Turning $1,000 into $5,000 over five years is not a simple feat. It's a rare growth company that can accomplish that, and most investors should focus on steady growth stocks with the risk level that matches their temperament.
You only need one incredible growth stock to see your money compound at a high rate over time. Even if you're highly risk tolerant, it's important to spread your investments among several different stocks. If they all do well, you win, and if only one really takes off, it can reward you many times over.
Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
Two stocks that recently turned $1,000 into more than $5,000 over five years are Nvidia and Axon Enterprise. But it wasn't obvious five years ago that these two stocks were poised more than others to achieve this. And as the market can see from recent developments in artificial intelligence (AI), things can change quickly.
Opendoor Technologies (NASDAQ: OPEN) and Global-e Online (NASDAQ: GLBE) are two stocks that have the potential to turn a $1,000 investment into $5,000 by 2030. Let's check out how that could happen.
Opendoor stock was off to the races when it went public in 2021 in a low-interest-rate environment. But it plunged quickly as interest rates went up, and it's been struggling with performance since then.
The company operates a digital real estate platform that makes buying and selling a home easier and potentially more cost-effective than the traditional process. It uses data and machine learning to help buyers and sellers make decisions, and it makes quick cash offers for its iBuying business. It also has an online marketplace and partnerships with other online real estate platforms.
In theory, this should be a great business. In reality, it seemed like it was going to be before mortgage rates skyrocketed and people stopped buying and selling homes. With little change in that situation, Opendoor doesn't have much opportunity to rebound.
There has been some progress. Revenue increased 41% year over year in the 2024 third quarter. That would normally sound like a great increase, but it's still well off its 2022 numbers. Net loss improved from $75 million to $70 million, but it's going to take time to return to profitability.
Trailing 12-month revenue is 70% off its highs from 2022, and at the current $4.9 billion, it would have to almost quadruple just to return to that figure. If it can get back to that, the stock should follow. But shares trade at a dirt cheap price-to-sales (P/S) ratio of only 0.2. If the business rebounds, the valuation would go up as well, and the stock could quadruple even before the revenue hits previous highs.
Opendoor is a very risky stock right now and is only an option for the most risk-tolerant investor. The average investor should steer clear of this stock. But for those who have that appetite and $1,000 that they can afford to lose, Opendoor is a high-risk versus high-reward proposition.
Global-e is the name behind many retailers' international e-commerce programs. It provides cross-border e-commerce services for companies both big and small, but it's known for its partnerships with luxury names like LVMH and Hugo Boss. It has a strong pipeline of new clients that it consistently adds to the platform, like Fossil and Longchamp in the third quarter.
It also has a partnership with e-commerce platform Shopify, where Global-e provides services to Shopify's merchant clients. Shopify recently rebranded its white-label cross-border services as Shopify Managed Markets, and Global-e said that it's taking off as planned.
Things have been going well in general. Despite international economic pressure, Global-e continues to demonstrate robust growth, with a 32% year-over-year increase in sales in the third quarter. Adjusted gross margin expanded by 2.4 percentage points year over year to 46.8%, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were up from $22.1 million in 2023 to $32.1 million in 2024.
The company is still reporting net losses, but it's expecting breakeven in the 2024 fourth quarter and positive net income this year. Part of what's been eating profits are warrants related to an investment from Shopify, which will be fully amortized by the end of this year.
Global-e is still a small company, with only $675 million in trailing 12-month revenue. If it can keep a compound annual growth rate (CAGR) of 25% over the next five years, which is only one possibility, it would reach about $2 billion, or just over three times the amount it is today. But for a profitable company, stock price tends to move in line with net income. Wall Street is expecting Global-e earnings per share (EPS) of $1 this year, and Global-e stock could soar in 2025 if it reports positive net income for the first time.
Considering that it's starting from a loss right now, it's hard to imagine what quadrupling net income would look like, but if Global-e continues to be profitable at scale, the stock could become a multi-bagger and offer impressive gains over the next five years.
Before you buy stock in Opendoor Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Opendoor Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $795,728!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
Learn more »
*Stock Advisor returns as of February 7, 2025
Jennifer Saibil has positions in Global-E Online. The Motley Fool has positions in and recommends Axon Enterprise, Global-E Online, Nvidia, and Shopify. The Motley Fool recommends Opendoor Technologies. The Motley Fool has a disclosure policy.