What stocks will most likely 10x in the next few years?

DLocal's volume is compounding faster than its profit pool

Start with a business that already earns money. A payments platform processes merchants' transactions, retains a small economic spread and pays the costs of running its network. The investment case depends on multiplying transaction volume by the amount retained from each dollar, then converting that gross profit into earnings.

DLocal processed $17.7 billion in the second quarter of 2026, against $9.21 billion a year earlier. Gross profit increased from $98.9 million to $127 million, and quarterly net income reached $54.8 million. The company has an operating profit engine to scale. [1]

Management's demand argument is substantial. CEO Pedro Arnt said: “TPV growth has remained above 50% year-over-year for seven consecutive quarters, with the last three quarters at or above 70%.” He attributed the expansion to investments in the platform and its portfolio of licenses, alongside merchants' growth across emerging markets. [1]

Yet the volume going through the network is growing much faster than the gross profit staying behind. Dividing gross profit by total payment volume gives realized capture of 0.719% in Q2 2026, down from 1.074% a year earlier. That is a 33% relative decline. Payment volume rose 92%; gross profit rose 29%. [1]

Source: dLocal Q2 2026 results. Growth is calculated from the reported Q2 2026 and Q2 2025 payment-volume and gross-profit figures. [1]

We think this is the decisive observation in DLO's case. Winning transactions creates shareholder value only if enough economics survive the competition for them. Pricing, customer mix and geography can all affect capture; the disclosures available here do not isolate their contributions.

That leaves us interested, but price-sensitive. DLO's existing profitability gives the thesis more substance than a business awaiting commercialization. Its declining capture rate prevents us from extrapolating payment-volume growth directly into earnings.

DLocal's favorable case supports 10× only from an entry near $11

Our five-year scenarios produce terminal values of approximately $39–$110 per share. The upper end requires annual payment volume of $350 billion, a gross-profit capture rate near the latest quarter's level, and strong conversion of gross profit into net income. The lower outcomes show how much can disappear when capture, dilution or valuation moves against shareholders.

Annualizing Q2 produces a payment-volume base of $70.8 billion. Reaching $350 billion would require about 38% annual growth for five years. That is well below the latest quarterly growth rate, but sustaining it at a much larger scale would still be an exceptional achievement. [1]

The entry price determines whether the same operating outcome delivers a tenfold return.

Note: Analyst scenarios. Terminal price equals payment volume × gross-profit capture × net-income conversion × P/E ÷ terminal shares. Share counts are dilution sensitivities. No separate cash value is added. The 40–45% profit-conversion assumptions bracket approximately 43% in Q2 2026; 30× terminal earnings is aggressive. Entry ceilings equal terminal prices divided by ten. Source for current operating economics: dLocal. [1]

The favorable case holds capture at 0.72%, converts 45% of gross profit into net income and values that income at 30 times earnings. It produces roughly $110 per share, which supports a tenfold return from an entry around $11 or below. The entry ceiling is the result of those assumptions; it is not our estimate of fair value.

The compression case reaches the same $350 billion payment volume but retains only 0.50%, converts 40% into net income and carries more shares at a lower multiple. Its terminal value falls to about $51. The market opportunity has barely changed; the value belonging to each shareholder has more than halved.

Our view is that DLO deserves a conditional place on the watchlist. A verified purchase price and outstanding share count must sit beside these thresholds before the operating thesis becomes a stock recommendation. In particular, volume growth and capture should be assessed together: favorable customer economics cannot simply be assumed alongside rapid expansion.

BlackSky's customers are growing, but investors are funding the expansion

DLO's central question is the economic spread on transactions. BlackSky adds a capital-intensive constraint: satellite services must eventually earn enough to cover the constellation that delivers them, including maintenance and replacement. Additional customers can improve the economics of deployed capacity, provided the resulting cash stays ahead of that investment burden.

BlackSky's Q2 2026 revenue rose 50% to $33.3 million. Its September 24 reference price of $23.17, multiplied by the earlier August 3 snapshot of 40.9 million common shares, implies approximately $948 million of basic equity value. That dated capitalization proxy gives the business room to become much larger. [2] [3]

The cash bridge shows who is paying for the opportunity today. BlackSky spent $15.4 million on capital expenditure in the quarter and raised $150 million by issuing 3.6 million shares through its at-the-market program. Capex equaled 46% of quarterly revenue; equity proceeds were 4.5 times revenue. The raise financed expansion beyond the quarter, but its scale makes shareholder funding central to the thesis. [2]

We therefore ask what the company must earn after all the costs of keeping the service operating. Our model uses equity free cash flow after interest, taxes, working capital and capital expenditure. A favorable margin must pay for replacement satellites as well as the initial build.

Depending on margin and valuation assumptions, the annual revenue required for a tenfold return is approximately $1.70–$3.40 billion. The lower threshold assumes a 25% equity free-cash-flow margin, 30× free cash flow and 55 million terminal shares. Against the $133 million annualized Q2 revenue base, it requires roughly 66% annual revenue growth for five years. The higher threshold uses a 15% margin and 25× multiple. [2] [3]

Note: Current run rate is Q2 revenue multiplied by four. Both requirements assume 55 million terminal shares and a $231.70 target price, ten times the September 24 reference. Required revenue equals target price × shares ÷ FCF margin ÷ P/FCF. No separate cash value is added. Sources: BlackSky and Fiscal.ai. [2] [3]

The favorable case asks growth to accelerate beyond the latest reported rate and remain exceptional for years. It also assumes that 25 cents of every revenue dollar becomes cash available to equity after reinvestment. We regard that combination as demanding, even before considering the premium terminal multiple.

A substantial business expansion can still leave shareholders far short of tenfold appreciation.

Note: Analyst scenarios use terminal revenue × equity FCF margin × P/FCF ÷ terminal shares. Returns use the $23.17 September 24 reference price. The 55 million-share assumption represents approximately 34% dilution from the August snapshot. Sources for starting price, shares and operating scale: Fiscal.ai and BlackSky. [3] [2]

Our execution scenario reaches $600 million annual revenue and produces approximately $41 per share, or 1.77 times the reference price. The favorable case reaches tenfold appreciation; the bear case loses about 91%. These outcomes explain our position: BKSY belongs on a speculative watchlist because of its starting size and operating potential, while the financing and cash-generation requirements keep it out of the “probable winner” category.

Innodata stays provisional until the operating case is verified

Our provisional choice for the strongest AI operating opportunity is Innodata. The thesis is that a specialized supplier can become important enough to major customers to compound revenue and earnings without assuming the infrastructure funding burden seen in more capital-intensive businesses. The corresponding risk is dependence on a small number of customers with substantial bargaining power.

The evidence supporting INOD is less complete than the primary-source material supporting the DLO and BKSY analysis. We have not independently verified the financial inputs, reference valuation and complete capital structure needed to underwrite it. That keeps INOD on the provisional watchlist and prevents us from treating it as the highest-conviction stock.

Our test is demanding: durable revenue growth, customer diversification without lost business, and cash earnings strong enough to justify a premium valuation. We are skeptical of awarding a rich terminal sales multiple before a supplier demonstrates recurring demand and pricing power. A large AI market can sustain many suppliers while leaving the best economics with their customers.

Proven adoption still has to produce profitable delivery

TransMedics is the most useful secondary comparison. Its Organ Care System and National OCS Program connect demand for transplant technology with the logistics needed to deliver it. The company attributed Q2 growth primarily to greater OCS utilization in liver and heart, together with logistics services. [4]

Revenue rose 21% to $190 million, but operating income fell from $36.6 million to $23.7 million. Dividing operating income by revenue gives a margin decline from 23.3% to 12.5%. The release identifies investment in OCS Kidney, Gen 3.0, clinical programs and supporting infrastructure as contributors to higher operating expenses. Those investments may create future value; their current cost is visible. [4]

Our tenfold scenario requires approximately $4.31 billion annual revenue, a 28% EBIT margin, 25× EBIT and 36 million terminal shares. Using the research reference price of $83.90 and an $18.4 million net-cash proxy, the revenue requirement follows from valuing the target equity and dividing by the assumed margin and multiple. Against $747 million midpoint 2026 revenue guidance, it requires about 42% annual growth. The cash proxy uses the reported convertible-note carrying value, with conversion effects still requiring reconciliation. [3] [4]

We keep TMDX on the secondary watchlist because adoption is established, but current growth and margins fall well short of that combination. A less exceptional case of $2 billion revenue, a 20% EBIT margin and 20× EBIT produces approximately $223 per share under the same share-count and cash assumptions—about 2.65 times the reference price. A good operating outcome can stop well short of tenfold appreciation.

We are more skeptical of Red Cat and Enovix. Red Cat reported 527% revenue growth to $20.2 million in Q2, but its 16.1% gross margin left only about $3.25 million gross profit, calculated as revenue times margin. The growth rate has to be read alongside the small profit pool. [5]

Enovix reported $9 million quarterly revenue. Its approximately 84% yield milestone concerned Zone 1 dicing, one manufacturing step. The shareholder case requires the entire production process to deliver saleable batteries economically, so we give commercial revenue and finished-product economics more weight than an isolated process improvement. [6]

ODDITY supplies another reason to resist ranking stocks by apparent recovery upside alone. Q2 revenue fell 25% to $181 million while the company worked with its largest advertising partner to resolve the IL MAKIAGE account disruption. Management described the problem as technical and solvable. We think its ability to acquire customers profitably remains the relevant test, and we would not promote ODDITY into the leading group on recovery assumptions alone. [7]

The opportunity is real; the probability is harder to establish

The strongest case against our caution is that extraordinary winners emerge from changes that conventional extrapolation misses. A large customer, a successful satellite generation or a payments network reaching scale can change a company's economics abruptly. BlackSky's 50% revenue growth and DLO's 92% payment-volume growth show substantial demand already arriving. We give that evidence enough weight to maintain the watchlist. [2] [1]

But those observations do not tell us how often several favorable conditions coincide: rapid growth, better margins, manageable dilution and a generous exit valuation. The historical evidence available here cannot support company-specific numerical odds.

A Goldman Sachs study identified 134 stocks among then-current MSCI China constituents that had achieved tenfold total returns within some rolling five-year period since 2000. That retrospective, surviving-constituent universe answers a different question from the forward probability facing an investor today. Shumway and Warther's work on delisting bias explains why omitted failed stocks can materially distort historical return evidence. We therefore decline to manufacture a probability ranking from these studies. [8] [9]

Our distinction is narrower and more useful. DLO has a measurable earnings engine whose retained spread needs watching. BKSY has a small starting equity base whose owners must finance expensive capacity. INOD has a potentially compelling operating thesis whose inputs require verification. The attractive feature and the principal risk are inseparable in each case.