Making $1 million out of $50,000 isn't easy, but if you have $50,000 to invest, you could make yourself a millionaire with the right combination of stocks.
You'll want to find stocks that have a long growth path ahead of them, the ability to increase profits, and, ideally, a reasonable valuation. Keep reading to see three stocks that have the potential to make you a millionaire in a decade.
Image source: Getty Images.
1. Perion Network
If you're looking for promising growth stocks, a great place to start your search is in the ad tech industry. For the most part, ad tech stocks are not only growing fast but are also profitable, and Perion Network (PERI +2.50%) offers a great example.
The company operates primarily through its intelligent hub, a digital advertising marketplace that connects buyers and sellers, optimizing ad purchases and placements and adding value for both sides. The company also offers premium experiences through connected TV and other channels, such as a "connected cart" that allows viewers to buy an advertised product with a QR code.
NASDAQ: PERI
Key Data Points
Like other ad tech stocks, Perion delivered strong growth early in the pandemic, but the company also continued to grow over the last year even as growth in the digital advertising industry has slowed, a sign Perion delivers a high return on investment for advertisers.
Revenue in 2023 rose 33% to $636 million, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 88% to $131 million. At a market cap of just $1.44 billion, that means the stock trades at just 11 times EBITDA, a surprisingly low valuation for a stock that just doubled its EBITDA profits.
With a combination of growth, a low valuation, and a small-cap valuation, Perion has the potential to be a multibagging stock over the coming years.
2. MercadoLibre
Latin American e-commerce company MercadoLibre (MELI 12.69%) has already been a big winner on the market, up nearly 4,000% since its 2007 IPO. However, the company still has a bright future in front of it with a large addressable market to penetrate.
While e-commerce companies in the U.S. have posted sluggish growth through 2022, MercadoLibre continues to surge. On currency-neutral terms, MercadoLibre's revenue jumped 61% to $2.7 billion, driven by a 32% increase in its gross merchandise volume to $8.6 billion and a 76% increase in total payment volume to $32.2 billion.
Showing the reach of MercadoLibre beyond its e-commerce marketplace, MercadoPago, its digital payments business, now brings in most of its revenue off the MercadoLibre platform, including in brick-and-mortar stores through its point-of-sale machines. Off-platform payment volume at MercadoPago doubled in each of its last four quarters.
NASDAQ: MELI
Key Data Points
At the same time, MercadoLibre is seeing profitability ramp up thanks to growth in its ad business, its credit business, payments, and its third-party marketplace. Operating margin reached 11% in the most recent quarter, its highest ever, and should continue to expand as the business scales up and invests in high-margin opportunities like advertising and its credit business. MercadoLibre's track record of revenue growth also bodes well for continued growth in the stock.
3. Block
Another payments company with disruptive potential is Block (SQ +6.71%), the owner of Square and Cash App.
Block functions primarily as two separate businesses, Square and Cash App. Square serves small and medium-sized businesses like restaurants, retailers, and independent professionals, and it offers a comprehensive suite of more than 30 hardware and software products. Together, those products create a competitive advantage, adding switching costs.
Square makes money from transaction and subscription fees, growing with the small businesses it serves, so their interests are aligned.
Square is seeing its customer size increase as its customers grow and it attracts larger businesses. About 40% of Square's gross payment volume now comes from the mid-market tier, or businesses with annual gross payment volume above $500,000.
NYSE: SQ
Key Data Points
The company is also experiencing strong growth from Cash App, a leading player in the peer-to-peer payments space. Gross profit from Cash App jumped 51% to $774 million, and it now has 49 million monthly active users. Use of the Cash App card continues to grow, with more than 35% of monthly users using the Cash App card, helping drive the company's push into banking services.
On an adjusted EBITDA basis, Block is profitable, bringing in $327 million in the most recent quarter, and profits should scale over time thanks to new products and a growing user base.
Investors should expect the company to prioritize top-line growth to capture the $200 billion market opportunity in front of it. If Block can continue to capitalize on that opportunity, the stock has considerable upside potential ahead.
