The stock market is down over 10% over the last few weeks, and many high growth stocks are down 30, 40, or even 50% over that time. When we go through difficult periods in the market, I like to take some time to revisit the stocks that I own, and question my conviction levels in each one. I typically don’t sell much during these times, but I will often shift money from companies that I don’t believe in as much into ones that I do. Especially if those companies that I love are the ones that have experienced the largest drawdowns.

This list is the attributes that I look for in the companies that I believe have 100x potential over the next 10+ years.

1. High growth companies with low-to-moderate market caps.  Companies that have a multi-year track record of growing annual revenues 30% or more, where growth is holding strong or even accelerating.  Market cap ideally under 10 or 20 billion allows for plenty of room to grow.
2. Just reached profitability or have a clear path to profitability in the next 12 months.  These companies will usually grow EPS exponentially faster than revenues over the coming years. 
3. Have plenty of cash and minimal debt.  Some companies say they are profitable, but it doesn’t show up on the balance sheet.  Cash should be increasing every quarter, with some exceptions if they are using that cash for smart acquisitions.   
4. Have an overall business vision/story/model that I believe has legs for the next 10 years or more.  They don’t just have their current business model, but many future verticals that they can grow into. 
5. They are in a higher-margin industry where the big players in that industry or the total addressable market far exceeds their current market cap.  If they execute well, they could potentially reach 100X or more their current size today. 
6. Price-to-sales ratio under 8.  This tells me the market hasn’t fully caught up to the opportunity.  The stock price is disconnected from the fundamentals.  You can get away with a higher price-to-sales ratio if it’s in a high-margin industry like software and growth rates are above 30%. 
7. A consistent track record of beating their own guidance. This shows a company that understands its own capabilities well and has a tendency to under-promise and over-deliver. This also means that the estimates and ratios you are using to value the company are likely overly conservative.

Right now, there are 2 companies that fit this profile better than any others I’ve found… $HIMS and $SOFI. There are a few other companies that I love that are close. Those are Shift4, Robinhood, and Toast.

These are the companies I’m buying more of despite the recent sell offs. **Not financial advice**