4 Pioneering Growth Stocks That Can Turn $100,000 Into $1 Million By 2040

This year has served as a not-so-pleasant reminder that stocks don’t move in a straight line — even though last year has tricked the investing community into believing that’s what has happened. A combination of historically high inflation, an incredibly hawkish Federal Reserve and consecutive quarters of declining gross domestic product sent all three major US indexes into a bear market.

While bear markets can be scary and produce jaw-dropping volatility, they are also known to create unique buying opportunities for long-term investors. Throughout history, every double-digit decline in the stock market has eventually been erased by a bull rally.

Since all the major indices have plunged between 20% and 34%, the valuations of innovative growth stocks have become particularly attractive. The following are four pioneering growth stocks with the ability to turn an initial investment of $100,000 into $1 million by 2040.

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Assets received

The first game-changing stock with the ability to scale a $100,000 investment tenfold by 2040 is a cloud-based lending platform Assets received (UPST -1.00%). While there is no doubt that a rapidly rising rate environment will increase loan delinquencies and test a business that has not experienced a real economic downturn before, there are clear competitive advantages that Upstart can lean.

The company’s main differentiator is its artificial intelligence (AI)-based lending platform. For decades, banks and credit unions have used the same time-consuming and expensive process to verify loans. Upstart’s AI-powered platform uses machine learning to quickly review loan applications. Nearly three-quarters of loans processed by the company are verified and approved digitally, saving its roughly six dozen lending partners time and money.

Perhaps even more interesting is that Upstart gives a greater percentage of loan seekers the opportunity to prove themselves. Even though applicants approved by Upstart have a lower average credit score than applicants approved through the traditional loan verification process, delinquency rates were similar between the two processes. In other words, Upstart offers loan opportunities to people previously excluded from the credit market. In turn, this broadens the pool of customers for banks and credit unions without worsening their credit risk profile.

Another thing to consider is that Upstart has only just begun to expand into major addressable markets. Since its inception, it has mainly focused on verifying personal loans. But with the company now branching out into auto loans and small business loans, its addressable market has grown 10-fold. Patience should pay off for long-term investors in Upstart Holdings.

Bark

A second pioneering action that can turn $100,000 into $1 million over the next 18 years is a dog-focused products and services company Bark (BARK -1.09%). Although bear markets tend to weigh on money-losing growth stocks, Bark has no shortage of catalysts in its sails.

For example, few industries on the planet have proven more recession-proof than the pet industry. According to data from the American Pet Products Association, it has been more than a quarter century since year-over-year spending on pets in the United States has declined. The dotcom bubble, the Great Recession and the coronavirus crash have failed to stop pet owners from opening their wallets for their furry, gilled, feathered and scaly family members.

On a more company-specific basis, Bark stands out for its direct-to-consumer approach. Although you can find its products in tens of thousands of retail stores, approximately 90% of its sales come from online subscriptions. Not only are online subscribers a predictable source of operating cash flow for the company, but an online approach helps reduce inventory expenses and should bolster gross margins.

The other exciting aspect for Bark is its innovation. During the pandemic, he introduced Bark Home, which provides necessities like bowls, collars and leashes, Bark Bright, a canine dental service, and Bark Eats, which works with owners to develop diets. breed-specific dry foods. These additional sales opportunities are what will really allow Bark to shine over the next few years.

Employees using tablets and laptops to analyze business metrics during a meeting in a conference room.

Image source: Getty Images.

PubMatic

The third awesome growth stock that has the tools to grow an investment from $100,000 to $1 million by 2040 is programmatic cloud-based adtech stock PubMatic (PUBM -3.43%). Even though economic weakness tends to hit advertising spend hard, PubMatic’s long-term prospects are brighter than ever.

What sets this company apart from its competitors is that it is a sales provider (SSP). It’s a fancy way of saying that PubMatic helps publishing companies sell their digital signage space to advertising companies. Indeed, PubMatic uses its machine learning software to place relevant advertisements in front of users to satisfy both publishers and advertisers. Because there’s been quite a bit of consolidation in the SSP space, there aren’t too many options outside of PubMatic.

To capitalize on the above, PubMatic finds itself at the center of the digital advertising revolution. It’s no secret that advertising dollars flow from print to mobile, video and over-the-top programmatic advertising channels. While the digital advertising industry is expected to grow at an average annual rate of 14% through the middle of the decade, PubMatic’s organic growth rate is consistently between 25% and 50%.

But arguably the most overlooked yet important aspect of PubMatic’s operating model is its cloud-based infrastructure. While some of its competitors have chosen to rely on a third-party provider, PubMatic has designed and built its own platform. As the company’s sales grow, the end result should be higher operating margins than its peers.

Nio

The fourth and final trailblazing growth stock that can turn $100,000 into $1 million by 2040 is the China-based electric vehicle (EV) maker Nio (NIO 1.22%). Despite auto stocks struggling with a lot of supply chain headaches right now, Nio has what appears to be a clear path to profit and relevance in the EV industry.

From a macro perspective, electric vehicles offer a clear growth opportunity. Most developed countries want to reduce their respective carbon footprints, and promoting the transition to cleaner energy vehicles is an easy way to achieve this. EV makers like Nio stand to benefit from a decades-long vehicle replacement cycle. Once supply chain issues clear up, it wouldn’t be surprising to see Nio’s production increase to 50,000 EVs per month within about a year. For context, Nio currently produces just over 10,000 electric vehicles per month.

But in the EV space, innovation is paramount – and Nio certainly isn’t lacking in that department. This is a company that markets at least one new electric vehicle each year. Impressively, the top-tier battery upgrade for its recently introduced ET7 and ET5 sedans is blowing away major competitors (ahem, You’re here) out of the water in terms of autonomy.

Unconventional innovation also plays a role. During the pandemic, Nio unveiled its Battery-as-a-Service (BaaS) subscription. Signing up for BaaS lowers the initial purchase price of its electric vehicles and allows owners to charge, swap and upgrade their batteries. In exchange for giving up low-margin revenue on the initial sale of its electric vehicles, Nio generates high-margin recurring revenue and, more importantly, retains first-time buyers. The BaaS subscription is an awesome tool that should make Nio a key player in China’s still-nascent electric vehicle industry.

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