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Many new investors dream of buying stocks that will ultimately help them retire early. However, the success stories everybody knows, such as Amazon and Apple, now have market caps in the trillions, meaning they have grown too big to turn modest amounts into millions.

Nonetheless, many smaller companies leading emerging industries have not yet reached their full long-term growth potential. Consequently, emerging stocks such as Redfin (NASDAQ:RDFN) and Teladoc Health (NYSE:TDOC) could deliver the gains needed to help investors exit the workforce sooner. Are they for you?

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Redfin

Redfin is a full-service real estate brokerage that uses marketing technology to reduce the costs of buying or selling a home — giving it the opportunity to upend the cost structure of real estate transactions. Agent commissions alone can amount to 6% of the sales price — 3% each for the buying agent and the seller’s representative. However, Redfin performs its client’s side of the transaction for 1%. On a $400,000 house, that would cut the commission from $24,000 to $16,000.

The company also offers services such as fixing up a house to sell. Still, even this concierge service amounts to only a 2% commission. This helps Redfin stand out from Zillow Group, whose agents still charge full-price commissions. It also competes well with Opendoor Technologies, whose strategy of buying homes in hopes of flipping them for a profit will only appeal to a subset of sellers.

Redfin has not yet turned profitable, as a $5.1 million income tax benefit cut its losses for the second quarter to $64 million, down from $67 million in the same period in 2020. Still, Redfin’s strategy has helped it produce $740 million in revenue so far in 2021, an 83% increase compared with the first two quarters of 2020.

Redfin did not offer guidance beyond the third quarter, but it forecasts revenue growth between 124% and 128% compared with the third quarter of 2020. The absence of guidance beyond Q3 indicates a potential short-term slowdown related to COVID-19, but no evidence of such an event has emerged.

Additionally, because it has recently given back most of its net gains, Redfin stock trades at a price-to-sales (P/S) ratio of 4.4 at recent prices. This comes in slightly above Opendoor’s sales multiple of 4.1 and below Zillow’s P/S ratio of 6.4. Moreover, Redfin holds the lowest market cap at roughly $5 billion, compared to $10 billion for Opendoor and $25 billion for Zillow. Because it could come to define the entire residential real estate market with its lower price points, Redfin appears to hold the most potential of the three for stock price growth.

Teladoc Health

Teladoc has prospered by leading the way in the telehealth segment. While the company has existed since 2012, its value became apparent during the COVID-19 pandemic as it allowed users to see a doctor without leaving home. Teladoc has also built a significant international presence, delivering care in more than 125 countries.

At first glance, Teladoc may appear to have a narrow competitive moat, since, in theory, any doctor with video conferencing can provide this service. However, Teladoc offers a big advantage over your local provider with its 24/7 availability. Moreover, its latest major acquisition, Livongo Health, allows it to follow patients through their entire health journey, meaning it can monitor and test conditions such as blood pressure or glucose level on a periodic basis. This expanded view of a patient’s health gives Teladoc a competitive advantage over other telehealth providers.

Grand View Research valued the telehealth market valued at almost $56 billion in 2020, and it forecasts a 22% compound annual growth rate for the industry through 2028. The financials indicate that while Teladoc has lots of room to grow, it has captured a big chunk of this market already; during the first six months of 2021, Teladoc brought in $957 million, a 127% increase from the first two quarters of the previous year.

At the same time, the company’s total expenses increased by 149%. Moreover, higher expenses for losses on extinguishment of debt, interest expenses, and income taxes led to a loss for the first half of 2021 of $333 million. Teladoc lost $55 million in the same period last year. Consequently, the company came in short of analysts’ estimates in the second quarter.

Teladoc’s stock began losing value in February as interest rates began to rise. It continued to drop on fears that the launch of Amazon Care across the U.S. would undermine Teladoc’s growth story. Also, a previous earnings miss in Q1 pushed the stock lower. Now, with the latest earnings shortfall, Teladoc sells for less than half its February high.

Despite fears of a competitive threat from Amazon, the outlook calls for an 84% increase in revenue for 2021 compared with the previous year, and Teladoc’s P/S ratio around 14 is its lowest sales multiple since just before the beginning of the pandemic. Moreover, at a market cap near $23 billion, Teladoc remains small enough that a modest investment could earn massive returns over time as the telehealth industry continues its expansion.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.