Want $1 Million in Retirement? Invest $50,000 in These 3 Stocks and Wait a Decade

The stock market could help you retire a millionaire if you pick the right companies and keep them in your portfolio for a long time, as doing so will help you benefit from the power of compounding and changing trends in various industries.

For example, a $50,000 investment in Amazon a decade ago it’s worth around $500,000 now thanks to the stock’s nearly 900% gains over the past decade, and that’s after factoring in the e-commerce giant’s sharp drop in share price in the past few years. last months. Amazon, however, is not the only company that has generated strong returns for investors over the past decade.

nvidia (NVDA 2.08%), Microsoft (MSFT -0.26%)Y Tesla (TSLA) -0.13%) they have also generated massive returns in the last 10 years, and it will not be surprising to see them maintain their trajectory in the next decade. Let’s see why investors can put $50,000 into these companies and walk away millionaires after a decade.

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1.Nvidia

A $50,000 investment in Nvidia stock a decade ago is now worth more than $3 million if the dividends paid by the company were reinvested. It’s worth noting that Nvidia has delivered such massive gains despite periods of volatility that have sent the stock tumbling, so it may be a good idea to buy it now given the relatively low valuation.

Nvidia shares are now trading at 43 times earnings following their 43% pullback in 2022. The stock has a five-year average earnings multiple of 58, meaning investors looking to buy a potential long-term winner term get a good entry point. More importantly, Nvidia is in a strong position to replicate its excellent stock market performance over the next decade due to a host of catalysts that extend beyond its traditional video game business, which has been the cornerstone of its rapid growth over the years.

Data centers, for example, have become a happy hunting ground for Nvidia. The growing need for graphics cards to cope with intensive workloads related to artificial intelligence and machine learning, as well as emerging technology trends such as the metaverse, have given Nvidia’s data center business a boost.

In fiscal year 2022, Nvidia generated $10.6 billion in revenue from the data center business, an increase of 58% from the previous year. The segment accounted for almost 40% of Nvidia’s sales last fiscal year, and the company is just scratching the surface of a huge opportunity in this business. According to a third-party report, the global market for data center accelerators such as graphics cards and processors could grow at an annual rate of 32.5% through 2031 and generate $179 billion in revenue.

Nvidia is currently one of the major players in the data center GPU market with a share of over 80%. Throw in other catalysts and it’s easy to see why analysts are optimistic about Nvidia’s long-term growth. It is expected to post 25% annual earnings growth over the next five years, which could also translate to excellent long-term gains in the stock market.

2.Microsoft

Microsoft is another stock that has generated strong returns over the past decade, turning a $50,000 investment into nearly $550,000, including dividend reinvestments. The tech giant has come a long way from selling computer operating systems and is now a major player in several fast-growing areas such as video game software and hardware, cloud computing, and emerging tech trends like the metaverse.

These tailwinds have been fueling impressive growth at Microsoft, with the company’s fiscal 2022 third quarter revenue (for the three months ending March 31) rising 21% year over year in constant currency terms. at $49.4 billion. A closer look at key growth points indicates that Microsoft is in a good position to continue to grow at a good pace for a long time to come and replicate its impressive performance on the stock market over the next decade.

The cloud business, for example, is becoming a key growth driver for the company. Microsoft reported 29% year-over-year growth in its cloud business last quarter to $19.1 billion, with the segment producing 39% of its top line. The cloud business still has a lot of room to grow for a couple of simple reasons.

First, the global cloud services market is expected to exceed $1.6 trillion in revenue by 2030, compared to $325 billion in 2019, translating to an annual growth rate composed of almost 16%. Microsoft has steadily increased its influence in this market, with market share reaching 22% at the end of 2021 compared to less than 14% in 2017.

If Microsoft continues to gain more share of the cloud computing market and strikes gold in other areas, such as gaming and the metaverse, it could well be on its way to posting impressive long-term growth and adding significantly to players’ portfolios. investors.

3.Tesla

Tesla has been a huge stock market winner for the past decade, turning a $50,000 investment into roughly $6 million. However, Tesla’s best years are yet to come thanks to the growing adoption of electric vehicles (EVs) around the world.

In the US, for example, electric vehicle sales nearly doubled to 608,000 units in 2021 compared to 308,000 units in 2020. Globally, approximately 6.75 million electric vehicles were shipped in 2021 , an increase of 108% compared to 2020. It is estimated that the global electric vehicle market could register an annual growth of 29% until 2030 and reach annual sales of 31.1 million units. Electric vehicle sales could continue to grow apace beyond 2030 and will account for a 32% share of the overall vehicle market by then.

Tesla is already taking advantage of this opportunity, and its revenues have increased significantly over the last decade.

TSLA Revenue Chart (TTM)

TSLA Income (TTM) data by YGraphics

The company posted $18.8 billion in revenue during the first quarter of 2022, an increase of 81% over the prior year period. It’s also worth noting that their margins are improving apace. Tesla’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin increased to 26.8% at the end of the first quarter compared to 17.7% in the prior year period.

This surprising growth was the result of an increase in the production and delivery of vehicles. Tesla delivered just over 310,000 vehicles last quarter, a 68% increase from a year earlier. The company’s production increased 69% year over year to 305,407 units during the quarter. Tesla CEO Elon Musk aims to achieve an annual production capacity of 20 million vehicles by 2030.

For comparison, the company has produced just over 1 million vehicles in the last four quarters, indicating that it aims to substantially increase its capacity to capitalize on the end-market opportunity. Analysts expect Tesla’s earnings to rise at an annual rate of almost 40% over the next five years, a rate that could continue beyond that, as the discussion above indicates, and lead to a healthy uptick in the stock market. values.

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