$ 10,000 invested in these growth stocks could make you a fortune over the next 10 years
If you have $ 10,000 to invest, of course you want to do it wisely. If you want an above-average return on your investment, you need to find growth stocks that are already proven and whose business models point to the reasons for continued growth.
Start with Free Mercado (NASDAQ: MELI), Advanced micro-systems (NASDAQ: AMD), and Seagate technology (NASDAQ: STX), companies whose shares have risen more than 10% this year and more than 100% in the past five years.
1. MercadoLibre is just getting started
MercadoLibre is often referred to as the Amazon Latin America, it is an e-commerce and fintech giant. The company, which started as an Argentinian company in 1999, is now present in 18 countries in the region. Over the past five years, Mercado Libre has seen its quarterly revenue increase by 637% and its share growth of nearly 800%.
The company just completed its second quarter on June 30, posting record sales and volume figures. MercadoLibre said it had net sales in the quarter of $ 1.7 billion (figures reported in USD), up 102.6% year-over-year. In addition, the sales volume amounted to $ 7 billion, up 46% from the same period in 2020.
The company was particularly strong in Argentina and Mexico, two countries where it saw triple-digit percentage increases in revenue in the quarter, year-over-year.
MercadoLibre also generated a net profit of $ 68.2 million, compared to $ 55.9 million in the same period last year. The growth in the number of COVID-19 cases in Latin America, while tragic, has increased the conversion to more e-commerce and online payment systems. Last year, around 13 million people in Latin America made an online purchase for the first time.
Bad roads and rough terrain make it expensive to ship products across South America. In many ways, this gives MercadoLibre a gap from new entrants to the region, such as Amazon. The company, whose shipping arm is known as Mercado Envios, has bought Kangu, a Brazilian logistics company that operates in Brazil, Colombia and Mexico, giving it more delivery vehicles and personnel in key countries. . The transaction was finalized in August for an undisclosed amount.
What makes MercadoLibre a great long-term stock is that it is only scratching the surface of e-commerce capacity in South America. An OMR Global report puts the region’s compound annual growth rate (CAGR) at 25.6% over the next six years. Which makes it a stock with long term potential and a buy for investors.
2. Advanced Micro Devices has a bright future
Demand for semiconductor chips has exploded since the start of the pandemic. Mainly, there has been an increase in the company’s central processing and graphics processing units. Several factors have driven this increase, the rollout of 5G, the growth of cloud computing, and the increase in laptop and tablet purchases. These things will likely still be around long after the pandemic is over.
The global semiconductor market CAGR, according to a Fortune Business Insights report, is expected to be 8.6% over the next seven years and grow to a market of $ 803.15 billion during that time period. This is great news for Advanced Micro Devices (AMD) investors. The stock is up more than 15% over the year and 1,520% over the past five years.
The company has recorded double-digit revenue growth for seven consecutive quarters. In the company’s second quarter report, it said it had revenue of $ 3.85 billion, up 99% year-over-year. Gross profit was $ 1.83 billion, up 116% year on year and 15% higher than in the first quarter of 2021. Net profit was $ 710 million, up 352% over the same period in 2020. The company said it expects revenue in 2021 to be up 60% from 2020. Additionally, the company reported its highest free cash flow of $ 888 million for the second quarter, up from $ 152 million for the same period in 2020.
The company is also using its extra cash to restore shareholder value and further drive growth. It launched a $ 4 billion share buyback program in May. And the company said it was on track to complete its $ 135 billion acquisition of Xilinx, known to manufacture programmable logic devices, by the end of the year. Xilinx deal should help AMD compete better Intelligence in his company’s data center that runs digital applications.
Perhaps AMD’s biggest advantage is that semiconductor manufacturing is expensive. It has to be done in sterile environments, using state-of-the-art machinery, and microchip science evolves so rapidly that it is difficult for new companies to catch up in terms of market share. That’s a big divide for existing chipmakers, especially AMD.
3. Seagate Technology is ahead in the cloud
Seagate Technology is a global leader in data storage, making portable hard drives and external solid state drives essential for laptops and cloud computing. The company’s shares have risen more than 38% this year and more than 106% in the past five years.
On July 2, the company closed its 2021 fiscal year and all of its numbers were higher than last year. Annual revenue was $ 10.6 billion, up 1.6% year-on-year. While the operating margin was 14% versus 12.4% in 2020. And the net profit was $ 1.3 billion, up 30.8% from 2020. The revenue of The company’s $ 3 billion in the fourth quarter was its best quarter in six years.
The company signed a multi-year agreement last month with Focus on video communications for the video conferencing company that will allow Zoom customers to use Seagate’s Lyve Cloud platform to store meeting recordings. This helps Seagate’s business because it shows that a leading customer sees the benefits of storage as a Lyve Cloud service.
While Seagate shares haven’t shown as much dynamism in the past three years as the other two companies mentioned here, they appear to be on fire this year. According to data from Seagate, the rise of cloud computing has accelerated the need for mass storage devices. In 2015, 25% of data was stored in the cloud. Last year, 40% of data was stored in the cloud. Certain trends, such as the rise of autonomous vehicles, smart factories, and human genomics research, have spurred the need for cloud computing.
Another reason to love Seagate shares is their good price, with a price / earnings ratio of just 15.46. It also has something that the other two stocks don’t: a dividend – and a generous one on top of that. The company increased its dividend by 3% to $ 0.67 per share in October 2020 and its current yield is 3.18% on Wednesday’s share price. With all the evidence, this stock shows great potential in a changing world.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.