2 unstoppable actions that could turn $ 200,000 into $ 1 million by 2030

IIn the face of general stock market nervousness, the best thing investors can do is take a long-term view. Over time, the current noise becomes less important and the performance of the market tends to wane.

After all, in the past 20 years alone, markets have recovered from the dot-com collapse and the global financial crisis. Both of these events sparked a lot of concern as they happened, but now they look like blips on any chart of the long-term markets. While we are still in the midst of the COVID-19 pandemic, there is very little reason to believe it will be any different when we look back a decade from now.

Image source: Getty Images.

With that in mind, here are two actions aimed at rewarding patient investors with five-fold growth potential by 2030.

1. The case of DigitalOcean

DigitalOcean (NYSE: DOCN) is in the field of cloud computing, an industry dominated by technology royalties, including Microsoft, with its Azure platform, and Amazon, with Amazon Web Services (AWS). But DigitalOcean’s advantage is actually its small size, as it serves areas of the market that might be too specialized for its giant competitors.

The company emphasizes simplicity. It’s designed for small-scale applications run by users who may be less development savvy than the average AWS or Azure customer (think start-ups, for example). Therefore, it places a strong emphasis on price competition and can be up to 56% cheaper than AWS, depending on the product configuration. From a bandwidth standpoint, the price is as low as $ 0.01 per gigabyte, the cheapest in the industry.

For DigitalOcean’s share price to increase 400% by 2030, it would need to increase its revenue by 22.5% per year on a compound basis, assuming its current price-to-sales ratio remains. constant. Since 2018, he has largely exceeded the bar.

Metric

2018

2021 (Estimate)

TCCA

Returned

$ 203.1 million

$ 427 million

28%

Data source: DigitalOcean, Yahoo! Finance. CAGR = compound annual growth rate.

Despite the good performance of the past three years, revenue growth is expected to accelerate in 2022, based on early estimates from Wall Street analysts. DigitalOcean could deliver $ 562 million, which would represent an increase of almost 32% compared to 2021.

And because the business is already profitable, it runs a much lower risk of disruptions such as dilutive capital increases in the future. Additionally, the cloud computing industry is expected to far exceed $ 1 trillion by 2030, so DigitalOcean has a major revenue and profit opportunity ahead of it.

Two students sitting at a table studying, with flags in the background.

Image source: Getty Images.

2. The case of Duolingo

Duolingo (NASDAQ: DUOL) is one of the world’s leading providers of language education. The company’s success stems from its smartphone-based approach, where it turns its lessons into an interactive game.

The Duolingo app is currently the most lucrative app in the entire education category in Alphabetis the Google Play Store, and it is the second highest of Applethe App Store.

Although it has already been downloaded 500 million times worldwide, Duolingo still has a huge avenue for growth. The company estimates that there are currently 1.8 billion people learning a language in the world, and that the digital language learning market could be worth up to $ 47 billion a year by 2025, growing twice as fast as offline language learning methods.

And since the company started ramping up monetization in 2019 through subscriptions and in-app purchases, its revenue is growing at a rate that is skyrocketing the 22.5% it needs to have its inventory five-fold by now. 2030.

Metric

2019

2021 (Estimate)

TCCA

Returned

$ 70.7 million

$ 245.5 million

86%

Data source: Duolingo.

The percentage of its monthly active users who convert to paid subscribers is also growing rapidly. In 2019, 3% of monthly active users paid, which rose to 4% in 2020, and it was above 5.2% in the third quarter of 2021.

Still, the most important growth for Duolingo could be ahead of it. The company pays special attention to developing countries like India, where the app grew 400% in 2020. By 2022, the company estimates that 500 million people in India will have accessed the Internet for the very first time. times, which significantly increases Duolingo’s addressable market. .

This is a company in the very early stages of a promising growth phase, and it’s a big bet to grow in multiples from here for investors with a long-term view.

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Anthony Di Pizio has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Teresa Kersten, an employee of LinkedIn, a subsidiary of Microsoft, is a member of the board of directors of The Motley Fool. The Motley Fool owns and recommends Alphabet (A-shares), Alphabet (C-shares), Amazon, Apple, Digitalocean Holdings, Inc. and Microsoft shares. The Motley Fool recommends the following options: January 2022 long calls at $ 1,920 on Amazon, March 2023 long calls at $ 120 on Apple, January 2022 short calls at $ 1,940 on Amazon, and short calls March 2023 at $ 130 $ on Apple. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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