Most of my Stocks and Shares ISA is invested in high-quality, large-cap stocks. I’m talking about stocks such as Apple, Diageo, Mastercard, and London Stock Exchange Group.
However, recently, I decided I wanted to allocate a small amount of capital to five smaller US-listed, high-growth stocks in the hope of generating exceptionally large returns over the next decade. I’m calling these my ‘moonshots’.
Here’s a look at them.
The search for scalable companies
When I was thinking about what stocks to buy, scalability was a key theme. I was looking for companies with the potential to scale up rapidly.
One company that fits the bill here is Shopify, which operates a subscription-based, e-commerce platform that allows merchants to easily set up their own online stores.
Shopify is a volatile stock. However, I think it has huge potential. New retail brands are popping up everywhere and many are turning to the Shopify platform to operate their businesses.
Assuming this trend continues, I think the stock is likely to do well in the years ahead.
High-growth platform companies
Another very scalable company is Airbnb, which operates the world’s largest home rental platform.
I chose to invest here for several reasons. Firstly, it offers a great service I use all the time. So I’m following investor Peter Lynch’s theory, ‘buy what you know’.
Secondly, I reckon the travel industry is likely to do well in the years ahead, thanks to the retirement of the Baby Boomer generation.
Sticking with the travel theme, I also picked up shares in Uber.
One thing I like is its name has become a verb (as with Airbnb). This is a huge competitive advantage.
Additionally, I like that Uber has recently moved into digital advertising (in both its apps and cars). This move should propel revenues higher.
Data is the new oil
My fourth moonshot stock is Snowflake. It’s a technology company offering cloud-based data storage and analytics services designed to help organisations analyse their data in a cost-effective and resource-efficient way.
I see Snowflake as a good play on the data theme. It’s said data is the new oil, and this company is at the heart of the data storage and analytics industry.
And I’ve been impressed with its growth. Today, Snowflake has over 400 customers each spending more than $1m annually. This time last year, it only had 250.
A play on the gig economy
Finally, I selected Upwork as a moonshot. It operates the world’s largest freelance employment platform.
The reason I’m bullish here is that I expect the ‘gig economy’ to grow significantly in the years ahead.
These days, more and more people are quitting the nine-to-five scene to work for themselves.
I also see it as a play on artificial intelligence (AI). Through Upwork, businesses can find skilled individuals that can help them get up to speed on AI.
High-risk, high reward
Now, all of these stocks are at the higher end of the risk spectrum. Most don’t have a lot in the way of profits yet. As a result, their share prices are volatile.
But I’m backing these stocks for the long term. I’m convinced at least a few of them will deliver outsized returns over the next decade.