2 Bets That Might Pay Off by 2025

Making modest returns in the short term might seem more attractive than making hefty returns way off in the future. But the balance between the two is key to financial independence.

| More on:

Not all stocks are held long term for the same reason. It’s a good idea to keep decent Dividend Aristocrats long term, because the rise in payouts might help you stay ahead of inflation (if you have a decent-sized dividend income). Many steady and reliable growth stocks are amazing long-term holdings, since the longer you keep them, the more sizeable your nest egg is likely to become.

There is another type of stock that you might consider keeping in your portfolio for years — even decades. And these are stocks that might pay off in the right conditions. Naturally, because of their “unpredictable” nature, you shouldn’t divert too much of your capital into these stocks, but even a small investment can help you grow your capital by a decent margin once these wildcard bets pay off.

A marijuana stock

Cannabis stocks have been in a rut for so long now that many investors have disregarded this category as a lost cause. Some vitality was promised alongside the U.S. marijuana legalization, but that’s also on the ice for now. Most cannabis stocks in Canada are simply down, but one, HEXO (TSX:HEXO)(NASDAQ:HEXO), has completely cratered.

The stock is currently trading at a price 95% down from its 2019 peak. This kind of fall usually spells major financial trouble, like a company heading for bankruptcy. HEXO, however, got down to that level because of its dangerous approach to debt. The company is using debt to fund its aggressive acquisition strategy and has already acquired three major businesses, including Redecan, which cost the company $400 million.

Even the company’s auditors have raised significant doubts regarding the company’s survival, making it a dangerous purchase, to say the least. But if you buy at the current price, and the position the company has claimed in the recreational market (thanks to the acquisitions) starts paying off, the return could be quite magnificent. If the stock can reach its glory-days valuation, buying now would mean multiplying your capital by 29.

A tech stock

CloudMD Software & Services (TSXV:DOC) is one of the few players in the still-nascent “digital healthcare delivery” marketplace. Even though telehealth has been around for a very long time, it has mostly been a niche market. But the pandemic helped many people and businesses realize that telehealth or virtual healthcare is an option worth considering.

And that’s not all that CloudMD does. The company is building a “combined healthcare ecosystem,” which includes health coaching, primary care, and healthcare navigation. The network already includes 11,500 mental health professionals, 22,000 family doctors, and about 55,000 specialists.  

The stock (at least till now) is not nearly as promising as the company’s own growth potential. It did spike in its early days (which was well into the pandemic), and the stock grew about 346% in a matter of months. But it has been downward relatively smooth sailing since then. But as the digital healthcare delivery solutions gain traction, CloudMD might start shining much brighter, and the stock may take off.

Foolish takeaway

If you can keep these two potentially powerful growth stocks in your portfolio till 2025, they might be able to give a decent boost to your overall capital appreciation. Make sure to close the position at the right time. These stocks are more reliable for their occasional spikes than they might be for long-term growth potential.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends HEXO Corp.

More on Investing

Paper Canadian currency of various denominations
Bank Stocks

1 Magnificent Canadian Dividend Stock Down 28% to Buy and Hold for Decades

This top Canadian dividend stock is underperforming its large peers this year, but a turnaround could be on the horizon.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution

The TFSA is attractive for investors who want to generate tax-free passive income.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Investors: 3 Dividend Stocks Worth Holding Forever

These TSX stocks have the potential to grow their dividends over the next decade, making them top investments for TFSA…

Read more »

hand stacks coins
Investing

Secure a Wealthy Future With These 3 Canadian Stocks

These Canadian stocks have the potential to appreciate substantially over time and may also enhance returns through dividend payments.

Read more »

Tractor spraying a field of wheat
Dividend Stocks

Is Nutrien Stock a Buy for its Dividend Yield?

Nutrien is down more than 50% form the 2022 highs. Is NTR stock now oversold?

Read more »

analyze data
Investing

3 Blue-Chip Stocks Every Canadian Should Own

These blue-chip stocks are backed by large-cap companies with well-established businesses, solid fundamentals, and a growing earnings base.

Read more »

dividends grow over time
Stocks for Beginners

The Smartest Growth Stock to Buy With $2,000 Right Now

Do you have $2,000 to invest for the long term? These three TSX stocks have and will continue to deliver…

Read more »

golden sunset in crude oil refinery with pipeline system
Dividend Stocks

Best Stock to Buy Right Now: Enbridge vs TC Energy?

Enbridge and TC Energy rebounded nicely over the past year. Are more gains on the way?

Read more »