Tax season is around the corner, And if you handle your tax preparation well, there's the real potential you'll be getting a refund from Uncle Sam. That refund presents an excellent opportunity to jump-start your portfolio with some new purchases after what's been a few months of steady selling by the market.
There are hot deals everywhere on growth stocks, and some of these high-quality companies will turn into massive winners over the long term. If you're looking to turn $5,000 into $10,000 or more through long-term investment, here are three stocks that could be up to the task.
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1. MercadoLibre: E-commerce king of Latin America
MercadoLibre (MELI -0.45%) is the leading e-commerce company in Latin America, which happens to be one of the fastest-growing regions globally for e-commerce; Statista estimates the region's sales will grow from $85 billion to $160 billion by 2025. The company offers various services to consumers, including its e-commerce marketplace, fintech services, and shipping. Users can shop and bank within the company's ecosystem, which has more than 139 million active users.
The company recently reported fourth-quarter results to finish off its 2021 fiscal year. It grew revenue 74% year over year to $2.1 billion, almost as much as the $2.3 billion in revenue MercadoLibre generated in all of 2019! MercadoLibre's e-commerce platform is doing well, shipping 25% more items in the quarter than in 2020, but the many ways MercadoLibre's fintech business could branch out to serve consumers' banking needs could be its most significant long-term growth driver. Fintech revenue grew 81% year over year in 2021 Q4.
Shares continue to sell off in this challenging market, even though MercadoLibre continues to grow. The stock is now trading under $1,000 per share, after hitting as high as $1,970 less than 12 months ago. MercadoLibre's current valuation at a price-to-sales ratio of 7.5 seems like a bargain for a company poised for years of growth ahead.
2. Nvidia: Powering tomorrow's computing needs
Nvidia (NVDA 3.71%) designs and sells graphics processors (GPU), chipsets, and software; its GPUs have more than 80% market share, making them the de-facto leading brand. GPUs are seeing increased demand as several applications that require a lot of computing power grow, including automotive, cryptocurrency mining, gaming, and the metaverse. Nvidia's revenue has grown an average of 27% per year over the past five years.
There's so much demand for computing hardware today that Nvidia's experiencing accelerated growth despite being a much larger company today than five years ago. It recently wrapped up its fiscal year (ending Jan. 30), with revenue growing 53% year over year in the quarter and 61% for the entire year. Last year, the company tried to acquire processor technology company Arm Holdings for $40 billion, but the parties recently agreed to cancel the deal due to antitrust concerns.
This mishap and broader market selling pressure have pushed the stock down more than 30% from its highs. Nvidia's accelerating growth seems to show that the company's attempted acquisition was more a luxury than a necessity, and the company appears poised for strong growth moving forward. The industries it serves could continue growing over the long term, and Nvidia's strong leadership position in the GPU market sets it to benefit directly from these opportunities.
3. Block: Digital banking and merchant software collide
Block (SQ -1.68%) is a financial technology company that runs two separate ecosystems. Its Square seller system offers hardware and software for merchants to operate their businesses. Cash App is Block's peer-to-peer payments app, and it is increasingly evolving into a digital bank.
The company recently acquired buy now, pay later (BNPL) company Afterpay for $29 billion in stock. Afterpay brings more than 16 million consumers to Block, and allows the company to get BNPL features into Square and Cash App while cross-selling between customers of both companies.
The stock is trading at 52-week lows, driven by competitive concerns that tech giant Apple will attempt to compete with its payment terminals business. However, Block's complete suite of services could keep competition at bay, and the stock's current P/S ratio of three is its lowest in nearly five years. According to Boston Consulting Group, the global payments industry is worth roughly $1.5 trillion today, and could nearly double by 2030, so there should be a lot of room for Block to grow and take its share of the market over the years ahead.
