Investing for a passive income can be exciting. There’s so much promise. However, we have to be pragmatic. With, say £20,000 of cash, we can only generate around £1,600 as passive income annually.
I’m sorry to say it, but we need to take our time, and invest in the right stocks to make our portfolios grow. So, here are two explosive stocks I’d buy today to build a bigger portfolio and generate a life-changing passive income in the future.
Have I missed the bus?
Blue Bird Corporation (NASDAQ:BLBD) is an American school bus maker, and it’s riding high on a wave of orders for its new electric buses. The stock is actually up 95.7% over the past 12 months, with a recent earnings beat attracting investor attention.
Currently, electric buses only make up a small proportion of the company’s total output. Management stated that the current order backlog is for 5,900 vehicles — worth $850m — but only 8% of these are electric.
However, the electric market is growing — big time. In Q2, electric vehicles (EVs) represented 9% of its total sales, versus 6% a year ago. “In Q2, EV bookings increased by 56% over last year as we sold a quarter record of 210 electric school buses,” management said in the earnings call.
This growing EV market has been driven by the Environment Protection Agency’s Clean School Bus program. While I’m not a fan of subsidies — they can make companies inefficient over the long run — the state’s $5bn of funding appears to be driving the transition to electric buses.
I do genuinely see subsidies as a risk, because when they go in 2026, companies have to be ready to go it alone. However, that doesn’t undermine the strength of the investment opportunity. Blue Bird is currently trading at 20.5 times forward earnings and has a price-to-earnings growth ratio of 0.64 — that’s so cheap!
A future e-commerce giant
GigaCloud Technology (NASDAQ:GCT) has nothing to do with cloud technology as the name might suggest. Rather misleadingly, it’s a company that connects large parcel — furniture — manufacturers in Asia with buyers and resellers in North America and Europe. It also provides the logistics.
The company’s lean business model and platform have proven very successful over the past 18 months. In its Q1 earnings call, the business highlighted that gross merchandise value had surged to $908m, representing a 64% increase over 12 months.
Moreover, the number of active third-party sellers grew by nearly 44%, reaching a total of 865 by the end of the quarter, while the number of active buyers increased by over 29%, reaching 5,493 for the trailing 12 months.
I think it’s worthwhile recognising that most of GigaCloud’s sellers appear to be in China, and that represents a risk in the current geopolitical environment. However, GigaCloud’s value proposition remains highly attractive, especially with its forward price-to-earnings ratio of just 10.7 times.
The passive income story
If I invest in companies that grow my portfolio between 10% and 15% annually, rather than 5% and 10%, I can achieve my passive income dreams sooner. However, it’s not about taking risks. It’s about making data-driven decisions.
