It's been a rough start to the year for Wall Street and investors. Through March 1, both the benchmark S&P 500 and technology-dependent Nasdaq Composite were lower by a double-digit percentage from their respective all-time closing highs.
While the volatility that occasionally accompanies corrections can sometimes be unnerving, it's historically an ideal opportunity to put money to work in high-quality stocks. After all, every stock market crash and correction throughout history has eventually been put into the rearview mirror by a bull-market rally.
Perhaps the smartest move investors can make right now is to scoop up shares of brand-name growth stocks. Fast-growing, established companies have the potential to deliver steady returns over the next decade. In fact, the following three brand-name growth stocks have all the tools and intangibles needed to turn a $250,000 initial investment into $1 million in 10 years (or less).
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The first brand-name growth stock that can turn $250,000 into a cool $1 million in a decade or less is social media company Pinterest (PINS 1.01%). Pinterest also happens to be my top stock to buy for March (and beyond) following its drubbing over the past year.
The weakness Pinterest has contended with since early 2021 primarily has to do with investors pairing back their stakes in pandemic winners. Pinterest was one of a handful of social media companies that enjoyed a surge in monthly active users (MAUs) during the initial stages of the pandemic and during lockdowns. But with vaccination rates ticking up, the company has reported three consecutive quarters of sequential MAU declines.
However, this dialing back of MAUs isn't the cause for concern that short-term traders have apparently made it out to be. If investors pull back and examine Pinterest's MAU growth over four or five years, they'll see a steady upward trajectory. We've simply returned to the upward trendline following the pandemic boost.
What's more, Pinterest has had few issues monetizing its user base. Last year, global average revenue per user (ARPU) rose 36%, with international ARPU leaping an even more impressive 80%. Even with aggregate MAUs declining 6% for the full year, merchants had no qualms about spending more in total, and per ad, to reach Pinterest's user base.
Investors also shouldn't be concerned with privacy changes introduced by Apple. While some social media platforms could lose valuable tracking data, Apple's privacy changes for downloaded apps won't have much effect on Pinterest. That's because the company's entire operating model is based on users willingly sharing the things and services that interest them. There's virtually no guesswork involved, which allows for targeted advertising and substantial ad pricing power for Pinterest.
Ultimately, we're talking about a highly profitable company with sustainable double-digit sales growth that's sporting a price-to-earnings growth ratio (PEG ratio) below one. It's incredibly inexpensive and a good bet to quadruple in 10 years or less.
Image source: Getty Images.
Salesforce
A second brand-name growth stock that can quadruple a $250,000 investment over the coming 10 years, or less, is cloud-based customer relationship management (CRM) software solutions provider Salesforce.com (CRM -0.55%).
In simple terms, CRM software helps consumer-facing businesses better engage with their existing clients so they can boost sales. It can be used for overseeing product and service issues, handling online marketing campaigns, and even running predictive sales analyses when a new product or service launches to determine which existing clients might be the likeliest to buy. CRM has been widely adopted by the service industry, but is gaining utility in some unlikely sectors, such as industrials, financials, and healthcare.
The growth runway for CRM software solutions is extensive, with annual double-digit sales growth forecast through at least mid-decade, if not likely well beyond. Salesforce finds itself the unquestioned leader of this fast-paced industry. According to a report from IDC, Salesforce brought in nearly 24% of global CRM spend in the first half of 2021, which was a higher share than its next four closest competitors, combined!
In addition to having a virtually insurmountable market share lead in cloud-based CRM solutions, Salesforce has demonstrated a gift for making prudent acquisitions, too. Some of the smartest buyouts orchestrated by CEO Marc Benioff include MuleSoft, Tableau, and most recently Slack Technologies. Though adding the unique revenue channels from these respective companies helped, their true value is in expanding Salesforce's product and service ecosystem, as well as broadening its reach to small and medium-sized businesses. Slack, for instance, is the perfect platform to cross-sell Salesforce's CRM solutions.
Salesforce looks to be on track to deliver at least $50 billion in full-year sales by fiscal 2026 (calendar year 2025), which would represent a near-doubling in sales from its most recent fiscal year. As long as Salesforce continues to grow by 20% or more annually, its path to a possible trillion-dollar valuation remains in focus.
Image source: Amazon.
Amazon
The third brand-name growth stock that can quadruple a $250,000 initial investment by 2032 or sooner is Amazon (AMZN 0.82%).
The vast majority of people who are familiar with the Amazon brand know the company because of its superior online marketplace. According to a report last August from eMarketer, Amazon was forecast to bring in approximately $0.41 of every $1 spent online in the U.S. in 2021. That's nearly six times more than Walmart, which is No. 2 in U.S. online retail sales.
Although Amazon's online marketplace is dominant, the margins attached to e-commerce sales are still razor-thin. To counter this, the company has aggressively pushed users to sign up for Prime memberships. The annual fees Amazon collects from its 200 million Prime members help to buoy its retail margins and provide a buffer that allows the company to undercut brick-and-mortar retailers on price.
But as an Amazon shareholder, it's not the retail side of the business that I'm watching like a hawk. Rather, it's the company's cloud infrastructure services segment. Amazon Web Services (AWS) accounted for almost a third of global cloud infrastructure spending through the first nine months of 2021. That's noteworthy for two reasons. First, cloud growth is still in the early innings, which means AWS has a long runway to boost its sales. Second, cloud margins are substantially higher than online retail margins.
Last year, Amazon recognized almost $470 billion in net sales, with approximately 13% of its revenue deriving from AWS. However, AWS accounted for 74% of the company's $24.9 billion in operating income. As AWS, subscriptions, and advertising (the higher-margin segments) grow into a larger percentage of total revenue, Amazon should see its operating cash flow soar. That could easily put shares above $10,000 well before the decade comes to a close.
