Over the last 20 years, growth stocks have handed shareholders some of the best returns that the stock market has to offer.
Take Amazon, for example. A £10,000 stake in 2003 would have surged 10,079% to become over a million at today’s share price.
While that’s hardly typical, it does show what’s possible. And there are two stocks I own that I think have the potential to shoot up in the coming years.
Games Workshop
The first stock I’m excited about is tabletop gaming company Games Workshop (LSE: GW). Its share price has already grown over 20 times from £4.23 to £98.30 inside the last decade.
This growth shows what a good job it’s been doing building its brand. In fact, from 2016 to 2022:
- Revenue increased from £118m to £414m
- Margins increased from 11% to 31%
- Net income increased from £13m to £128m
- The total market cap grew to £3.2bn from only £161m
A Henry Cavill TV series
As impressive as all that is, I think it might just be the start here. As what’s really exciting is the potential of its Warhammer intellectual property.
Other fictional worlds like Star Wars, Marvel or Lord of the Rings have had outrageously successful – and lucrative – TV shows and movies.
And only last year, Amazon struck a deal with the firm to create a Warhammer series starring Henry Cavill. If that goes on to have success like those other big franchises, then I’d expect my Games Workshop shares to move much higher.
It’s worth mentioning that the show hasn’t even been filmed yet, so any success is not at all guaranteed.
Tesla
My second choice, electric vehicles (EV) manufacturer Tesla (NASDAQ: TSLA), needs little introduction.
The carmaker has already grown at a 40% compound annual growth rate (CAGR) for the last 10 years. That’s thanks to its success in producing desirable EVs, taking a 65% share of that market.
But its success does present an obvious question: is the growth phase already over?
Musk’s latest vision
Personally, I don’t think so. And the reason is its owner Elon Musk has a much grander vision. He wants Tesla to put self-driving vehicles on roads all around the world.
The company that introduces safe and effective autonomous vehicles will surely see huge growth. It’s like creating the same productivity as millions of taxis and lorry drivers in one fell swoop.
And Tesla looks well placed here. First off, the firm’s vertical integration – making its own batteries, having its own repairs, and the like – means the company trounces its competitors when it comes to margins.
| Tesla | Toyota | Honda | GM | Ford | Stellantis | |
| 2022 Net Margin | 15.5% | 6.9% | 4.80% | 6.20% | -1.4% | 9.2% |
That’s a lot more cash to spend on research and testing its autonomous vehicles.
But also, Musk’s latest move was to slash thousands off the prices of his cars. By doing this, he thinks Tesla can gain further market share to give itself an untouchable advantage in self-driving technology.
For me, the biggest risk here is simply that other investors agree with me. Today’s share price of $172 bumps the price-to-earnings ratio up to an expensive-sounding 50.
But even at that price, I think Tesla can join Games Workshop on my list of stocks that I’m extremely bullish about for their future growth potential.
