In less than a decade since going public, Tesla Inc (NASDAQ: TSLA) has made for an incredible investment. At this writing, the stock price has increased an incredible 1,100% since the IPO in 2010. That means every $1,000 invested in the company would be worth $11,000 today -- and that's even with the share price down more than 20% from the peak last fall. And while it has made for a wonderful investment over the past few years, there are real questions as to whether Tesla can make the jump from distributor to industry dominator, particularly as it continues to struggle to manufacture its first mass-market auto at higher volumes.
Whether you're bearish or bullish on Tesla's prospects, there are other stocks investors should consider buying today. Three Motley Fool investors have identified biopharma leader Amarin Corporation plc (ADR) (NASDAQ: AMRN), upstart -- and uber-profitable -- soda maker National Beverage Corp. (NASDAQ: FIZZ), and turnaround-in-the-making healthcare property giant Welltower Inc. (NYSE: WELL) as having market-beating prospects. Keep reading to learn why these very different companies are set to deliver market-beating -- and possibly Tesla-beating -- returns going forward.
Image source: Getty Images.
Buy this turnaround at a bargain price
Jason Hall (Welltower): Over the past few years, healthcare and retirement facility owner Welltower has faced some challenges. Recent trends for more in-home care for seniors has created a short-term oversupply of the properties Welltower has specialized in, and management has engaged in a major effort to rebuild the company's portfolio, exiting less-profitable and lower-demand markets, while paying down debt and investing in the kinds of facilities that should increase in demand in the decades ahead.
It's been a bit painful for investors, which have seen Welltower's funds from operations per share -- a key profitability measure for real-estate-intensive companies -- fall more than 25% from the peak in recent years, pulling the stock price down more than one-third:
At the same time, rising interest rates have sent many shareholders to the exits, fearing higher debt expenses will hurt the company's prospects.
While it's been unpleasant for anyone who's held, I think it has created a wonderful opportunity for market-beating returns going forward. The restructuring efforts continue to weigh on FFO, which fell about 6% last quarter, but Welltower's balance sheet is improving as it deleverages, and it is using cash from asset sales to invest where future demand will be.
Management continues to expect full-year FFO of $3.95 to $4.05 per share, putting the current share price at about 13 times 2018 FFO, a reasonable value considering the strong prospects as the turnaround plays out. Add in a 6.6% dividend that's well within its cash flows, and Welltower should make for a market-crushing investment for years to come.
Keeping it simple
Demitri Kalogeropoulos (National Beverage): Whether it is electric automobiles with futuristic self-driving features or solar energy systems that can power a home, Tesla is working on some of the most difficult manufacturing challenges in the world today. And sure, those kinds of problems attract skilled engineers and visionary leaders like CEO Elon Musk. But they make many investors nervous. After all, breaking new technical ground is risky, and it carries no guarantee that consistent profits will follow.
If you fall into that risk-averse category, I've got a far different stock in mind. National Beverage is the soda company behind the wildly popular La Croix sparkling water franchise. Compared to a Tesla Model 3, its products are laughably easy to manufacture, containing a simple mix of three ingredients: water, flavorings, and carbon dioxide.
And, with sales volumes having risen 16% in the past nine months, and by 17% over the prior 12-month period, there's no question about whether robust demand exists for National Beverage's portfolio of soft drinks. Average prices are improving, too, which recently made this company more profitable than its bigger soda peers.
National Beverage's stock has stumbled a bit in 2018 after nearly doubling last year. But, as sales and profitability reach new highs, the future looks bright for this non-traditional soda specialist.
Luck of the Irish
George Budwell (Amarin Corporation): To generate the type of awe-inspiring return on capital exhibited by Tesla over the last few years, you're going to need to some luck. And Irish biopharma Amarin seems to have that all-important trait on lock.
Long story short, Amarin has somehow done battle with the Food and Drug Administration (FDA) over the appropriate target market for its highly refined fish oil pill Vascepa and won. As a result, the drugmaker's top line has been blasting higher by more than 28% over the last two years in a row, and this noteworthy trend is actually expected to accelerate by a wide margin next year.
To keep the growth party rolling, though, Amarin is going to need some more luck. The company is expected to reveal the top-line results for its cardiovascular outcomes trial, dubbed Reduce-It, by the end of the third quarter. This trial should prove to be a make-or-break moment for the company.
If positive, Reduce-It's results would expand Vascepa's target market by perhaps 10-fold from current levels. That's certainly an impressive forecast, given that the drug is already on track to generate a healthy $230 million in sales this year.
Unfortunately, Amarin is also a super high-risk stock. A failure in Reduce-It, after all, could spell disaster for the company. Vascepa is the company's only FDA-approved product, and Amarin doesn't have much of a clinical pipeline to fall back on in the event Vascepa proves to be a dud. But if you're looking for a stock that could potentially match or even exceed Tesla's outstanding returns, Amarin definitely has what it takes to achieve that goal.
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Demitrios Kalogeropoulos owns shares of Tesla. George Budwell has no position in any of the stocks mentioned. Jason Hall owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool recommends Welltower. The Motley Fool has a disclosure policy.