With this bullish market momentum, many investors are looking for millionaire-maker stocks. Indeed, making a million dollars with any investment likely requires a big up-front capital allocation.
Yet, for those with patience, and the ability to hold onto positions for decades, even five-figure sums have the potential to hit the seven-digit threshold over time. With a bit of luck and patience, the power of compounding can lead to incredible results.
As it happens, many high-growth stocks have proven this idea over the past decade. Last year provided a nice dip for long-term growth investors to jump into various names. I think this window isn’t completely closed, for those who believe in the transformational nature of certain stocks.
Keep in mind that the three companies I’m going to discuss as potential millionaire-maker stocks are highly speculative. Thus, these aren’t for those with a relatively low risk tolerance threshold. However, for those willing to put a small amount of capital to work for big potential gains, these are three places to start looking.
C3.ai (AI)
C3.ai (NYSE:AI) is an AI software company that caters to major enterprises, offering prebuilt SaaS platforms for various applications. Analysts predict significant growth potential for the company, anticipating triple-digit returns for investors. As C3.ai scales up its operations, inconsistent profitability is expected to be resolved, paving the way for a more promising future.
Moreover, C3.ai is a leading provider of enterprise AI software, positioned in a rapidly growing market. While its recent growth has slowed, the company is undergoing a transition in its business model that is expected to reignite its growth potential.
C3.ai is transitioning to a consumption-based model, where customers pay based on their usage. While this model may result in less revenue visibility than a subscription-based model, it offers flexibility and potential for accelerated growth. The company’s revenue guidance for fiscal 2024 indicates a moderate increase, but analysts anticipate stronger development in the following years as C3.ai gains momentum in its new business model.
Carvana (CVNA)
Valuing companies like Carvana (NYSE:CVNA) is complex due to their reliance on financial leverage and sensitivity to asset value changes. Carvana’s profitability is highly influenced by fluctuations in used-car prices, making risk management challenging. Unlike commodity traders, Carvana lacks hedging options due to the absence of a liquid index for reselling used cars.
A significant surge helped Carvana’s stock, rising over 250% in the past three months. Better-than-expected financial results and a positive outlook for the second quarter fueled this increase. The company reported a quarterly loss that surpassed estimates, driven by a renewed focus on profitability and reduced advertising spending. Carvana subsequently raised its second-quarter expectations, projecting adjusted EBITDA above $50 million and total gross profit per unit exceeding $6,000.
Carvana is scheduled to announce its second-quarter financial results on August 3rd, with a conference call to discuss its business following the release. The company reported a remarkable 786% increase in total EV sales over the past five years.
Upstart (UPST)
Upstart’s (NASDAQ:UPST) proprietary AI-powered credit assessment tool has revolutionized the lending industry, reducing default rates and increasing approval rates. With $33 billion in originated loans since its inception in 2012, Upstart continues to expand its offerings beyond personal and auto loans, eyeing the lucrative markets of home loans and small-business lending. The company’s growth is driven by its technology-driven approach and partnerships with 99 lending partners.
However, Upstart faced significant challenges due to rising interest rates, leading to a substantial decline in its top-line growth. The company reported an operating loss of $103 million last year and a continued loss of $54 million in the last quarter. Although Upstart has taken steps to address these issues, its recent financial performance raises concerns. Upstart aims for $135 million in sales and a net loss of $40 million. Cost-cutting measures have reduced operating expenses by 15%. The company’s entry into the home equity market could be a game-changer, tapping into the $3 trillion mortgage originations industry.
Despite this, with a market capitalization of $2.7 billion, potential exists for significant rewards if Upstart can overcome these challenges and achieve success in the long run.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
