For young FIRE investors, retirement isn’t an age. It’s a number. And it’s a number which they believe they can get to rather quickly. Much more quickly than their parents did.
FIRE — which stands for Financial Independence, Retire Early — is a modern, Millennial-driven movement creating a blueprint for young workers to follow so that they can retire well before 65, and even as early as 35 or 40.
What does that blueprint look like? It’s not too complex.
Save. Invest. Retire.
Specifically, live with minimal expenses so that you can afford to — regardless of your income — save anywhere between 50% and 75% of your annual salary. Take those savings and smartly invest them across various assets, like stocks.
Watch your investment portfolio benefit from the wonders of compounding. Retire within 15 to 20 years as a millionaire. Here’s the math.
It’s 2020. Let’s say you have a job which pays $60,000 per year (the median household salary in the U.S. today). Let’s also say you live by FIRE principles, and invest half of that salary every year. If you net out 10% returns per year on those investments, then by 2040, your investment account will have more than $2 million in it.
And that’s what the FIRE movement is all about. Creating millionaires through frugal living and smart investing.
Of course, critical to unlocking this huge growth is picking the right stocks to buy so that you can net out those 10% returns per year. Here are 10 growth stocks to buy for long-term FIRE investors:
- Amazon (NASDAQ:AMZN)
- Shopify (NYSE:SHOP)
- Facebook (NASDAQ:FB)
- The Trade Desk (NASDAQ:TTD)
- Beyond Meat (NASDAQ:BYND)
- Adobe (NASDAQ:ADBE)
- Okta (NASDAQ:OKTA)
- Roku (NASDAQ:ROKU)
- Splunk (NASDAQ:SPLK)
- Square (NYSE:SQ)
With a disciplined budget and these stocks in your portfolio, financial independence is closer than you think.
Growth Stocks to Buy for FIRE Investors: Amazon (AMZN)
FIRE investors want exposure to Amazon. This company has its fingers in every important, hyper-growth industry out there.
Amazon.com is the global leader in e-commerce, a space which is projected to grow by leaps and bounds over the next several years as consumers continue to migrate into online channels.
Amazon Web Services is also the global leader in cloud computing, a space which is similarly projected to grow dramatically as businesses increasingly digitize office workloads.
Meanwhile, the company’s smart home business — headlined by Alexa — is a leader in the emerging voice assistant and AI-powered consumer products market. Amazon’s digital ad business is in the first innings of becoming a formidable player in that secular growth industry. Amazon also owns Twitch, the leading video game streaming platform, which will see huge uptake over the next few years as eSports gain traction.
There’s also the autonomous vehicle business, which was boosted recently by the acquisition of Zoox. At scale, Amazon could build out a fairly robust self-driving logistics business.
Net net, Amazon has a ton of long-term growth potential through its various hyper-growth businesses. All of that potential will keep AMZN stock on a healthy upward trajectory for the next 10+ years.
Maybe the best growth stock to buy for FIRE investors is Shopify.
That’s because this company is rapidly turning into the backbone of modern commerce, a journey which will ultimately power huge gains in revenues, profits and the stock price over the next 10+ years.
Shopify broadly provides e-commerce solutions to merchants and retailers of all shapes and sizes. Such tools include website building tools, expert consulting advice, digital marketing insights, social channel selling capabilities and much more.
These tools are the building blocks of modern commerce. That is, a retailer cannot stay alive for long today without a robust online selling operation, and that robust online selling operation is powered by the tools which Shopify provides.
To that end, Shopify is becoming the backbone of modern commerce. Yet gross merchandise value through the platform measured less than 2% of total e-retail sales last year. And the company’s profit margins are essentially flat today, despite near 60% gross margins.
Thus, over the next 10+ years, Shopify will leverage e-commerce tailwinds to dramatically grow its share of the global retail market, power huge revenue growth, drive significant margin expansion and produce enormous profit growth.
That enormous profit growth will help SHOP stock sustain huge gains in the long run.
Facebook has tremendous long-term growth potential, making it a must-buy for FIRE investors.
The company owns four of the most used social media apps in the world. Each of them — Facebook, Instagram, WhatsApp and Messenger — have over a billion users. Yet, only two of them — Facebook and Instagram — are populated with ads. Thus, Facebook has a huge opportunity in the long run to roll out ads on WhatsApp and Messenger, dramatically increase ad inventory in its ecosystem and power huge revenue growth.
That’s on top what is already rapid ad revenue growth on Facebook and Instagram, which is powered by an exceptionally sticky user base and a shift of ad dollars from offline to online channels.
Even further, Facebook has a huge opportunity in e-commerce. We are already spending all of our time on social channels. And we are already discovering tons of products and services on social feeds. So why not just buy products and services though social channels, too?
Facebook is trying to build out this last step in the shopping process, with new initiatives like Shops. If these initiatives gain traction over the next decade, Facebook could inject a ton of e-commerce related revenue into its growth narrative.
Big picture: Facebook has a ton of growth potential over the next decade, and all that growth potential will drive consistently large gains in FB stock.
The Trade Desk (TTD)
The shift from guess-and-check, human-driven processes towards data-driven, computer-powered processes is already one of the biggest trends in the world, and that is only set to acccelerate.
One way to play this trend is to buy programmatic advertising leader The Trade Desk.
The Trade Desk operates a demand-side advertising platform which leverages data-driven algorithms to dynamically and automatically run ad campaigns in way that decreases costs and optimizes every ad dollar spent.
This form of data-driven advertising is the future of advertising.
Yet today, only about 1% of total digital ad spending goes through The Trade Desk’s platform.
Thus, this innovative company has a huge opportunity to grow market share, ad spend and revenues over the next decade. The Trade Desk will do just that. At the same time, the company’s highly scalable application software business model will benefit from positive operating leverage and profit margin expansion.
At the end of the day then, The Trade Desk is in the first few innings of a huge, multi-year growth narrative wherein the company’s profits — and stock price — will soar higher.
Beyond Meat (BYND)
The future of meats consumption is plant-based, and this simple reality makes Beyond Meat one of the best stocks to buy for FIRE investors.
In a nutshell, one of the defining megatrends of the 2020s — which started to emerge in the late 2010s — will be a mass consumer shift towards socially and environmentally positive products and services.
Why? Thanks to the internet and social media, consumers are plugged into everything, all the time. This “always on” behavior from consumers has increased their social and environmental awareness, to a point where they increasingly want to do their part to save the planet.
The adoption of plant-based meat fits in perfectly with this trend.
Relative to animal meat, plant-based meat is environmentally positive (it eliminates the need for cows and meat production plants, which are huge contributors to global warming) and socially positive (it preserves animal welfare). So over the next decade, as more and more consumers pivot towards socially and environmentally positive products and services, many of these consumers will gradually adopt plant-based meat.
Beyond Meat is the Tesla (NASDAQ:TSLA) of this space. They have the branding power. They have all the distribution partnerships. And they have robust technological advantages in efficiently mass-producing plant-based meat of all varieties.
So, what Tesla did in the 2010s is what Beyond Meat could do in the 2020s.
And that makes BYND stock one of the best stocks to buy for young FIRE investors.
Adobe — as a leader in all things visual media — is set to win big over the next 10+ years as the world increasingly communicates through visual media.
Long story short, everything is visual these days. Consumers are spending all their time communicating with each other through visual-heavy social apps, like Instagram, Snap (NYSE:SNAP), and TikTok. Because of this, brands are spending all their time communicating with customers through these visual-heavy social apps, too.
What this creates is persistently rising demand for tools which help consumers and enterprises create compelling visual content.
Adobe is the head-and-shoulders-above-the-rest sector leader when it comes to providing those tools.
Consequently, demand for the company’s consumer-facing and enterprise-facing visual media content tools will surge over the next 10+ years as the world more significantly pivots into visual communication.
At the same time, Adobe has a digital workflow business which helps businesses digitize their contract management processes. This business, too, has secular growth prospects, thanks to the rise of remote work.
Overall then, Adobe has a bright future. That bright future will continue to guide ADBE stock to big gains for long-term investors.
Okta has developed a unique cloud security platform that represents the future of how companies will secure their workflows and data.
In a nutshell, Okta has created a security platform which turns identity into the defense perimeter. What that means is that, as opposed to protecting a company’s workflows and data with a wall of security, Okta simply protects the identities of each employee in the ecosystem. In so doing, the company has created a cloud security platform which optimizes for employee mobility and workflow flexibility without compromising security integrity.
In the future, organizations will employ a hybrid business model which incorporates remote and in-office work. Okta’s novel Identity Cloud platform is the ideal security solution in that world.
As such, Okta’s Identity Cloud platform will go from relatively niche today, to nearly ubiquitous over the next decade. As that happens, the company’s customer base, revenues and profits will all soar.
So will OKTA stock.
And that makes OKTA one of the best stocks to buy for long-term FIRE investors.
The long-term bull thesis on Roku is very simple.
Streaming TV is the new cable TV. But, when you sit back and think about it, streaming TV isn’t too different from cable TV. It just has multiple on-demand streaming services, as opposed to multiple pre-programmed channels.
Still, in both spaces the existence of multiple content options mandates the existence a centralized software platform that aggregates and curates all the content, and provides consumers with seamless access to whatever they want to watch.
In the old cable TV world, the cable box did this job. In the new streaming TV world, Roku does this job.
The company has created a centralized software platform — which both operates through standalone plug-and-play Roku devices, and is built-in into smart TVs — that aggregates, curates and provides seamless access to all the streaming services in the world, from Netflix (NASDAQ:NFLX) to Disney+ to Amazon Prime Video.
In so doing, Roku is turning into the cable box of streaming TV.
That’s a valuable position to be in. Over the next 5 to 10 years, the $70+ billion of ad spend sitting in the linear TV channel, will migrate into the streaming TV channel. As it does, a lot of those ad dollars will make their way into the Roku ecosystem, since its the biggest central access point in the entire industry.
This huge influx of TV ad dollars will propel equally huge revenue growth at Roku. Big profit growth will follow suit. So will big gains in ROKU stock.
Young FIRE investors should invest in the big data revolution.
That’s because over the next decade, the widespread proliferation of data-tracking software will dramatically increase the volume of data globally. At the same time, technological advancements in AI-powered data analytics algorithm will dramatically increase the value of insights companies can glean from data.
In essence then, the global big data market is on the cusp of huge growth. By the end of the decade, data will be everywhere. So will data analytics tools and platforms.
Splunk is at the heart of this big data megatrend.
The company provides market-leading data analysis tools — through its Data-to-Everything platform — which allow companies to take the mountains of data they are collecting, and quickly turn into them into accurate and actionable insights.
These tools will increasingly become mission-critical and ubiquitous over the next decade.
As they do, Splunk’s growth narrative and SPLK stock will power higher over the next 10+ years.
Last but not least, on this list of growth stocks to buy for FIRE investors is Square.
Square is a pure-play on the cashless commerce revolution.
The era of cash is coming to an end. The era of card and digital payments is here. Square has built a robust portfolio of tools and services to help facilitate this transition from cash to cashless payments.
This includes seller-side tools, such as cashless payment readers, digital payroll management services and e-banking services. It also includes buyer-side tools, such as the digital peer-to-peer payments ecosystem, Cash App and an accompanying debit card.
Both of these sets of tools will see robust adoption over the next few years as cash increasingly becomes antiquated.
Square’s reach across the global payments network will increase. The company’s revenues and profits will soar. So will the SQ stock price.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he was long AMZN, SHOP, FB, TTD, BYND, ADBE, OKTA, ROKU, SPLK, SQ, and NFLX.