Stocks with 10X potential usually have a few defining characteristics. They generally (but not always) have relatively low market capitalizations, visionary leadership whose interests are aligned with those of shareholders, and most importantly, see massive market opportunities to develop.
With that in mind, three potential 10X stocks (or many more) that I’m watching as we head into 2022 are Vacasa (NASDAQ: VCSA), The next door (NYSE: GENRE), and Offer block (NYSE: OPAD). While none are exactly a low risk investment, here’s why I think all three could have huge upside potential in the years to come.
1. Vacasa: a huge and fragmented market
Vacasa is the premier vacation rental property manager in the United States. Unlike companies like Airbnb, which is primarily an SEO platform, Vacasa is a full service director. They list the property, clean it between tenants, deal with tenant issues, and send a check to the landlord every month. In addition, the company aims to maximize returns for owners through its technology.
The company is the largest player in its market, with around 35,000 properties under management. However, it is important to realize how fragmented this market is. In the United States alone there are over 5 million vacation homes and Vacasa is # 1 with Less than 1% of it. There just isn’t a big vacation rental brand, and that’s exactly what Vacasa wants to create. And if successful, this $ 3.4 billion company could become many bigger.
2. Nextdoor: a different kind of social media
Nextdoor is a neighborhood-focused social media platform that went public through the SPAC merger in 2021. (Note: All three of those actions became public through SPAC last year.) And the platform’s user base has grown dramatically – one in three U.S. households now have a Nextdoor member, and more than 30 million people use actively platform at least once a week.
The social network has expanded its functionality over the past few years and continues to do so, but the company is still in the early stages of monetization. Average revenue per user of Nextdoor is less than a tenth of Twitter‘s, to name just one competitor. However, with the old Square (now To blockCFO Sarah Friar at the helm and war chest of her PSPC merger to invest in growth, Nextdoor could be a huge winner for investors if it can realize its potential.
3. Offerpad: disrupting a $ 2 trillion market
Almost $ 2 trillion in residential real estate changes ownership every year in the United States, and despite this huge market, the process of selling a home is clunky at best. If you are putting your house up for sale, you will need to take care of the viewings, the staging of the house, hiring an agent, holding open houses, and generally repairs before putting the house on the market. the market. And once it “sells” it can take a month or two to close, and there are usually contingencies (such as the buyer’s ability to secure a mortgage) that can cause the deal to fail. .
This is where Offerpad comes in. The company is an iBuyer, which basically means it buys homes directly from sellers and then sells them to buyers. For the seller, that pretty much eliminates all of the pain points mentioned in the last paragraph. Offerpad is bidding entirely in cash and can be closed in just three days.
In 2021, Offerpad is expected to purchase around 6,000 homes (we’ll have final numbers in a few weeks). The company is the most efficient of the three main iBuyers and plans to expand its complementary offerings to increase income per home over time, for example by offering home insurance or warranty services. At the very least, if Offerpad could expand its business to its target of 3% to 4% of homes sold in its markets and could do so cost-effectively, it could certainly be a 10 bagging – or much more.
Don’t expect a smooth ride
None of these stocks are what I would call a low risk (or even medium risk) stock. All of them are capable of yields of 10 baggers, but they could also drop dramatically if things don’t go right. And even if things To do going well, investors will likely be pulled on a roller coaster as these growth stories unfold. Invest in this spirit.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.