Investing in the right growth stocks can be game changers for your retirement goals. Ideally, you want to invest in companies benefiting from powerful megatrends in the economy. Here are two extraordinary companies doing exciting things that could deliver monster returns for patient shareholders over the next few decades.
Tesla (NASDAQ: TSLA) was one of the best-performing stocks over the last decade. If you had bought shares when Tesla first launched the Model S in 2012, you would be sitting on a 16,900% gain at the time of writing. While it still has opportunities to grow car sales over the next decade, its work on artificial intelligence (AI) could become the company's most valuable asset in the next 20 years.
It's a common mistake for investors to think that just because a stock has risen by a huge amount it can't continue to rise in value. Tesla's recent surge in share price reflects expectations for a return to growth as electric car demand recovers and the company launches a robotaxi service. But Tesla also has other irons in the fire that provide the company a lot of upside optionality over time.
One example is Tesla's humanoid robot. The investments the company has made in AI training for its electric cars are paving the way for other autonomous products like Optimus. CEO Elon Musk claims that Tesla is the only company with the assets to scale these robots for mass production.
"I mean, as I have said a few times, I think the long-term value of Optimus will exceed that of everything else at Tesla combined," Musk said on the second-quarter earnings call. For perspective, Tesla generated $12 billion in profit on $97 billion of revenue, primarily from selling cars and energy solutions over the last year. There could be tremendous demand for Optimus over the long term, given that more companies continue to install robotics in their operations almost every year, not to mention the potential for consumer demand.
Of course, there is the pending launch of Cybercab, which was officially unveiled in October. Management expects the robotaxi to launch in Texas and potentially California as early as 2025 assuming it receives regulatory approval. It should benefit the stock, as it would help Tesla further scale its automotive production and grow profits.
Investors have already started to price in a recovery in EV sales next year, along with the possible launch of Cybercab. Tesla's automotive revenue returned to growth last quarter, but analysts expect revenue growth to accelerate to 16% in 2025, according to Yahoo! Finance. Great companies are usually going to surprise to the upside, which is why I would continue to hold this extraordinary stock for more return potential over the next 20 years.
Another company building the future is Archer Aviation (NYSE: ACHR). It is positioning itself as a leader in the urban air mobility market -- an opportunity that could be worth over $1 trillion by 2040, according to Morgan Stanley. Archer Aviation already has partnerships with major airlines to roll this out in major cities in the U.S.
Urban air transportation is expected to grow in demand in the coming years to help reduce air pollution and traffic congestion. In late October, the Federal Aviation Administration released its Special Federal Aviation Regulation (SFAR) for powered-lift aircraft that establishes a path to begin training pilots for electric vehicle take-off and landing aircraft.
"We are seeing true commitment from our airline partners to this electric air taxi vision, investing both capital and leadership resources through teams embedded with us, as we lay the groundwork for future scaled air taxi services across America," CEO Adam Goldstein said on the company's Q3 earnings call.
Archer Aviation has been building production facilities and signing agreements with Southwest Airlines and United to roll out an air taxi service in major U.S. cities. In September, Archer Aviation entered into a new agreement with Japan Airlines and Sumitomo's joint venture Soracle with the goal to establish a similar air taxi service in some of Japan's most congested cities.
Archer currently has an order book worth over $6 billion. This is based on meeting certain conditions with each customer and an indicative price per aircraft of $5 million. The company is well funded to deliver on its roadmap, ending Q3 with $502 million in cash. The company expects to launch commercial air taxi services in the United Arab Emirates as early as the fourth quarter of 2025.
The stock has been volatile over the last few years, which necessitates keeping a long-term perspective on the company's performance. Some share price volatility is expected for a company that is not generating revenue yet, but with a market cap of just $3.4 billion at the time of writing, the upside over the next 20 years could be enormous.
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
See 3 “Double Down” stocks »
*Stock Advisor returns as of December 9, 2024
John Ballard has positions in Archer Aviation and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.