Top 5 Stocks To Buy With Potential Multibagger Returns?

Stock #1: Veeva Systems (VEEV)

Veeva Systems is a cloud-based software provider serving the life sciences industry, with a market cap of $36 billion. One of the first things I like about Veeva is its solid financials—enterprise value is below its market cap, and it has no net debt. Its free cash flow is $1 billion compared to a net income of $600 million, with five-year averages of $800 million in free cash flow and $460 million in net income. This tells me the company is generating strong cash flows, which is always a great sign.

Their gross margin is impressive at 73.4%, meaning that for every additional dollar they make, a substantial portion goes straight to the bottom line. Profit margins are also consistent at around 24%. Growth rates, however, are slowing down. Veeva has seen 25% annual growth over the last decade, 21% over the last five years, and 15% over the past three years—indicative of a maturing company.

What’s even better is that most of this growth appears organic. By checking the cash flow statement, we see minimal acquisitions—another good indicator that this is a company with a lot of runway. However, with a $36 billion market cap, the company might not have the same explosive potential as a smaller business. Multibagger stocks usually come from sub-$1 billion companies, so while Veeva has growth potential, it could take a while to see that 100-bagger return.

The stock isn’t cheap either—currently trading at 36 times free cash flow. However, if it can grow at 30% per year, this valuation could make sense. Using the Stock Analyzer tool, I estimated a revenue growth of 6%, 10%, and 14% over the next 20 years, with profit margins around 22-26%. After running the numbers, the potential return was about 10.5%. While it’s not screaming "cheap," Veeva could be a good long-term hold, though I believe there are better cybersecurity stocks out there.

Stock #2: Mercado Libre (MELI)

Next up is Mercado Libre, the “Amazon of Latin America,” with a market cap of $108 billion. I love its balance sheet—$5.6 billion in free cash flow compared to $1.4 billion in net income. Its free cash flow over the past five years has grown from just $450 million to $5.6 billion. From a price-to-earnings (PE) perspective, the numbers are a bit high: 77 for the past year and 240 over the last five years. But its free cash flow multiple is a more palatable 19, which could indicate growth potential.

Mercado Libre’s gross and profit margins are even better than Amazon’s, and their return on invested capital (ROIC) is improving. The stock is near its all-time high, but it’s had some amazing growth—it’s already been a 15-bagger over the past 10 years. There’s potential for more, but its large market cap makes it challenging to see another 100-bagger scenario without some external factors like a market dip or strategic buybacks.

When I ran it through the Stock Analyzer tool, I estimated revenue growth at 8%, 14%, and 20%, with profit margins ranging from 6-8%. The results showed a possible high-side value of $7,500 and a low-side of $1,600. If you’re comfortable with those numbers, Mercado Libre could be worth further research.

Stock #3: Meta Platforms (META)

Meta is a massive company with a market cap of $1.36 trillion, so the odds of seeing a 100-bagger are slim. However, there’s still potential for solid growth, especially if they can optimize their existing assets. Meta's gross margin sits at a whopping 81%, and its free cash flow is consistently strong. Even though they’re losing $10-$12 billion annually on the Metaverse, it’s a high-risk, high-reward bet. If it pays off, it could dramatically boost their free cash flow. If it doesn’t, they could shut it down, adding billions to their cash flow almost instantly.

One thing to keep in mind is their ability to monetize WhatsApp, which remains untapped. With 3.5 billion users across its platforms, Meta certainly has potential, but achieving multibagger status from here is difficult. The stock is currently trading at 27 times free cash flow, which is expensive, but they’ve been buying back shares when prices dipped, which helps shareholders.

When I analyzed Meta’s future potential, I forecasted revenue growth at 4%, 7%, and 10%, with profit margins between 27-34%. The stock seems slightly overpriced at the moment, but if you believe in the long-term vision, holding on could yield good returns over time.

Stock #4: Verve Holdings (VEEV)

Verve Holdings is an interesting case. They focus on hardware, software, analytics, and services to ensure the smooth operation of customers’ applications. With a $33 billion market cap, they also boast low debt, but their margins are not as attractive. Free cash flow is double net income, which is a good sign, but the ROIC is low, and they’ve been increasing shares outstanding, which is a red flag for multibagger potential.

They also pay a small dividend, which doesn’t make sense for a company that should be reinvesting profits to grow. Analysts predict revenue to rise from $7.8 billion to $10.7 billion over the next four years, but there doesn’t seem to be enough growth here to justify calling it a multibagger.

Stock #5: e.l.f. Beauty (ELF)

Finally, we have e.l.f. Beauty, a stock that has recently caught my attention. After hitting an all-time high of $221, it’s since dropped to $115. Despite that, it has a great balance sheet and an improving ROIC. e.l.f. has seen significant revenue growth—tripling from $190 million to $500 million over the last few years. Their gross margins are impressive at 71%, and they’ve maintained a 41% growth rate over the past five years.

Analysts project revenue will grow 85% in the next three years, from $1 billion to $1.85 billion. Running the Stock Analyzer, I estimated revenue growth at 10%, 16%, and 22%. The results suggested a low-side valuation of $45-$50 and a high-side of $175-$190, showing decent potential. However, this is a smaller company, so a deeper dive into its growth story would be essential before making a decision.

Conclusion

These five stocks show varying levels of multibagger potential. Veeva and Mercado Libre have solid long-term prospects but come with larger market caps, making explosive growth harder. Meta, while a giant, still has opportunities, especially with WhatsApp and the Metaverse, but won’t be a 100-bagger anytime soon. Verve seems unlikely to reach multibagger status, while e.l.f. Beauty’s growth story is compelling but requires more research.

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