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Value Investor Daily #72

Value Investor Daily #72

Ten Stocks That Could 10X in Ten Years

December 04, 2024

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Travis Hoium compiled a list of ten stocks that could 10X over the next decade. Here’s the list, plus our comments on valuation below. Enjoy!

Hims & Hers Health (HIMS) is a telehealth provider with a direct-to-consumer model. Specializing in treatments like hair loss, ED, and weight management, the company has scaled rapidly with a compound annual growth rate of 94.9% since 2018. With 2.1 million subscribers and an average order value of $147, it operates outside the traditional insurance model, driving efficiency and margins.
Owlet (OWLT) offers accessible infant health monitoring solutions, including FDA-approved devices like oxygen and heart rate monitors. The company is expanding into hospital-prescribed products and testing subscription services to build recurring revenue streams. Owlet is positioned for substantial growth with a market cap of just $76 million as it penetrates larger markets.
SoFi Technologies (SOFI) blends banking and fintech, offering lending, financial services, and white-label technology solutions. Its financial services segment has grown revenue nearly 100% year-over-year for the last several years, and the lending segment remains a significant contributor with $871 million in contribution profit. With a market cap of $16.8 billion and a scalable, digital-first model, SoFi is poised to disrupt traditional banks.
General Motors (GM) combines a strong core auto business with a high-potential autonomous driving segment through Cruise. Over the past year, the stock has gained 95%, and management has aggressively repurchased shares, boosting value. GM remains an underappreciated stock with a price-to-earnings ratio of 5.9X, and Cruise expected to scale significantly.
Mobileye (MBLY) leads in autonomous driving technology, supplying sensors and systems to automakers worldwide. Its ongoing advancements in autonomy could drive substantial revenue growth over the next decade.
Archer Aviation (ACHR) is at the forefront of urban air mobility with its electric vertical takeoff and landing (eVTOL) aircraft. The company is developing autonomous flight capabilities and expanding operations, positioning itself in a nascent yet high-growth market. With early-stage operations and promising technology, Archer represents a bold, high-risk, high-reward opportunity.
Zillow Group (Z) is transforming from a home search tool into a “housing super app,” integrating services like financing, insurance, and rentals. With a $19 billion market cap, Zillow is aggregating the $52 trillion U.S. housing market. Recent traction in the rental market and digital-first solutions position it for substantial growth.
On Holding (ONON) has rapidly scaled its athletic footwear and apparel business with a 53% compound annual growth rate since 2021. The company’s innovative marketing and product differentiation have driven profitability, with forward-thinking strategies like custom-fit shoes made on demand. The company has guided for 30% annual growth over the next several years.
Shift4 Payments (FOUR) delivers payment solutions across niche markets, including stadiums and hospitality. With a 35% compound annual growth rate since 2018, the company has maintained profitability while scaling its subscription-based services.
Celsius Holdings (CELH) has emerged as a leader in the energy drink market, partnering with Pepsi for distribution. Despite recent inventory fluctuations, consumer demand remains strong, and the company is regaining momentum. With a forward P/E of 33, Celsius is still well-positioned for future growth or a potential acquisition.

Investments like these take patience and vision. What makes some of these interesting to us as value investors is they’re scaling profitability. That means positive cash flow for reinvestment, potential acquisitions, and shareholder return.

Why risk it with non-profitable companies until they at least prove their business model can turn a profit? There’s no reason to do so when you have a handful of profitable ones to choose from here, including Hims & Hers, SoFi, GM, On Holding, Shift4, and Celsius.

From the list, GM is the cheapest from a valuation standpoint, at just under 6X earnings.

On Holding and Shift4 are interesting here, too, with sales of $2.55 billion and $3.15 billion, respectively, and still growing at 30% a year.

That growth rate implies over 10X more revenue in ten years and even higher earnings growth as they hit the operating leverage inflection point.

On Holding could see earnings grow from $148 million to $2.55 billion (17X) if it can match Nike’s 10% margins. If On Holding starts a share repurchase program, EPS could grow even more.