Regardless of whether you're a new or tenured investor, it's been a bumpy start to the new year. The benchmark S&P 500 and nearly 126-year-old Dow Jones Industrial Average both dipped by more than 10% from their all-time highs, while the growth-dependent Nasdaq Composite tumbled as much as 22%, which briefly placed it in a bear market.
It's been equally challenging for the Nasdaq 100, an index comprised of 100 of the largest nonfinancial stocks listed on the Nasdaq exchange. Earlier this month, the Nasdaq 100 entered its first bear market in two years.
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But where there's fear, there's also opportunity. That's because every correction throughout history has eventually been wiped away by a bull market rally. In other words, patient investors can find some serious bargains at the moment.
If you invest $300,000 into these three Nasdaq 100 components now, you may have the tools necessary to make you a millionaire by 2030.
Meta Platforms
Even though it's been throttled on a year-to-date basis, Meta Platforms (META 0.20%), the company formerly known as Facebook, is a core Nasdaq 100 stock that may make you a lot richer by the turn of the decade.
Meta's swoon over the past three months has to do with two factors. First, there's concern about iOS privacy changes introduced by Apple that could limit data tracking. That's a worry for ad-driven companies like Meta. The other worry is CEO Mark Zuckerberg's desire to spend aggressively on metaverse innovations. This spending is modestly weighing on the company's near-term profits.
However, neither of these concerns has dissuaded me from adding to Meta for the long run on this pullback, and it shouldn't stop you, either.
Meta is the premier social media company. Despite hearing a lot about the metaverse, investors shouldn't lose sight of the fact that Facebook, WhatsApp, Instagram, and Facebook Messenger are consistently the most-downloaded social apps. In fact, Meta had 3.59 billion users visiting its platforms on a monthly basis during the fourth quarter, which represents more than half of the global adult population.
Advertisers understand that no other social platform is going to give them broader access to eyeballs than Meta's family of apps. Not surprisingly, the company enjoys superb ad-pricing power.
Something else to consider is that Meta's strong ad-pricing power led to nearly $46.8 billion in net income from operations in 2021. With the company also sitting on more than $33 billion in net cash, Meta has the flexibility to get aggressive with its metaverse investments, even if they don't pan out for years to come.
But the real eye popper with Meta Platforms is its valuation. Investors can currently scoop up shares for just 15 times Wall Street's consensus earnings forecast for 2023.
Keep in mind that Facebook is maintaining a double-digit growth rate and is only marginally pricier on a forward-year price-to-earnings basis than IBM, with revenue that's been falling for nearly a decade. Patience with Meta Platforms should be handsomely rewarded.
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Palo Alto Networks
A second Nasdaq 100 stock that can turn a $300,000 initial investment into $1 million in eight years is cybersecurity-specialist Palo Alto Networks (PANW 0.18%).
The beauty of cybersecurity is that it's evolved into a basic-necessity service over the past two decades. No matter how well or poorly the U.S. economy and stock market are performing, robots and hackers aren't going to take a day off from trying to steal consumer and enterprise data.
This is especially true in the wake of the pandemic, considering that businesses have shifted a lot of their data online and into the cloud. In short, it gives cybersecurity stocks a long growth runway and fairly predictable cash flow.
What makes Palo Alto such an intriguing company is its ongoing shift to subscription-based security solutions, as well as its penchant for making earnings-accretive acquisitions.
Palo Alto Networks provides both subscription services and physical firewall products. But over the past couple of years, it's been adjusting its focus to subscription-based solutions. This transition will help the company be more responsive to potential threats, relative to on-premises security solutions, and should result in higher operating margins over time.
It also doesn't hurt that the company's next-generation security solutions are growing at a significantly faster pace than its physical products. According to Palo Alto, annual recurring revenue (ARR) from next-gen security solutions is forecast to hit $3.25 billion in fiscal 2024. That represents estimated growth of 175% from the next-gen ARR the company reported in fiscal 2021.
The company's bolt-on acquisitions are playing a key role, as well. Palo Alto's numerous small buyouts are helping to expand its product ecosystem, boost cross-selling opportunities, and grow its reach to small- and medium-sized businesses.
With a sustainable double-digit growth rate, Palo Alto Networks checks all the appropriate boxes to make patient investors millionaires.
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Alphabet
The third and final Nasdaq 100 stock that can turn $300,000 into $1 million by 2030 is Alphabet (GOOGL 10.14%) (GOOG 10.11%), the parent company of internet search-engine Google and streaming-platform YouTube.
Most people are probably familiar with Google because it's the most dominant internet search engine on the planet. Based on data provided by GlobalStats, Alphabet's Google has maintained between 91% and 93% of worldwide internet search share dating back two years. With Alphabet's veritable monopoly on internet search, it shouldn't come as a surprise that businesses are willing to pay a premium for placement.
But what's often overlooked with Alphabet is its significantly faster-growing ancillary operations. When YouTube was acquired for $1.65 billion in 2006, no one could have predicted what a revenue giant it would eventually turn into.
Today, YouTube is one of the most visited social sites on the planet. Based on the more than $8.6 billion in ad revenue it generated in the fourth quarter, YouTube is nearing a $35 billion annual run rate. And that's not all.
In addition to YouTube, cloud infrastructure service-provider Google Cloud should be a long-term bright spot. Google Cloud is the global No. 3 in cloud infrastructure spending and has consistently been growing by close to 50% on a year-over-year basis. Because cloud margins tend to be substantially higher than advertising margins, Cloud could be primarily responsible for helping Alphabet double its operating cash flow by 2024.
Similar to Facebook, Alphabet looks like a screaming bargain. Shares can be picked up for a little over 20 times Wall Street's forward-year consensus earnings despite the company maintaining an annual growth rate of 15% or higher.
