If you want to create generational wealth, there is no better vehicle than investing in stocks. They're better than gold, bonds, collectibles, and just about every other asset out there. While over short periods of time, one asset class or another may outperform stocks, the long-term results prove investing in stocks is the way to go if you want to retire wealthy.
There is also no better market for it than U.S. exchanges. The relative transparency, regulatory oversight, high liquidity, and the status of the U.S. dollar as the world's currency all make American markets the most sought-after in the world.
Last year, Deutsche Bank published a study showing that over the past century, equities beat out gold by 5.6% per year; Treasuries by 6.8%; and oil by 8.4% per year.
In fact, there have been only two decades when stocks have had negative returns: the Great Depression of the 1930s (when stocks had negative 0.5% returns) and the start of the 21st century when the dot-com implosion, 9/11, and the bursting of the housing bubble conspired to tank the market by 0.9%.
It's clear from the foregoing that for investors wanting the best chance of having a comfortable retirement, investing in stocks and staying in the market for the long haul is the correct strategy. By the time working Americans are ready for their gold watch, investors should consider this pair of top U.S. companies for their portfolios today.
In the six years since Shopify (SHOP 0.20%) went public at $17 a share, investors have enjoyed extraordinary gains from the continued transition by business to an e-commerce presence. Despite a number of ups and downs, at $1,439 per share as of this writing, Shopify has returned more than 5,500% versus a 122% gain by the S&P 500. There's good reason to think growth will continue.
Revenue is forecast to almost quadruple by the middle of the decade, rising from an expected $4.6 billion to over $16 billion, or a 37% annual compound growth rate. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are anticipated to increase even faster, growing at almost 50% annually to $3.9 billion.
Shopify keeps evolving, adding livestream shopping events to its tools merchants can use -- Amazon and Meta are testing such events on their sales platforms -- to generate $25 billion by 2023, while click-and-collect commerce will top $64 billion this year alone. In the third quarter, Shopify also introduced its new Shopify Markets to enhance cross-border commerce while adding tabs for TikTok Shopping and launching a no-fee money management platform called Shopify Balance.
With a market valuation of $174 billion, Shopify has built a solid foundation for growth and has a potential path to become a trillion-dollar company.
Nvidia (NVDA -0.93%) is best known for its graphics cards that make processing-intensive video games possible, but it has since broadly widened the lens for industries in which it has become a critical tool. It now commands a leadership position in data centers, automobiles, and artificial intelligence, which informs all areas of its business because there is considerable overlap between them.
Data centers, for example, generated $2.9 billion in revenue for Nvidia in Q3 alone but is rapidly rising, jumping 55% from the year-ago period. The $7 billion acquisition of Mellanox last year helped position Nvidia as a leading supplier for networking hardware and is expected to help data centers become the chipmaker's largest segment by 2025.
Its Nvidia Drive AV platform for autonomous vehicles (the "AV" in the platform) uses the computational power the company developed for gaming and ramps it up through hardware and software while allowing for continuous updates as the technology and safety needs of the vehicle evolve.
Gaming, of course, still remains Nvidia's most important segment, generating 45% of total Q3 revenue. Nvidia already has an 83% share of the discrete gaming graphics processing unit (GPU) market, and the segment could generate as much as $20 billion annually if sales keep growing at their current rate. It could very well happen, as Mordor Intelligence forecasts, the gaming GPU market will grow at a compound annual rate of 14% through 2026.
Nvidia is already almost a trillion-dollar company, making even greater valuations the next target on the horizon.