Hypergrowth stocks can produce huge winners for those who buy and hold for the long term.
Rocket Lab's growth in the space economy has been rapid, and it still has a long journey ahead of it.
Coupang's dominance in South Korean retail should keep growing for the rest of the decade.
Hypergrowth stocks can create huge gains in the stock market for investors who buy and hold for the long term. Take Nvidia. The stock is up over 20,000% in the last 10 years, meaning anyone who bought $3,000 worth of shares back then would be sitting on over $600,000 today. That is, if you held through the ups and downs that come with fast-growing companies.
Buying stocks as they are falling can feel wrong, but investors should consider it similar to buying any item on sale in a store. It is the same company, so why wouldn't you want to snag some shares of the stock at a 25% discount?
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Here are two hypergrowth stocks down 25% or more that can deliver huge gains for investors who hold over the next 10 years. Here's why putting just $3,000 into these two stocks gives you huge upside potential for your portfolio.
Rocket Lab takes flight
The space economy is no longer science fiction, but rather the underlying reality of our economy in the 21st century. And boy, is it growing quickly. McKinsey expects the sector to be worth $1.8 trillion by 2035, adding over $1 trillion in annual spending compared to 2023 levels. Just this week, Amazon's Project Kuiper launched its first satellites into orbit to bring internet access to more people globally.
Rocket Lab USA(NASDAQ: RKLB) is a company poised to take advantage of this trend. It is one of the only companies outside of SpaceX that can reliably launch rockets into orbit for commercial customers, along with its space systems that it sells to third parties, such as capsules, solar panels, and radio communications. Currently, it is operating the small Electron rocket for customers, including the Department of Defense, to test hypersonic missile capabilities (among other use cases).
This year, it plans to upgrade its rocket fleet with the Neutron rocket, a medium-sized rocket with a much larger payload than the Electron. Larger payloads will make the Neutron a viable candidate for more launch services and can generate much more in revenue per launch. Plus, it will put the company in direct competition with SpaceX. The plan is to start launching the Neutron in late 2025, although we still need to see the parts come together and run through full testing.
Propelled by the growing demand of the space economy and minimal viable competitors, Rocket Lab's revenue is up 681% to $436 million since going public in late 2021. While this torrid growth won't continue forever, Rocket Lab has a huge opportunity to continue attracting more customers, scale up its launch facilities, and add more services for commercial customers in the years to come, which can propel its revenue generation into the billions and, perhaps, eventually over $10 billion a year. There is plenty of market demand on the table for its offerings.
Today, Rocket Lab's stock is down 28% from all-time highs set earlier this year. For investors looking to take the long view and buy an innovative start-up, Rocket Lab is a perfect stock.
Another fast-growing company can be found on the other side of the world. Coupang(NYSE: CPNG) is the dominant e-commerce retailer in South Korea, with a goal of expanding into more markets, such as Taiwan, where it is already finding success. The opportunity for growth just in its home market remains massive.
Coupang's revenue was $30 billion in 2024, mainly from South Korea. With its rapid shipping times, a Prime-like subscription offering called Rocket Wow, and add-on perks such as cheap restaurant and grocery delivery, the company is poised to capture a larger share of the $500 billion in retail spending in South Korea each year.
Similar to Amazon in the United States, the value proposition of using Coupang to buy the goods you need surpasses anywhere else you could shop in the country, online or offline. Revenue grew 24% year over year in 2024, a rate that is maintainable over at least the next few years.
With the stock down 54% from its all-time highs, Coupang stock looks mighty cheap at a market cap of $42 billion. It has the opportunity to grow its annual revenue from $30 billion to $50 billion within a few years and even to $100 billion eventually, if we add in the so far successful expansion into Taiwan. Other East Asian markets may be tackled someday as well.
Assuming the company can reach 10% profit margins, $50 billion in revenue equates to $5 billion in annual earnings, or less than a 10x multiple compared to the current market cap. This is much too cheap for a fast-growing company such as Coupang and indicates that shares will be much higher in five to 10 years if the company can keep growing revenue at such a quick pace. Buy now and hold for the long haul.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Brett Schafer has positions in Amazon and Coupang. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool recommends Coupang and Rocket Lab USA. The Motley Fool has a disclosure policy.
