If you're looking to build generational wealth, the stock market is a great place to start. The S&P 500 produced an annualized return of 7.6% over the last 50 years, meaning $100 invested on a weekly basis would have grown into a $2.7 million fortune during that time.

Of course, it is possible to beat the market with a portfolio of individual stocks. That approach is riskier and requires more work, but the payoff can be enormous. If you were to achieve an annualized return of 9.6% -- just 2 percentage points higher -- $100 invested on a weekly basis would grow into a $5.5 million portfolio over 50 years.

Unfortunately, there is no blueprint for picking market-beating stocks. But investors can set themselves on the right track by looking for businesses with strong sales growth, a solid competitive advantage, and a big market opportunity. Here are two examples.

1. CrowdStrike: A cybersecurity leader

CrowdStrike Holdings (CRWD -1.12%) is the gold standard in endpoint security, and the market leader in managed detection and response, a branch of cybersecurity in which businesses can outsource threat detection and incident response to security professionals. The company is also gaining traction in other industry verticals, including cloud security and identity protection.

CrowdStrike owes that success to the unique architecture of its platform. Its portfolio comprises 22 software modules, but all of them are delivered through a single lightweight agent that can be installed without a device reboot. That makes adoption frictionless, and it distinguishes CrowdStrike from other vendors, which often burden devices with multiple agents and required reboots.

Additionally, CrowdStrike has more threat intelligence data than other vendors, due to its leadership position in the endpoint security and managed detection markets. Management believes that advantage makes its artificial intelligence engine uniquely effective, enabling CrowdStrike to detect and prevent even the most sophisticated attack.

The company is growing revenue at a blistering pace, and it's generating significant free cash flow in the process.


Q1 2020

Q1 2023


Revenue (TTM)

$298.6 million

$1.6 billion


Free cash flow (TTM)

($65 million)

$480.6 million


Data source: YCharts. TTM = trailing 12 months. CAGR = compound annual growth rate. Note: fiscal Q1 2023 ended April 30, 2022.

The secular shift to cloud computing and the ever-growing number of connected devices means hackers have more potential targets than ever before, and that makes effective cybersecurity a necessity. With that in mind, CrowdStrike puts its addressable market at $58 billion in 2022, but that figure could reach $126 billion by 2025 as the company debuts new products.

In summary, CrowdStrike has delivered impressive financial results on a consistent basis, and it benefits from a strong presence in a large and growing market. That's why this growth stock could help investors build generational wealth.

2. Mastercard: A digital payments giant

Mastercard (MA -0.56%) powered 24% of card purchase transactions last year, making it the third-largest payments network in the world (behind Visa and UnionPay), according to the Nilson Report. That success can be attributed to brand authority and scale.

Mastercard has nearly 3 billion payment cards in circulation, its acceptance network includes more than 80 million merchants, and it has relationships with thousands of financial institutions. Building that foundation required a significant amount of time and money, meaning potential challengers face significant barriers to entry. Moreover, Mastercard's scale creates a significant cost advantage, because it incurs almost no expense to power each additional transaction. That means the company could easily undercut the pricing of any competitor that attempted to enter the market.

Not surprisingly, Mastercard's trusted brand and immense scale have translated into solid financial results over the past three years, in spite of pandemic-driven headwinds.


Q2 2019

Q2 2022


Revenue (TTM)

$15.7 billion

$20.9 billion


Free cash flow (TTM)

$6 billion

$9 billion


Data source: YCharts. TTM = trailing 12 months. CAGR = compound annual growth rate.

Looking ahead, investors have good reason to believe the company can maintain that momentum. Mastercard's gross dollar volume totaled $8.1 trillion over the past year, but management puts its addressable market at $115 trillion, and the secular shift toward digital payments should be a tailwind for the company for many years to come.

In short, Mastercard checks all three boxes. Revenue and free cash flow are growing at a steady pace, and it benefits from a strong presence in a large market. That's why this growth stock could help investors build generational wealth.

A caveat about portfolio management

With a long-term mindset, it is possible to build generational wealth in the stock market. But investors who choose to buy individual stocks will have to do extra work to maintain their portfolio. That means staying up to date on the businesses in which you invest. While it may be OK to buy an S&P 500 index fund and forget about it for five decades, that hands-off approach will not work with individual stocks. Instead, for every stock in your portfolio, you will need to assess whether your investment thesis is still intact at regular intervals.