Building wealth can be a lot like baking a cake. It requires the right ingredients, the right recipe (or strategy), and time to cook. With all these conditions in place, even relatively modest investments can turn into a special treat. Consider Nvidia. If you had invested $3,000 in Nvidia stock 10 years ago, that total would have grown to $147,000 today.
Undoubtedly, there are stocks today that could go on to duplicate -- or even beat -- Nvidia's return given enough time. Let's take a look at two that I think can do just that.
Alphabet (GOOG -1.31%) (GOOGL -1.42%), the parent company of Google, is already a juggernaut. Its signature product -- Google Search -- is the world's dominant search engine, with an 84% market share.
Alphabet also boasts key growth engines such as YouTube and Google Cloud. These segments help drive Alphabet's double-digit revenue growth year after year, which is even more impressive when you consider the company generated $278 billion in revenue over the last 12 months.
What's more, Wall Street expects Alphabet's tremendous growth to continue. Analysts expect the company to record $324 billion in revenue in 2023, up 12% from this year.
Yet, despite these positives, Alphabet shares have struggled this year. The stock price is down 16% year to date. The weak first half of the year is to blame, as the Nasdaq Composite gave up 30% of its value in the first six months of 2022.
However, investors would be wise to capitalize on this recent weakness. Alphabet shares now trade at a price-to-earnings ratio of only 22.6, well below its three-year average of 28.3.
Airbnb (ABNB 0.60%) operates a rental marketplace app that connects guests and hosts. And while the concept behind Airbnb is not exactly new -- connecting homeowners and renters -- what sets the company apart is its penchant for inspiring travel.
Airbnb's app doesn't assume visitors know where or when they will travel. Like a sidewalk menu, it's designed to whet the appetite. As visitors add favorites to their wishlists, its algorithm highlights similar listings with open booking dates.
The result? Often, Airbnb guests find more than just a weekend getaway; they find a long-term rental. More than 45% of nights booked on Airbnb are now part of a stay that lasts for at least seven nights. More than 19% of bookings are for stays of 28 days or more.
And those sorts of long-term rentals are great news for hosts. First, they ensure steady rental income, and second, hosts save time and money due to fewer 'resets' between stays.
Wall Street analysts certainly like Airbnb's prospects. They expect the company to generate $8.3 billion in revenue this year, up 38% from 2021. Moreover, they expect revenue to grow to $9.5 billion in 2023.
Shares trade at a price-to-sales (P/S) ratio of 11. That might seem high, but since it debuted as a public company in late 2020, Airbnb's average P/S ratio is 20.5. What's more, the stock is down 26% year to date, offering investors an excellent opportunity to accumulate shares on the cheap.