAP) yearly revenue for the first time ever. It’s certainly outpacing the 23% yearly growth rate it needs for its stock to soar fivefold by 2030.

Metric

2018

2021

CAGR

Revenue

$1 billion (adjusted)

$10 billion

112%

Data source: Sea Limited. CAGR = Compound Annual Growth Rate.

But it’s unreasonable to expect Sea Limited to continue doubling its revenue each year going forward, simply because the numbers are becoming staggeringly large. But since e-commerce is its biggest segment, the company is exposed to a $5.5 trillion global opportunity in 2022, offering Sea Limited’s current $54 billion market valuation plenty of room for growth.

The company is still making losses on account of its aggressive investments in line items like marketing as it continues to build scale. The rate with which it’s growing revenue suggests it’s a wise way to spend money at least in the short term.

Investors will want to see profits eventually, but for now, this stock provides a diverse cross-section of the digital economy that is difficult to get elsewhere from a single name.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thissis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Publishing Team