3 Stocks That Look Just Like Home Depot in 1981

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From its beginnings as a pioneer of the big-box home-improvement concept in Atlanta in 1979, to its initial public offering in 1981, to becoming one of the world's largest retail chains, Home Depot has had an incredible run that's delivered tremendous returns for investors along the way.

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Finding stocks that can come close to matching that performance is no easy task, but we've assembled three Motley Fool investors and asked each one to profile a company that looks primed to be a huge winner for investors. Read on to see why think Axon Enterprise (NASDAQ: AAXN) Wayfair (NYSE: W), and Shopify (NYSE: SHOP) are stocks that have the potential to deliver massive returns.

An all-seeing eye

Rich Duprey (Axon Enterprise): The ability to change how the police interact with the public and how law enforcement is perceived by those they're sworn to protect and serve is no small task, but Axon Enterprise is leading the way to achieving both.

Through its body-camera and evidence-management systems, Axon is propelling law enforcement forward with both greater accountability and more protection against false claims. In the increasingly polarized public sphere, body cameras have the potential to serve as a balancing influence. And Axon Enterprise is building a profitable business around it.

Although Axon still realizes most of its revenues from its less-than-lethal TASER stun guns, the real growth being experienced is in cameras and evidence management. TASER division sales were up 16% in the second quarter, but up 66% in the software and sensors business that comprises the cameras and evidentiary systems. Sales are up 80% in the space over the first six months of 2017.

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As of the end of the second quarter, 38 of the country's 68 major city law-enforcement agencies have purchased Axon cameras or its digital evidence-management solutions. And as promising as the camera systems are, it's the evidence-management business that will be the real driver of revenues and profits, as it provides Axon with both recurring streams of revenue and a level of stickiness that will keep police departments in its orbit once they've signed up. Once embedded in an agency's data management, the switching costs become expensive.

The way Home Depot changed the way consumers thought of shopping for home-improvement projects is similar to how Axon Enterprise will transform law enforcement and how it touches upon the public.

Bringing home furnishings into the e-tail world

Dan Caplinger (Wayfair): Home Depot pioneered the hardware-store concept by taking it out of the realm of small mom-and-pop businesses and introducing it to the new reality of big-box retail in the early 1980s. Wayfair is looking to do something similar with the furniture business, taking a niche that has been traditionally resistant to the e-commerce revolution and seeking to make a viable alternative to brick-and-mortar home furnishings retailers.

Some investors weren't entirely convinced initially about Home Depot's business model, and there's also been some early skepticism about Wayfair's long-term prospects. But the company has been able to sustain high growth rates on the sales front, and Wayfair has particularly demonstrated a strong ability to keep its customers coming back for repeat purchases. As with many e-commerce companies, Wayfair isn't immediately worried about profit at the moment because it's focused on growing its market share at the greatest possible speed. Instead, growth in active customer counts, revenue per customer, and number of orders per customer show that Wayfair is finding loyal consumers. For a company that needs to keep its customer acquisition costs as low as possible to move toward profitability, Wayfair is at a turning point, and the next few years will be instrumental in determining whether it can match Home Depot's long-term success.

Leading the online-retail charge 

Keith Noonan (Shopify): The rise of online shopping means you won't find many companies in the brick-and-mortar retail space that have the potential to match Home Depot's incredible returns over the past three-plus decades. Instead, companies that facilitate the growth of e-commerce look to present the most promising retail-related investment opportunities, and Shopify is playing a leading role in helping small and mid-sized businesses quickly adapt to the internet age.

The company provides an inclusive sales platform that allows vendors to quickly bring their wares to the online marketplace -- eliminating the often expensive task of building and maintaining their own sales portals. Shopify offers over 100 design templates and 1,800 apps to help business set up a customized online sales portal and is already used by over 500,000 merchants across roughly 175 countries. Generating revenue through monthly subscription services and by claiming a portion of each purchase made through its platform, the company has managed to increase its trailing-12-month sales 385% over the past three years and appears to be on track to continue scaling rapidly.

At the core of Home Depot's incredible success has been its ability to deliver an all-in-one shopping destination for products that allow its customers to increase the value of their properties. Shopify's platform offers a similarly attractive proposition for vendors who want to take their businesses into the realm of online retail, and, combined with the momentum behind e-commerce, the company has what it takes to continue growing rapidly and delivering big wins for investors. 

10 stocks we like better than Axon Enterprise
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Dan Caplinger has no position in any of the stocks mentioned. Keith Noonan has no position in any of the stocks mentioned. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Axon Enterprise, Shopify, and Wayfair. The Motley Fool has a disclosure policy.