The recent market conditions have been brutal, but if you’re looking to build a strong financial foundation and turn $10,000 into $50,000, there’s good news. The sharp valuation declines have created attractive investment opportunities in promising companies, and time is on your side.
With that in mind, let’s take a look at two stocks that have the potential to deliver fivefold returns before the decade is over.
1. Cloudflare (NYSE: NET)
Cloudflare is a leading provider of web technologies, including content delivery network (CDN) and domain name system (DNS) services, as well as protection against distributed denial-of-service (DDoS) attacks. While its stock has dropped about 73% from its previous high, it is expected to rebound and deliver strong returns for long-term investors.
Despite facing economic headwinds, Cloudflare delivered another strong performance in its latest Q4 earnings report. Although macroeconomic conditions have somewhat restrained demand, existing customers continue to increase their spending on Cloudflare’s services. The company reported a 122% net revenue retention rate, meaning that, on average, customers spent 22% more than they did the previous year.
With strong customer retention and new customer acquisitions, Cloudflare’s Q4 revenue surged 42% year-over-year to $274.7 million, while annual revenue grew 49% to $975.2 million—bringing its annual revenue run rate to approximately $1.1 billion. During the earnings call, management reiterated that the company is on track to reach a $5 billion annual revenue run rate by the end of 2027. Furthermore, Cloudflare expects to achieve this milestone organically, but acquisitions could help the company exceed its current projections.
2. PubMatic (NASDAQ: PUBM)
PubMatic is a digital advertising technology company that provides a platform to automate and optimize ad publishing. The digital advertising market has faced tough times, and economic uncertainty has led investors to sell off stocks exposed to the ad industry. As a result, PubMatic’s stock has dropped about 81% from its peak.
While macroeconomic conditions remain challenging, PubMatic has demonstrated resilience. Despite mounting pressures, the company managed to grow its revenue by 13% year-over-year to $256.5 million in 2022. This was a significant slowdown from the 53% revenue growth in 2021, and its net income also halved to $28.7 million. However, the business remained profitable and continued to expand its revenue.
With a market cap of approximately $708 million and $174.4 million in net cash and equivalents at the end of last year, PubMatic remains a small-cap stock that appears attractively valued for long-term investors. The stock currently trades at about 37.5 times expected earnings and 2.5 times expected revenue for this year.
By investing in promising companies like Cloudflare and PubMatic, patient investors could see significant returns in the years ahead.
