Remember March 2020? Back then, most people didn’t want a share of the stock market. COVID-19 has been designated a pandemic, travel at all levels has ground to a halt, and major stock indexes are in deep dives.
But those who kept their heads, invested money in a Nasdaq Composite index fundand patiently waited saw a great reward less than a year later: Their investment had doubled in value. Between March 20, 2020, and Feb. 12, 2021, the index posted a 105% gain.
Now, opportunities can be found again with the Nasdaq Composite trading down 24% year to date and many individual stocks down even more. There is no guarantee of a one-year doubling at this time, but there is certainly potential for solid returns. Let’s look at three growth stocks that I think are set to double from current valuations.
1. Snowflake
Snowflake (SNOW -7.23%) went public in 2020 and is led by Frank Slootman, former chairman of the enterprise software giant Service Today. Snowflake’s signature product is Data Cloud, which helps customers consolidate all their data in one central location, enabling them to innovate, achieve efficiencies, and gain insight into their business.
It’s still early days for the company, which has just $1.4 billion in revenue over the past 12 months, but its revenue and customer base are growing rapidly. Revenue in the first quarter of Fiscal 2023 increased 85% year over year; total customers climbed to more than 6,000.
Investors took notice. Warren Buffett is a believer; his Berkshire Hathaway owns more than 6 million shares of Snowflake, worth about $875 million.
Analysts expect Snowflake to continue growing for many years. According to Wall Street, revenue should rise 66% this year and 53% next year.
With the forecast for that much growth, Snowflake stock could easily double its value in the next few years.
2. Alphabet
There are many reasons to like each other Alphabet (GOOG -2.56%) (GOOGL -2.32%) so far, like its attractive price/earnings-to-growth ratio, its recent stock split, and its impressive share of the digital ad market.
And Alphabet has a tremendous growth rate for a company of its size. Quarterly revenue is up about 20% year over year.
The company generated $277 billion in revenue over the past 12 months, placing it eighth among US companies, and closed at ExxonMobil, CVSand UnitedGroup Health.
And Wall Street thinks Alphabet can sustain growth for years to come. Consensus estimates are for revenue increases of 14% annually for the next five years.
3. Zoetis
My third stock set to double is Zoetis (ZTS 0.69%), a veterinarian who develops medicine. It manufactures pharmaceuticals for livestock and companion animals.
Nearly two-thirds of sales come from its companion-animal segment. The income from this part of the business is also growing faster, about 20% annually.
The company is well positioned to benefit from the long-term growth of the pet market. Morgan Stanley it is estimated that overall pet spending in the US will more than double to $275 billion by 2030. With more than half (66%) of US households owning a pet, according to research by Morgan Stanley, and nearly half (47%) of respondents who say they treat their pets like they would their child, the amount spent on pet health care is certain to increase in the coming years.
Wall Street expects Zoetis to benefit from this trend. The company already has a solid operating margin of 36%, and a solid return on equity of 47%. Analysts expect it to grow by 11% annually over the next five years.
As it rides the tailwinds of increased pet spending, I think Zoetis could easily double in the next five to 10 years.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in Alphabet (C shares). The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Berkshire Hathaway (B shares), ServiceNow, Inc., Snowflake Inc., and Zoetis. The Motley Fool recommends CVS Health, CVS Health Corporation, and UnitedHealth Group and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares) , and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.