Investing in high-growth stocks can produce life-changing gains, even in relatively short periods of time. Those potential profits are what make it worth taking on higher levels of risk in the market. Still, you don’t want to overstate the risk by putting too much of your portfolio into a single asset. So, for example, instead of investing $10,000 in one growth stock, you might consider investing $2,000 in five different companies. Sure, that kind of diversification will reduce your exposure to the biggest winners, but it also protects your portfolio from the impact of underperformers.
Even a $2,000 investment can be very rewarding when talking about growth stocks. Three excellent examples are Rigetti Computing (NASDAQ:RGTI), rocket laboratory (NASDAQ: RKLB)and Robinhood Markets (NASDAQ: HOOD). If you invested $2,000 in each of these stocks on Halloween last year, the combined value of those positions now (as of October 17) would be about $91,000. The following explains how much a $2,000 investment in each of those stocks made a little less than a year ago would be worth today and why they have recovered so much.
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Investing in Rigetti Computing a year ago would have required a willingness to take considerable risk. The business was not profitable then nor is it still. Investors have pushed up the stock primarily based on the expectation that it will be a leading quantum computing company in the future. It could be more than a decade before there are clear winners in the quantum computing market, but in the meantime, Rigetti has been among the most popular stocks to own in 2025.
Since last Halloween, tech stocks have soared 3,200%, and a $2,000 investment would now be worth about $66,000. That phenomenal return would have been almost impossible to predict back then. This again highlights the risks and opportunities of investing in these small growth stocks – it can be difficult to predict which direction they might take.
However, as well as Rigetti did last year, holding a stock today could be scary, just because its valuation has gotten so rich. The business only generates about $2 million in sales per quarter. At its current market capitalization of $14 billion, that gives it an inflated price-to-sales ratio of over 1,100.
This stock is at huge downside risk as the company still has a long way to go to prove it’s the real deal. While Rigetti seems unstoppable today, in 2023, when quantum computing was not so trendy, the story was very different. In May 2023, Rigetti shares would plummet to a low of just 38 cents, falling 95% over a one-year period.
This is a highly volatile and speculative stock, and if you have made good profits on Rigetti, you may want to consider selling at least some of your shares.
Another big growth stock that has been acquired over the past year has been Rocket Lab. Although its 540% gain since last Halloween seems modest compared to Rigetti’s, that would still have resulted in a $2,000 investment growing to a value of just under $13,000 today.
This aerospace company also struggles with profitability, but generates much more revenue than Rigetti. Over the past four quarters, Rocket Lab generated $504.3 million in sales, although it incurred a net loss of $231.3 million in that period. It has a long way to go to break even, but investors hope its Neutron rocket, which is larger than the Electron rocket it has been using so far, can open up more lucrative and profitable opportunities for the business.
If the Neutron rocket has a successful initial launch later this year, this already booming stock could rise even further. Rocket Lab remains a risky investment, but it can reach profitability much sooner than Rigetti.
If you invested $2,000 in Robinhood at the end of October last year, your investment would now be worth a little less than $12,000 since it is up about 485%.
Robinhood’s trading platform has evolved over the years and now serves as a hub for people who want to buy and sell stocks or cryptocurrencies. The company has also expanded into “prediction markets” and a few months ago announced it would launch prediction markets for the NFL and college football that will differ from standard sports betting.
Of these three companies, Robinhood is the only profitable one and its margins are not minimal either. Over the past four quarters, the company has reported earnings of $1.8 billion on revenue of $3.6 billion. It trades at a price-to-earnings multiple of 74, which is certainly high, but with its business rapidly expanding and its brand still popular among retail investors, that premium may be justifiable.
Before you buy shares in Rigetti Computing, consider this:
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool posts and recommends Rocket Lab. The Motley Fool has a disclosure policy.
Three Scarily Good Growth Stocks That Would Have Turned $6,000 Invested Last Halloween Into $91,000 Today was originally published by The Motley Fool
