Emerging Stock Titans: Finding the Next Apple or Amazon

There are a lot of so-called experts telling you how to make a successful long-term investment decision when it comes to the stock market. Unfortunately, much of the advice out there related to a growth investing strategy is short on “strategy” and long on hype. In order to find the next Apple or Amazon, we identified five succinct criteria that as stock needs to meet before they are considered the next Emerging Stock Titans.

Year to date has been very volatile for the S&P 500 so it is more important than ever to have a clear strategy as a growth investor and stick with it for long periods of time.

We want to tell you about how we go about picking our stocks for the Emerging Stock Titans portfolio here at Wealthplicity. We do this so you are confident investing your hard-earned money in these businesses. The five criteria detailed below are clear, concise, and easy to follow.

The best growth stocks 2021 and beyond is what we are looking for when we developed our strategy and made our initial stock selections. These stocks are smaller in size, but huge in potential as they could become large cap growth stocks in the years ahead.

In order to be a truly successful long term investor you need to stop thinking of your stocks as (electronic) pieces of paper that we can easily trade day to day and start to think of your stocks as part ownership in a business that hopefully has some clear advantages in the marketplace where it competes. 

We want to own businesses that are well respected and operate in industries where there are undeniable trends working in their favor. As such, it is almost inevitable that the stock price of our businesses will go up over time. 

I am not sure how price of the stocks in our Emerging Titans service will do tomorrow or next month, but I believe over the long run these stocks will perform quite well vs. the market averages. Too much money is lost by people trading in and out of their stock positions. If we make the stock selections right based on the criteria outlined below, we are almost certain to make money over the long run. 

Emerging Titan Criteria

Below are the 5 criteria that we will use to pick our stocks. Each of our Emerging Stock Titans selections are evaluated against these criteria and must pass all five to be in our service portfolio. 

1. They are a leader in their industry. Many of our stocks will be companies whose products you use every week. No “penny stocks” here. We want to select stocks of companies that are proven leaders that will continue to grow and compound our investment over time.
2. They are involved in undeniable trends that will lead to growth and price appreciation in the future. For instance, we will not be selecting any tobacco stocks since tobacco is a shrinking industry.
3. They are led by great CEOs that in many cases are the founder of the company. Founder led companies in many cases outperform the market indexes by a wide margin.  
4. They are companies that reflect how we want to see the future. Or another way to think of it would be to say that the success of these companies would lead to a better future for all of us. 
5. They are companies that are growing and are minimally leveraged. No turnaround situations here. I look for sales growth rate of at least 15% and often quite a bit higher.

Top Stock Titans for 2021

Here are two examples of stocks in our Emerging Titans service and why we picked them:

Emerging Titan #1 – Mercadolibre (MELI): 

MELI is Latin America’s largest online marketplace operator, so it is sometimes referred to as the “Amazon of Latin America”. However, it does also have other businesses including a large payment processing operation, which is vital in Latin America given that many do not have a bank account. 

No doubt that online shopping and the move to a cashless society (discussed above) are both trends that are undeniable with lots of growth possibilities in the years and decades ahead. That MELI operates in Latin America, which is several years behind the US in terms of adoption of online shopping and electronic payments is even a better indicator of the future growth potential of the business. 

MELI is run by Founder and CEO Marcos Galperin who has done an amazing job building this company into the powerhouse that it is today. 

The convenience of online shopping and the safety of electronic payments are creating a brighter future for the customers that MELI serves.  

For the last quarterly results, the company grew revenue in US dollars by 85%. This is a company that is firing on all cylinders and should continue to do so for the foreseeable future. Good operating results combined with minimal long-term debt give MELI a lot of flexibility with whatever strategy they want to roll out to their network in the years ahead. 

Having traveled to Latin America numerous times the last four years the region is in the early stages of adopting many of the trends already in place here in the U.S. around online shopping and electronic payments. 

So as bright as the past has been for MELI, they are tapping into some significant megatrends in Latin America that should propel their stock price higher for many years to come. And with the LATAM population approximately two times that of the United States, I expect MELI to continue a torrid growth pace. 

 Emerging Titan #2 – ETSY (ETSY): 

ETSY is an online marketplace that helps sellers scale their businesses. They are not trying to compete with Amazon and Walmart.com etc., but instead are a leader in their niche of offering handmade products such as shoes, clothing, bags, and accessories.  

The idea of an online marketplace is not new, but it is an unmistakable trend that will continue long into the future. The idea of having one like ETSY focused on handmade crafts, bringing 48 million buyers and 2.5 million sellers together is an amazing feat. At a market capitalization of approximately $16 billion, ETSY is a sizable company, but one clearly in the emerging titan category. 

ETSY has been led by well-respected CEO Chad Dickerson since 2011, so he has been at the helm for most of ETSY’s most significant growth. This includes revenue for the most recent quarter increasing by 128%. They are clearly seeing an acceleration in business growth which is helping to drive higher shareholder value.  

The idea of an ETSY network bringing buyers and sellers of hand-crafted items together is consistent with our themes of a better future for all. Without an ETSY network, their smaller sellers would likely get lost on an Amazon type site. 

In Summary:

As a growth investor, make sure you have got a concise and easy to follow criteria for making your investment decisions.

Our Emerging Stock Titans service allows you to easily understand the criteria we use and see how we apply it to the individual stock selections made.

We then monitor those businesses for long period of time and reap the benefits of the appreciation in the business value.