There is no better vehicle for creating wealth than investing in stocks. Not gold, not bonds, not real estate. While one asset class or another may outperform stocks over a short period of time, the long-term results prove that if you want to accumulate large amounts of wealth, investing in stocks is the way to go.
A Deutsche Bank study showed that over the past 100 years, stocks beat out gold by 5.6% per year, housing prices by 6.6%, Treasuries by 6.8%, and oil by 8.4% per year.
There have been only two decades when stocks had negative returns: the Great Depression of the 1930s and the 2000s -- when a combination of the Tech Wreck, 9/11, and the financial markets' collapse all conspired to sink the market.
Subsequent years produced life-affirming results. The 1940s saw compounded annual returns of 10.2% annually, including dividends, while the 2010s generated a compound annual growth rate (CAGR) of 14%.
For investors who want the best chance of having a comfortable retirement, investing in stocks and staying in the market for the long haul is the correct strategy. That's why the saying "it's not about timing the market, but your time in the market" is so true.
By the time working Americans are ready for their gold watch, the following pair of winning stocks have the potential to make investors wealthy.
It's an understatement to say investor sentiment about GoPro (GPRO -1.74%) has changed since its IPO in 2014, but the action-camera maker isn't the same company it was back then. Now its stock is trading at under $9 a share, so recommending its shares is an easy decision.
GoPro's cameras are feature-rich, versatile, and durable, meaning there is little need for consumers to upgrade to the latest model.
While planned obsolescence is more the industry rule these days, GoPro still produces rock-solid action cameras, but it is also doing a lot more. It now also offers top-notch video editing software and a subscription service that's as feature-rich as its cameras. It includes unlimited cloud storage, premium editing tools, and a live streaming platform, and GoPro plans to continue prioritizing these services. In its first year of implementation, GoPro was able to grow revenue, margins, and profitability in 2021.
It's not abandoning its cameras, though. GoPro plans to double the number of products beyond its HERO and MAX models by the end of the year and then expand them in 2023.
GoPro trades at less than four times trailing earnings and less than eight times next year's estimates, a minuscule fraction of what Wall Street is forecasting as its long-term earnings growth rate. It also sports a bargain-basement multiple of just six times the free cash flow it produces.
GoPro is going on offense with a powerful hardware and software lineup that makes its stock a no-brainer.
SentinelOne (S 8.99%) might not be a stock most investors are familiar with, as it just went public in June. The cybersecurity specialist has been in business for nearly a decade and is already starting to overtake the industry leaders.
Last year was a record year for cybercrime and cybersecurity. The Theft Research Center says the number of data breaches recorded in 2021 surpassed the previous record year by 23%, and it's only going to get worse as the advent of 5G networks will increase the number of devices accessing the Internet of Things. Cybersecurity will be a prime investment opportunity for decades, and SentinelOne should be at the top of your list.
Revenue more than doubled last year, growing from $93 million to almost $205 million, while its number of customers expanded 70% to over 6,700. Better still, the number of customers providing it with annual recurring revenue (ARR) of over $100,000 grew to 520, a 137% increase from the year-ago period.
ARR is the key metric SentinelOne wants to be measured on, and that grew 123% in the fourth quarter, making it the fourth consecutive quarter of triple-digit ARR growth.
The cybersecurity sector is becoming a three-horse race between SentinelOne, CrowdStrike, and McAfee. SentinelOne maintains that its Singularity platform is more accurate in detecting threats and is faster than its rivals' technology.
SentinelOne has lost about half its value from the heights it reached following its IPO, making the fast-growing cybersecurity stock an easy selection.