Growth stocks can deliver exceptional returns for long-term investors. While holding more risk, these stocks can comfortably surge past market indices and outperform them in the long run.
Notably, investors saw winners like Nvidia (NASDAQ:NVDA) and Tesla (NASDAQ:TSLA) turn early investors into 6-figure and 7-figure portfolio owners. True, these types of stocks don’t come by often, and guessing the stocks that can yield 10x returns can lead to substantial risks.
First, you don’t need a stock to gain 1,000% over the next five yers to become a part of the 1%. Second, investors should focus on growing their income and investing more money each year. These two practices will further your quest in joining the top echelons of investors. However, you have to pick the correct money-maker stocks, seven of which we will now explore.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) has delivered consistent returns and dividends for long-term investors. Shares are up by over 50% year to date (YTD) and have gained 262% over the past five years. Broadcom’s revenue and earnings growth has decelerated in recent quarters, but the company still has high profit margins.
In addition, shares trade at an attractive 26 P/E ratio and have a 2.20% dividend yield for investors. The dividend per share grows at a rapid pace and went from $0.49 per quarter in 2016 to $4.60 per quarter today.
Furthermore, the semiconductor giant has partnerships with many corporations and stands to benefit from the rising demand of artificial intelligence (AI) tools. Broadcom won’t benefit from the AI trend as much as Nvidia, but the semiconductor giant stands to be a winner.
Finally, Broadcom is a reliable blue-chip stock with a reasonable valuation and steady growth. These types of stocks can help investors reach the 1% threshold and generate meaningful wealth.
Celsius Holdings (CELH)
The sports beverage company Celsius Holdings (NASDAQ:CELH) capitalizes on large partnerships and quality products to attract loyal customers and reward shareholders. Celsius Holdings is one of the companies that turned people into millionaires within a few years.
CELH has gained over 50% YTD, but the real success lies in the company’s 4,200% gain over the past five years. While those gains are impressive, investors must look at the current investment opportunity instead of wishing they had time machines.
Celsius Holding’s only flaw is the valuation. A 61 forward P/E ratio for a sports drink company is not cheap, but the high valuation can get smoothed out over the years if the company continues to report strong financials.
The company achieved 112% YOY revenue growth in Q2. With demand in a strong North American market, Celsius Holdings saw a 114% YOY revenue growth in the continent.
Celsius Holdings has barely penetrated the international market. The company made only $15.1 million in Q2 revenue from the international market compared to $310.8 million in revenue from North America. International revenue grew by 76% YOY, indicating strong growth potential.
If Celsius Holdings continues to maintain its strong popularity and growth in North America while combining high growth rates in international regions, the company can thrust many shareholders into the top 1%.
Fortinet (FTNT)
Over 680,000 customers use Fortinet (NASDAQ:FTNT) to protect their digital information. This data does not only protect private documents but also safeguards information about a company’s customers.
Businesses without the necessary protocols can risk cyberattacks that leak customers’ information and lead to expensive lawsuits. Fortinet is one of the top companies in the industry, and investors have noticed.
Shares have gained 23% YTD and are up by 274% over the past five years. Shares currently trade at a 45 P/E ratio after an exaggerated drop from soft guidance. Like the other companies on this list, Fortinet is profitable. The company has been free cash flow positive every year since its 2009 IPO.
According to an investor presentation, Fortinet has 28.2% of the cybersecurity market. This market’s total addressable value is $192 billion. As the market grows, Fortinet will grow along with it and reward long-term investors.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is an e-commerce and fintech company based in Argentina. The stock has a $62 billion market cap and an 83 P/E ratio. The forward P/E and PEG ratio sit at 41 and 1.00, respectively. Shares have gained 50% YTD and are up by 300% over the past five years.
MercadoLibre is a profitable firm with rapidly growing revenue and earnings. In the second quarter, the company’s profits more than doubled year over year (YOY). The fintech segment achieved 24% YOY growth based on U.S. dollars while the YOY revenue growth was 48% for the local currency. Almost half of the company’s revenue came from the company’s fintech division, Mercado Pago.
MercadoLibre’s YOY revenue growth has been decelerating, but it still remains high. Profits are picking up the slack and have been growing at respectable rates. Higher profits have contributed to a lower P/E ratio, making the stock look more attractive in the process.
Adobe (ADBE)
Adobe (NASDAQ:ADBE) stock didn’t have the best 2022. In that year, shares fell by roughly 40%. However, the stock has rebounded nicely in 2023 and has currently gained 56% TYD. Shares have more than doubled over the past five years.
Adobe is a creative’s dream. The company offers software that helps people create better pictures, edit videos, and perform other tasks. The company’s AI resources allow freelancers and business owners to increase efficiency and create better media. Adobe Firefly, offering free and premium plans, allows creators to generate images for commercial use with a single prompt.
The creative software company is still growing at a steady pace. Adobe reported 10% YOY revenue growth in the Q3 of fiscal 2023. Also, a 21 million share buyback program helped fuel the stock price and reward long-term investors.
Adobe has many essential tools for freelancers, small business owners, and corporations. The company’s customers are fine with paying monthly subscriptions to access the software. The company currently has $14.60 billion in annual recurring revenue for its digital media segment.
Alphabet (GOOG,GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has a duopoly in the online advertising industry and is the search engine of choice for many consumers. Alphabet has been a reliable stock for most of its existence. Shares have gained 54% YTD and are up by 150% over the past five years.
While advertising is Alphabet’s claim to fame, the tech giant has impressively diversified its revenue streams. In the second quarter, Google Cloud grew from $6.3 billion to $8.0 billion YOY, representing a 28.0% YOY growth rate.
Google Cloud made up more than 10% of Alphabet’s total revenue in light of company-wide revenue rising only 7% YOY.
Alphabet retains advertisers in spite of economic slowdowns, becoming a vibrant firm during bullish economic cycles. Investors can benefit from accumulating Alphabet shares for the long run.
ServiceNow (NOW)
ServiceNow (NYSE:NOW) is a cloud computing company that serves over 7,700 global enterprise customers. The company helps its clients unlock productivity and create more efficient work flows.
ServiceNow has been on a tear for its investors. Shares have gained 45% YTD, more than tripling over the past five years. Also, it fulfills a main criteria for the stocks on this list – profitability.
In Q2, NOW exceeded its guidance and raised its forward-looking guidance. The company reported $1.0 billion in GAAP net income, compared to $20 million in the same time frame last year.
Furthermore, revenue growth is solid. ServiceNow reported 23% YOY revenue growth. In addition, it offers extensive AI capabilities for its enterprise clients, expanding its partnerships with KPMG and Nvidia.
Trading at an 80 P/E ratio and a 45 forward P/E ratio, NOW has steadily rewarded long-term investors, making it a solid pick for investors who want to join the top 1%.
On this date of publication, Marc Guberti held long positions in AVGO, CELH, and FTNT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
