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This leading video game producer is pursuing a profitable growth strategy, with analysts anticipating 42% annualized earnings growth.
This activewear brand is thriving despite adverse conditions.
This apparel stock looks cheap and still has plenty of room for growth.
Keeping a long-term mindset on a company's opportunities is a major advantage in spotting tomorrow's winners. If you're looking to double your money, or even higher returns, you'll want to focus on companies that are experiencing growth tailwinds in their industry.
To help you in your search, three fool.com contributors recently selected three stocks with above-average upside over the next five years. Read on to learn why Take-Two Interactive (NASDAQ: TTWO), On Holding (NYSE: ONON), and Lululemon Athletica (NASDAQ: LULU) could double in value by 2030.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Getty Images.
John Ballard (Take-Two Interactive): The $190 billion video game industry has remained resilient through the macroeconomic obstacles in recent years. Take-Two Interactive is one of the top stocks in the industry that is hitting new highs following strong financial results over the past year.
Take-Two is preparing to launch one of the biggest releases in years. The sixth installment in the best-selling Grand Theft Auto series is scheduled to launch in May 2026, which falls in Take-Two's fiscal 2027. The last release has sold over 215 million copies after more than 10 years since its release, which is why this upcoming release is such a big deal.
Take-Two is already off to a strong start in fiscal 2026, with first-quarter financial results exceeding expectations. It continues to experience healthy player interest in top franchises like Grand Theft Auto and NBA 2K, and it's also having success expanding its game portfolio to mobile devices.
Spending on extra content within these games, or recurrent consumer spending, remains the company's main revenue driver, making up 83% of net bookings (non-GAAP revenue). This lucrative revenue grew 17% year over year last quarter, providing great momentum heading into next year.
Analysts anticipate Take-Two's revenue hitting a record $9.2 billion in fiscal 2027, which would include the first year of sales from Grand Theft Auto VI. The company's game expansion strategy and cost discipline remain undervalued by investors. Analysts project the company's earnings to grow at an annualized rate of 42% over the next few years. Yet the stock is priced very reasonably, trading at a forward price-to-earnings (P/E) multiple of 27 on fiscal 2027 earnings estimates. From this valuation, the stock could easily double within the next five years.
Jennifer Saibil (On Holding): While the largest activewear companies in the world -- like Nike, Adidas, and Lululemon Athletica -- are struggling, newcomer On Holding has been demonstrating phenomenal performance. This up-and-coming winner is resonating with an affluent clientele that's driving growth and resilience despite a challenging operating environment, and it should thrive under better conditions.
Although it hasn't recently updated its numbers, at an investor day in 2023, it had low brand penetration worldwide, including in its home country of Switzerland, where it was at 47%. It was at only 6% in France and the United Kingdom. Notable U.S. cities where brand penetration was low include New York City at only 6% and San Francisco at only 9%. Those numbers are surely higher today, but they're still likely low compared with the opportunity.
It has a four-pillar growth strategy comprised of innovation in product, growing brand awareness, expanding its geographic footprint, and operating with excellence. It has a robust direct-to-consumer segment, but it also has a healthy wholesale business.
The second quarter was one glimpse into how it's doing. Sales were up 38% year over year (currency neutral), with a 54% increase in direct-to-consumer sales and 29% increase in wholesale. It also has the highest gross margin in the industry at 61.6%, up from 59.9% last year. When economic trends change, it should perform even better.
Management had laid out a goal of keeping growth at a compound annual growth rate (CAGR) of 26% through 2026, and it just raised its outlook for 2025 to 30%. If it can manage to keep its CAGR at 26% through 2030, trailing 12-month revenue of $3.1 billion will more than triple to $9.5 billion. At the same price-to-sales ratio, the stock would triple, too. But if the CAGR or the price-to-sales ratio comes down, it should be able to amply double your investment.
Jeremy Bowman (Lululemon Athletica): Lululemon has historically been one of the top-performing apparel stocks on the market, but the company has run into some trouble this year. In fact, it's currently the second-worst-performing stock on the S&P 500 this year, down 57% year to date.
Lululemon has faced a number of challenges in the U.S., its biggest market. Discretionary spending has been weak due to pressure from tariffs, a slowing job market, and concerns about a potential recession. Fashion trends also seem to be shifting away from leggings, its trademark product, as workout clothes.
The company also slashed its full-year guidance due to the effect of the removal of the de minimis exemption. This means that Lululemon will have to redesign its supply chain to fulfill e-commerce orders that were shipped from Canada to the U.S., or pay an import tax.
Despite those headwinds, there's good reason to think that Lululemon can bounce back and double by 2030, especially since it now trades at a forward P/E of just 13, and doubling would mean recouping only part of its losses from the year.
On the recent earnings call, CEO Calvin McDonald said the company had allowed styles in lounge and social to go stale. He said that Lululemon was increasing the percentage of new styles in its collection, and speeding up its go-to-market process to make the brand more nimble and allow it to respond faster to consumer demand.
Additionally, Lululemon is seeing phenomenal growth in China, where revenue was up 25% in Q2. China is now its second-biggest market. The company continues to open new stores in new and existing markets, which should give it plenty of growth opportunities over the next five years.
At its current valuation, it shouldn't be hard for the stock to double during that time.
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Jennifer Saibil has positions in On Holding. Jeremy Bowman has positions in Nike. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lululemon Athletica Inc., Nike, and Take-Two Interactive Software. The Motley Fool recommends On Holding. The Motley Fool has a disclosure policy.
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