Seasoned stock market investors know things rarely go according to plan.
In fact, even if we significantly discount the future profitability of a company – to arrive at its intrinsic value – it rarely turns out exactly how we envisaged.
Even the biggest companies, with the most predictable cash flows, are usually modelled for only around five years because after that forecasts are really no better than an educated guess.
But with smaller 'growth stocks' – i.e. those which can be expected to double in 10 years – forecasts are even more unreliable, which is one reason why a defensive investor should keep their small-cap exposure to a minimum.
However, if you don't mind taking on a little extra risk, the three stocks below could be exactly what you're looking for. If everything goes according to plan (remember, it rarely does), I believe there is a decent possibility the below companies' stock prices could double within the next 10 years.
1. Affinity Education Group Ltd (ASX: AFJ) is a childcare centre owner and operator with minimal debt and an appetite for acquisitive growth. Since listing on the ASX in late 2013, Affinity's share price has jumped 27%.
2. Donaco International Ltd (ASX: DNA) is a casino owner, with its flagship resort in Lao Cai, Vietnam. I bought the stock about a year ago but recently sold at a discount to today's price after tensions between China and Vietnam began to arise. Donaco's newly opened and larger resort relies on Chinese patrons because it's illegal for Vietnamese citizens to gamble. However with revenues and cash flows soaring, if everything goes according to plan, Donaco's current share price could prove to be really cheap.
3. Nearmap Ltd (ASX: NEA) appears to have an excellent risk/reward trade-off. The provider of geospatial imagery could see its revenues, earnings and cash flows fly higher in coming years, as it embarks on US test flights and begins to expand its range of bolt-on applications. Furthermore, the market still appears to be ascribing a share price which is very reasonable for long-term investors, even if Nearmap's international expansion fails.
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In a perfect world, each of these companies would double in just 10 years. However in reality, all of them face a number of risks moving forward. In addition, none of them pay a dividend!
