Matt Ankrum has spent his life analyzing and investing in stocks and, in that time, he's become obsessed with the 100 baggers. The stocks that go up and up for decades, turning small investments into enormous fortunes. His research into the topic has led to both a book by him and a family project that could potentially turn his college-age daughters into heiresses if things play out according to his plan.

He's going to put $250,000 into twenty different stocks (a total of $5 million) when he identifies companies that have the potential to become a Home Depot or a Monster Energy or an Apple or an Nvidia-type situation. Five million bucks on a portfolio of potential 100 baggers with the aim of seeing this collection of equities turn into a half-billion dollar fortune. He has strict rules that prevent him from selling early and jeopardizing the magical compounding he is hoping for. He understands that in some cases, the stocks he selects now (he's already picked 13 of the 20) will turn out to be dogs, badly missing his expected return or even failing to best the S&P 500. His screening process begins with quality and profitability so it's unlikely he'll end up with a lot of bagels, but yes, that too is something that could happen if the world materially changes in the decades to come (spoiler: it will).

It's a cool idea and his friend Neeraj Khemlani decided to write a book about it. The Coffee Can Investor is now out and for sale (Amazon link). You can learn all about Matt's methodology and get the list of stocks he's putting away. Or, you can listen to us interview both Matt and Neeraj on The Compound and Friends! Links below.

I have some stocks that I've owned for well over a decade, like Nvidia, Apple, Berkshire Hathaway and JPMorgan. You hear me talk about them all the time. I don't think, based on their current size, that any of them could become 100 baggers from today's valuations. I wouldn't say it's impossible but I would say it's highly unlikely.

Which is why I am still out there looking at opportunities like Shake Shack, Joby, ServiceTitan and some of the smaller names you've seen me mention and write about. I'm fascinated by the idea of the 100 bagger, even if I don't think that's the way the typical investor should be thinking about their equity exposure. It's a difficult game to play and most people attempting it will end up with lots and lots of losers, even if they do pick a few grand slams that pay for those losers over time.

But if you're interested in the concept, this episode is literally perfect for you!

One thing I wanted to mention is that Matt's portfolio has a lot of SaaS software in it, which is already trading lower than where he added it to the coffee can. We asked him if he wished he could have a do-over and he emphatically said no. He's not a disbeliever in AI. Rather, he believes, as I do, that some of today's incumbents will be among the most profitable providers of AI technologies to their respective verticals. Matt asked rhetorically how many of the top twenty ecommerce websites are New Economy players versus those that had been around decades before the turn of the century. He says it's just Amazon and Chewy and one or two others. The rest of the ecommerce opportunity has gone to the incumbents who adopted the internet for their own purposes. Target, Walmart, Costco. It's an interesting lens to think about the AI opportunity through.

I think there will be major casualties but also major surprises like the way Walmart has become a faster growth company than Amazon in recent years. I do not believe in a narrative that says every company that existed before AI has nothing but trouble ahead and that AI-native startups are going to upend every major player by virtue of the fact that they're shiny and new.

It literally never works that way.

Sometimes it just gets too dumb. I bought more Toast last week. Famous last words but I think the market has now, perhaps appropriately taken the multiple down for this name. At this point, any further erosion in valuation just flies in the face of what’s actually going on. Toast is not only not going to get disrupted by AI, they are actually going to be the most likely candidate company to be brining AI to the 150,000 or so restaurants, bars, hotel stores, etc that they currently have their hooks into as the payments provider. No other pure-play company sells as much software into the hospitality business.

As you can see above, the earnings and revenue estimates for next fiscal year continue to trend higher and higher while the share price (and its multiple on forward earnings) keeps falling lower and lower. Either the analysts are totally wrong and none of this expected growth is going to happen OR the rocket scientists who are selling at down at any price are going to watch me double my money.

Maybe there’s simply no bottom because every BBQ joint, Chinese takeout kitchen, roadside diner, tavern, fast food joint, Italian restaurant, steakhouse, cantina and fine dining establishment that has standardized on their payments platform, kitchen supply reordering system, payroll processing module, reservations management system, et al will just rip it all out and code their own replacements using Anthropic. I know how ridiculous that sounds and so do you, but humor me for a moment. In that world, I am dead wrong and the stock goes to $10. I’m willing to bet that the future looks absolutely nothing like that and that, three years from now, Toast will be spending half its conference calls answering analyst questions about the growth in its ToastIQ business (that’s what they call their AI product for restaurant owners). It’s entirely possible that the handheld waiter and waitress point of sales gadget is just the Trojan Horse enabling this company to be the preeminent AI solution for a million businesses. No one else seems to think this is possible, hence the relentless selling week after week after week.

I think it’s stupid. I doubled the size of my position.

I will grant you that maybe 50x earnings last year wasn’t the right valuation. I don’t think 20 is either given the TAM and the growth rate. The parent company of their biggest direct competitor (Clover is owned by Fiserv) just had one of the most spectacular blow-ups we’ve ever seen. Another competitor, Block (which owns payment processor Square), is spending most of its time indulging the founder’s crypto delusions. Jack Dorsey really is a gem - from running Twitter, which Mark Zuckerberg famously said was like “a clown car that crashed into a goldmine”, to overseeing this, a stock in a 75% drawdown from all-time highs, now trading at the same level that it did eight years ago in 2018.

Sorry, back to Toast. I guess you could say I’m not worried about competition at all. They’re growing share and winning more business every quarter. Three years ago, the company had 79,000 restaurants using their platform. As of the last quarter for which we have data, Q4 2025, it’s over 164,000. They’re growing location count at a 27% CAGR over the last three years and it’s not impossible to envision 20% + growth over the next three years. It’s a great big world out there and the business has already begun to grow internationally.

The more locations, the more platform usage and take-rates from guest checks. And, as restaurant employees become experienced and knowledgable about the company’s systems, it becomes more likely that other employers will adopt it - and more importantly, keep it. However much you think a homemade AI solution may save these restaurants, my guess would be it would never be enough. Think of the aggravation and potential for errors. It’s cheaper to keep Toast and use whatever purpose-built AI solutions that they themselves bring to the table.

But who knows. Maybe I’ll get killed in the stock. Or maybe the sellers will be left in tears. Let’s find out.

Attention: I am a long-term shareholder in Toast. I am not recommending that you buy or sell the stock. I don’t give advice to non-clients on the internet. This is me speaking about my own activities. I have a gigantic disclaimer you can read too if you need this spelled out even further.

THE COMPOUND & FRIENDS

Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by Neeraj Khemlani and Matt Ankrum to discuss: what 100 bagger stocks look like, the search for high quality companies, the impact of compounding and exponential growth over decades, and much more!