To be a millionaire investor, you don't need to go looking at high-risk penny stocks to invest in. While that can be a quick way to turn a profit, it can also be a surefire way to lose all your money. Sometimes, all that's required to make a big profit is patience and investing in established businesses with proven business models.
If you invested in either Amazon (AMZN -0.01%) or DexCom (DXCM -0.24%) a decade ago, both could have made you rich; a $100,000 investment in either stock would have been more than enough to make you a millionaire today. But are both of these stocks still good buys right now?
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1. Amazon
Online retailer Amazon wasn't a trillion-dollar business a decade ago. It wasn't even worth $100 billion. In March 2012, its valuation was right around $82 billion. And at the time, the company was already one of the world's top growth stocks. Net sales of $48.1 billion in 2011 grew by 41% year over year and were close to double 2009's tally of $24.5 billion.
This past year, revenue topped $469.8 billion -- nearly 10 times its revenue from a decade ago. And while its growth rate slowed down to 22% in 2021, the business continues to dominate retail as an easy one-stop-shop for electronics, groceries, and just about anything that consumers can buy online.
Over 10 years, the stock has risen by more than 1,400%. That would turn a $100,000 investment into $1.5 million.
Whether this already incredibly successful stock can do that again is a tough question. The boost it received from pandemic-driven demand over the past two years may not be sustainable. But with more than $110 billion in cash from its operating activities during that time, I'm confident that the business won't run out of opportunities to pursue more growth in the future. So while it may not jump by another 1,000% in the next 10 years, Amazon still looks like a promising growth stock to buy and hold for the long run.
2. DexCom
DexCom is a medical device company that makes it easier for people with diabetes to manage their glucose levels. Rather than having to rely on pricking themselves with finger sticks all the time, people can use the company's continuous glucose monitoring system (CGM), which can easily display readings on an ongoing basis.
And so it's no surprise that with rising diabetes cases over the years, DexCom's products have been in high demand. This past year, the company's revenue of $2.4 billion grew by 27% year over year. In 2011, its sales were just $65.9 million, as the business was still in its early growth stages. It was also unprofitable then, reporting a net loss of $44.7 million. Now, it's coming off a year where its net income was $154.7 million -- more than double its sales from 10 years ago.
And so it's easy to see why, over the past decade, the stock has been red-hot, soaring more than 4,000%. A $100,000 investment here would have made you a multimillionaire, with those shares now worth close to $4.2 million.
It has been a terrific growth story for DexCom, which has evolved its products over that time to be more intuitive and easy to use for its customers. Its newest CGM, the G7 (still to be released), will be 60% smaller than the current version (G6) and continues to improve on its "best-in-class accuracy," as the company calls it.
It will remain an important product for the healthcare industry, as the number of people with diabetes will only grow. The Centers for Disease Control projected back in 2010 that by 2050, one in three U.S. adults could be living with the disease (up from just one in 10 at the time). Although it's an unfortunate projection, DexCom's devices can make living with diabetes much more manageable.
And that's why although the stock has already risen so much over the past decade and trades at a hefty price-to-earnings multiple of more than 270, the growth potential for its business is what still makes DexCom a promising long-term buy.
