The key to enjoying a happy retirement is to invest your money as early as you can and watch it compound over the years. Of course, choosing the right companies is of utmost importance for this process to work best. Businesses that can consistently grow their revenue, net income, and cash flows should see their share prices head higher.
Given a time horizon of 20 years and an annual growth rate of 8.5%, your investment will multiply by slightly more than fivefold. Assuming you pumped in an initial $100,000, this will grow to an impressive $500,000 by the time you are ready to call it a day. The key to achieving this is to select market leaders that can consistently grow their business and gain market share. They also need to display both a track record of innovation and the ability to take advantage of technology and trends to power ahead.
Here are four stocks that should easily be able to multiply your funds by the time you decide to retire.
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MercadoLibre
Latin America's largest e-commerce company, MercadoLibre (MELI -0.81%), has been growing at a breakneck pace over the last few years. From its fiscal year 2016 through to 2020, net revenue surged from $844.4 million to $3.9 billion while gross profit more than tripled to $1.7 billion over the same period. The pandemic has accelerated digital adoption and acted as a catalyst for the company to post continued growth.
For its fiscal 2021 second quarter, unique active users jumped by 47.4% year over year to 75.9 million while gross merchandise volume climbed by 39.2% year over year to $7 billion. Its payments platform Mercado Pago chalked up around 730 million payment transactions within the quarter, and total payment volume surged by 56.3% year over year to $17.5 billion. MercadoLibre's dominant position and growth momentum should see the company posting continued growth in top and bottom lines as the years go by.
Nike
One of the largest sports footwear and apparel retailers in the world, Nike (NKE 0.49%) has demonstrated its ability to pivot toward online sales to sustain its growth momentum amid the pandemic. For its fiscal year 2021 ended May 31, the company reported a 19% year-over-year jump in revenue as markets reopened and interest in sports returned. Net income for the year more than doubled year over year to $5.7 billion.
The strong performance has carried forward to its fiscal 2022 first quarter, with revenues up 16% year over year and net income climbing by 23% year over year to $1.9 billion. During the company's latest earnings conference call, CEO John Donahoe attributed Nike's good results to its culture of innovation. Its yoga collection has nearly quadrupled over the past two years with the introduction of Dri-FIT and Infinalon , new types of fabric that provide comfort and coolness. Dri-FIT's cooling technology has also been used in its sports bra collection, allowing Nike to retain its pole position in North America. The company's relentless focus on innovation will keep it one step ahead of competitors and engender greater customer loyalty.
Shopify
Shopify (SHOP 0.47%) has been integral in providing the necessary platform and internet infrastructure for a vast number of online entrepreneurs. The pandemic has resulted in a surge in the number of people who have lost their jobs, many of whom have started up an online business to earn some side income. The number of merchants hopping onto Shopify's platform has increased, pushing up monthly recurring revenue to $95.1 million for its fiscal 2021 second quarter, up from just $57 million in the same period last year.
A look back at Shopify's growth over the last three years shows that the company has nearly tripled its total revenue from 2018 to 2020. Shopify also turned profitable in 2020, reporting net income of $319.5 million against a loss of $124.8 million in 2019. For the second quarter of 2021, total revenue jumped by 57% year over year as consumer spending remained strong and merchants made more use of its platform. Shopify's growth can likely continue as it scales up its offerings and allows the powerful network effect to attract an increasing number of merchants and customers.
Netflix
The pioneer and market leader in streaming TV, Netflix (NFLX 1.92%), reported continued paid membership additions in its latest earnings report and has promised an impressive content slate for 2022. The company's growth over the last five years has been nothing short of impressive -- revenue jumped from $8.8 billion in 2016 to nearly $25 billion by 2020, while net income soared by more than 14-fold to $2.8 billion.
Its latest quarter saw its paid membership base hitting a new all-time high of 213.5 million while its revenue increased by 16.3% year over year. Net income nearly doubled year over year to $1.4 billion for the quarter. Netflix's blockbuster South Korea TV Series, Squid Game, has become its biggest-ever TV show and garnered a whopping 142 million views in just four weeks. The company is planning for a greater number of original shows in 2022 along with a release schedule that is more balanced throughout the year. With significant money being poured into original content development, Netflix should continue to lead the pack despite competition from the likes of Apple and Disney.
