3 Stocks With Home Depot-Like Return Potential

Home Depot (NYSE: HD) has created a lot of wealth over the years. Share prices have quadrupled over the last decade alone, and early buyers have enjoyed a spine-tingling return of 641,000% so far.

But those massive gains are fading in the rearview mirror now. What's the next wealth-building success story in the Home Depot mold?

That's what we asked a handful of your fellow investors here at The Motley Fool, and they were quick to respond with some fantastic growth-stock ideas. Read on to see how they came up with Chuy's Holdings (NASDAQ: CHUY), Walt Disney (NYSE: DIS), and iRobot (NASDAQ: IRBT).

Don't be fooled by iRobot's short-sellers

Steve Symington (iRobot Corporation): With its market capitalization sitting at a relatively small $2 billion as of this writing (compared to Home Depot at nearly $200 billion), iRobot Corporation still enjoys a long runway for growth that could help it rival Home Depot's returns in the coming years. And luckily for opportunistic investors today, iRobot shares have fallen more than 20% since the middle of September after a short-seller highlighted a new competitive threat to the Roomba maker.

More specifically, investors are worried that the entrance of an affordable new robotic vacuum from Shark will usurp iRobot's commanding lead in the space -- a fair concern considering Shark has taken market share from Dyson in the upright market in recent years and that Roomba currently represents the bulk of iRobot's revenue.

But iRobot has long insisted that competition is a good thing, serving more as validation for its core business than a threat to its long-term story. What's more, last quarter iRobot teased that it's making additional investments in research and development to accelerate its product road map in anticipation of new product launches in 2018. Those launches could include anything from new Roomba models to improved Braava jet floor-mopping robots (which are particularly popular in Asia, where hardwood floors are the norm), new cloud-based features, and potentially even iRobot's widely anticipated robotic lawn mower.

So while some investors are understandably concerned by iRobot's reliance on robotic vacuums, it's working hard to diversify its revenue streams and become an even bigger part of consumers' lives. For investors willing to take advantage of the recent pullback and watch iRobot's long-term growth play out in the coming years, I think it could easily rival Home Depot's returns.

There's no business like show business

Anders Bylund (Walt Disney): The most impressive detail about Home Depot's 380% returns over the last decade is that the home-improvement retailer was a large business with a $53 billion market cap at the start of that run. Today, I think that Walt Disney is poised to deliver similar gains over the next decade.

The House of Mouse owns the strongest catalog of characters and story lines in Hollywood today. A slew of billion-dollar buyouts has added key creative assets like Pixar, Lucasfilm, and Marvel, all of which are working on long-term production schedules and story arcs spanning across many movies. Disney also knows how to exploit its pop culture prestige like nobody else in the form of amusement park rides, themed cruise ships, Frozen lunch boxes, and Captain America jammies. If there is a way to squeeze value out of a character, Disney will find it and keep squeezing for decades on end.

Despite all of these industry-leading business advantages, though, Disney shares have been trading sideways for three years. Investors have seen its cable TV assets struggling, led by weak ad sales for sports network ESPN, and concluded that the entire enterprise must be in trouble.

I respectfully disagree with that hasty conclusion.

Disney is not only poised to weather the TV storm, but already evolving into a digital media distributor. The company could have shacked up with steaming video leader Netflix for the long run, but preferred to whip up its own package of streaming video solutions, powered by technology from Major League Baseball's BAMTech platform. These Disney-branded streaming apps will launch over the next couple of years, and likely to be winners in their respective fields. The ESPN-based sports video app doesn't really have any serious rivals yet, and the Disney name alone should ensure a solid audience right of the gate for the main movie and TV content platform.

And if that's not enough to deliver a 400% return in 10 years -- less than 18% per year -- when you start from the modest valuation multiples Disney is sporting today, I might just have to buy a hat in 2027 just to eat it. Hold the salt, please.

"Big As Yo' Face" Burritos and Texas Martinis

Tim Green (Chuy's): Betting on a small restaurant chain before it becomes a large restaurant chain can provide stellar, Home Depot-like returns if things go right. Chuy's, a chain of full-service Tex-Mex restaurants founded in Austin, Texas, has that potential. With just 87 locations, there's room for Chuy's to triple or even quadruple in size before all is said and done.

Chuy's is not a cookie-cutter restaurant chain. Each location sports unique decor, distinguishing the company from chain restaurants that look the same no matter where you are. The focus is on providing value, with just 13 out of 50 menu items priced above $10, and with an average check size of less than $15. With fast-casual restaurants proving popular, especially with younger consumers, a strong value proposition is important for a full-service chain.

Chuy's stock has had its ups and downs since going public in 2012. It currently sits well below its all-time high, knocked down by general restaurant pessimism and some lackluster comparable-sales numbers. At around $21 per share, Chuy's trades at a price-to-sales ratio of just about one and roughly 21 times last year's earnings.

Buying the stock is a bet that Chuy's will be able to grow into a chain with hundreds of locations around the country. If that story plays out, investors should be happy with the results.

Find out why Walt Disney is one of the 10 best stocks to buy now

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Anders Bylund owns shares of Netflix and Walt Disney. Steve Symington owns shares of iRobot. Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Chuy's Holdings, iRobot, Netflix, and Walt Disney. The Motley Fool has a disclosure policy.