2 explosive stocks I’d buy today for a life-changing passive income in 10 years

For many of us, passive income is the end goal. However, unless we have a big pot of cash, we’re not going to be capable of generating the income we desire.

| More on:
Young mixed-race woman jumping for joy in a park with confetti falling around her

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

James Fox has positions in Blue Bird Corporation and GigaCloud Technology Inc . The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Is Tesco’s share price still a bargain after rising 26% over a year?

Recent results show Tesco is still growing its leading market share, and despite its share price gains this year, it…

Read more »

Investing Articles

Is this FTSE 250 gem the next big thing in defence sector shares?

This FTSE 250 defence firm was founded by the MoD, has seen its order book and profits swell, and is…

Read more »

Investing Articles

Here’s what the National Grid share price fall could mean for passive income investors

It's long been seen as one of the FTSE 100's best stocks for durable dividends. What does the recent National…

Read more »

Female florist with Down's syndrome working in small business
Investing Articles

£6,000 in savings? Here’s how I’d try to turn that into a £500 monthly passive income

With careful planning and patience, it’s not hard to earn a passive income with UK shares. Here’s one way to…

Read more »

Investing Articles

Here’s how I’d aim for a second income of £1,000 a month, with just £10 a day

How much do we need to build a decent second income? With enough time, we could do it with a…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Down 12% in a month, is this the FTSE 250’s most overlooked gem?

Our author thinks Kainos is one of the most overlooked FTSE 250 gems. Here's why he thinks the future could…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

Just released: our 3 best dividend-focused stocks to consider buying before July [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

A top FTSE 250 stock to consider buying for rapid dividend growth!

Looking for dividend shares to target a lifetime of passive income? Here's a FTSE 250 growth stock that could provide…

Read more »