You only need three things to make a lot of money. Each of them is readily apparent in the formula for determining future value. How much money you'll have in the future is a factor of how much you invest, what return you get, and how much time goes by. It's that simple.
Ideally, the best way to amass wealth is to have a sizable initial investment, pick assets that generate strong returns, and have a long time horizon. The specific for each of these criteria will vary from person to person. But if you have $5,000 to invest upfront, these three stocks should make you a fortune over the next 10 years.
If you've ever shopped on Etsy (ETSY -0.70%), you know that its site features unique items that you simply can't find anywhere else. That's been the company's "secret sauce" since it started.
That competitive edge has helped Etsy deliver extraordinary growth. E-commerce sales, in general, skyrocketed last year thanks to the COVID-19 pandemic. Etsy grew 2.5 times faster than the U.S. Department of Commerce's e-commerce benchmark.
Can Etsy keep that momentum going? I think so. The company's focus on sellers using videos on its platform to tell their stories is one great example of how Etsy makes buying online more personal than other e-commerce sites. Etsy is also boosting repeat sales from regular visitors, which bodes well for strong organic growth in the future.
Despite its huge gains over the last 16 months, Etsy's market cap remains below $30 billion. With a total addressable market that tops $1 trillion and a differentiated platform, this stock just might even be a 10-bagger over the next decade.
While the pandemic helped boost Etsy's fortunes, it was a different story altogether for Intuitive Surgical (ISRG 1.35%). Hospitals pushed back non-emergency surgeries, which resulted in lower procedure volumes for Intuitive's robotic surgical systems.
The picture is looking a lot better for Intuitive now, though. Its revenue and earnings growth rebounded nicely in the first quarter of 2021. That trend is likely to continue as concerns about COVID-19 wane. The more important thing to focus on with Intuitive Surgical, however, is its long-term growth potential.
Intuitive should have significant opportunities to expand in China, currently its second-largest market after the U.S. The company's joint venture with Chinese drugmaker Fosun Pharma appears to be paying off.
But there's an even bigger growth driver for Intuitive Surgical. More than 1.5 million procedures will probably be performed using the company's da Vinci system this year. Intuitive estimates that there are 6 million procedures performed each year for which its products already have regulatory clearances. Technological innovations could expand that opportunity to 20 million procedures.
Intuitive Surgical is already a relatively big company with its market cap of around $100 billion. I think that it will grow much larger over the next decade -- and make investors a lot of money along the way.
Square (SQ -2.00%) operates two separate ecosystems, one for merchants and the other for individuals. They both benefit from the same trend, however -- the shift away from cash.
The company has been best known in the past for its small card readers used primarily by small businesses. That's only one part of Square's ecosystem for merchants. The company also provides a wide range of products and services, including payroll processing, e-commerce sites, and capital financing. The more new offerings Square rolls out for small and medium-sized businesses, the stickier it becomes.
Today, Square might be just as widely recognized for its Cash App digital wallet. Cash App supports peer-to-peer payments, paycheck and tax return deposits, and investing in stocks and Bitcoin. The app now ranks as an important source of revenue growth for Square.
I look for Square to continue to expand into nearly every area of the financial world. It recently received a federal charter to operate an industrial bank that can originate loans for Square Capital customers. The company also just announced support for customers to pay merchants via automated clearing house (ACH) transfers. My view is that this fintech stock is poised to deliver tremendous returns over the next 10 years.