A $5,000 investment can make you richer. Don't believe me? Consider this: If you had invested $5,000 in Advanced Micro Devices in 2013, it would have grown to over $300,000 less than a decade later.
There are stocks that will soar in the coming decades. And, like AMD, they might already be household names. So here are my three picks for stocks that could make you richer over the next 20 years: Amazon (AMZN -1.65%), Pinterest (PINS -0.64%), and Tesla (TSLA 4.96%).
Image source: Getty Images.
Amazon
Founded as an online bookstore, Amazon has changed a lot over the last 28 years. Even so, the company's retail vision is still paying off now. With its sprawling infrastructure network, Amazon is simply the most convenient way to shop for millions of people around the world. The company boasts over 200 million Amazon Prime members. Customers in the U.S. now pay $139 a year for Prime shipping and other benefits.
Furthermore, Amazon's Web Services segment (AWS) and its advertising segment continue to grow. For its part, AWS holds roughly 33% of the highly profitable cloud services market. Meanwhile, Amazon's advertising unit ranks third behind Meta Platforms and Alphabet -- but is closing the gap with its competitors.
Granted, Amazon isn't cheap. It trades at a price-to-earnings ratio of 76, which is quite high. However, that's still below the company's three-year average of 83. That might be too steep a price for some investors, but remember, owning Amazon stock means owning a share of the world's greatest online retailer -- along with the company's high-margin AWS and advertising units. That's a combination that can pay off in the long term.
Pinterest operates as a social media platform, but with a twist: Rather than facilitating links between users, Pinterest users are on the hunt for "pins."
These pins take a variety of forms:
- Standard images
- Video
- Products
- Ideas
In this way, Pinterest helps its users organize items and concepts for their interests and hobbies.
And this unique form of social media could prove quite lucrative due to increasingly stringent rules and regulations governing online privacy.
Since Pinterest's users select pins that correspond to their interests -- often signaling purchase intent -- the company's opportunity for ad monetization is obvious. If, for example, someone has selected five pins that show a flower arrangement, advertisers would leap at the opportunity to insert a similar ad in that user's feed.
With over 445 million monthly active users, Pinterest already has a large user base. The company will now need to turn its focus to monetizing its users. In its latest quarterly report, Pinterest earned $0.29/share, beating the consensus estimates of $0.27. Wall Street expects full-year 2023 earnings of $0.75, up from $0.62 in 2022. If the company can successfully integrate ads into the platform, I think the sky is the limit for Pinterest. And I think -- given a decade or two -- it could make some investors quite wealthy.
Tesla
If you want to get richer, one strategy you might adopt is to invest alongside one of the richest people in the world. But, in this case, I'm not talking about Warren Buffett, Jeff Bezos, or Bill Gates. No, I mean Elon Musk.
Although much of his wealth is tied up in private companies such as SpaceX, Twitter, and The Boring Company, Musk still owns about 13% of Tesla -- amounting to roughly $87 billion.
In the past calendar year, Musk sold a significant stake in Tesla to fund his buyout of Twitter. And investors who bought as Musk sold have been rewarded in 2023, as shares have skyrocketed higher by 68% year to date.
Behind the surging stock price is a company that continues to produce hits like Michael Jackson did in the '80s. In its most recent quarter, Tesla beat expectations for revenue and earnings. Revenue hit an all-time record of $24.3 billion and was up 33% from a year earlier.
Tesla continues to ramp up production as new factories in Texas and Germany come online. In 2022, the company produced 1.3 million vehicles, but in 2023 the company expects to produce around 1.9 million vehicles.
Once those new, shiny Teslas roll off the line and into the arms of excited customers, Tesla will further climb the list of top automakers by volume. Meanwhile, the addition of the Tesla Semi and CyberTruck will take further market share from legacy automakers.
With a bright future ahead of it and one of the world's richest men leading it, Tesla looks like a stock that can truly make you richer over the next 20 years.
