Retirement may be just around the corner, or decades away. Either way, you're ready to start building a portfolio of top tech stocks that could help make you rich before you collect that gold watch to enjoy those golden years.
I have some ideas to get you started on that road to retirement prosperity. Of course, reaching this goal will be easier if you have many years left before cashing your final paycheck, but the stocks below should have enough giddy-up to make a serious difference even if your time horizon if five years or less.
So let's get going. Have you considered chip designer Advanced Micro Devices (AMD -0.35%), media-streaming technologist Roku (ROKU 0.15%), and e-commerce platform provider Shopify (SHOP -2.37%) yet? Each one of these robust companies is a leader in its industry of choice. All three are poised to deliver wealth-building gains for patient investors.
AMD: premium price for premium results
AMD used to be the eternal runner-up to sector leader Intel (INTC 0.64%), but the game is changing before our eyes. Intel still puts up stiff competition and AMD also faces head-to-head challenges from fellow growth phenom Nvidia (NVDA -3.33%) in some markets, but the company enjoys strong demand for its products from gamers and data center operators anyhow.
This company has several factors working in its favor. CEO Lisa Su is widely regarded as a visionary leader who has turned the company around from the brink of irrelevancy. Under her steady hand, AMD has made significant progress in launching consistently successful products and managing its formerly brittle financial platform.
Furthermore, the recent buyout of embedded chip veteran Xilinx gave AMD access to new technologies such as reprogrammable chip layouts and low-power computing platforms. Xilinx also added tons of greenfield customers to AMD's Rolodex, with the possibility of cross-selling chips between the two relatively separate client lists. In the long run, the $50 billion Xilinx deal could be as game-changing as the $5.6 billion ATI acquisition of 2006, which signaled the start of AMD's graphics processor business.
AMD also has a strong financial position with solid cash flows and just $2.5 billion of long-term debt, which gives it the flexibility to invest in more growth opportunities. The stock is a bit pricey, trading at 110 times trailing earnings and 50 times free cash flows, but investors embrace the premium price due to a strong track record of innovation and soaring sales. In that light, die-hard growth investors could call AMD a steal today.
AMD Revenue (TTM) data by YCharts
Roku's budding media empire
Roku's user-friendly media-streaming hardware and software is finding its way into homes around the globe. Nobody can match the company's market footprint in the trend-setting North American market, and Roku is actively expanding its reach into other geographic areas these days.
TV shows and movies have leading roles in the entertainment industry, which is shifting away from broadcast and cable TV in favor of digital media streams everywhere. Roku's target market is already massive and constantly growing. By 2030 or so, the company should own a meaningful slice of the streaming platform market in every world economy large enough to move the needle for a global media giant, with the probable exceptions of China and Russia.
Roku is making some seriously smart moves to expand its business operations and keep shareholders happy. For starters, the company runs a successful advertising service, so that more and more advertisers can reach the large and engaged audience that watches its streaming service.
That business is suffering deeper revenue cuts than the economy as a whole during this inflation crisis, as ad buyers expect low returns on their invested ad dollars in this market. However, Roku's ad business is sure to escape from the doldrums over time, unlocking another potentially massive revenue stream's full potential. The headwind should turn into a tailwind when the inflation crisis finally fades out.
The company also produces some of its own content for the Roku TV service, aiming to keep viewers hooked with a direct tie-in to the aforementioned ad service. And to top it off, Roku is expanding its international presence by launching its streaming service in new countries such as Brazil, Germany, and the UK.
All in all, Roku is a well-run company with impressive market ambitions. Yet, the stock price is down 81% in 18 months as Roku bears focused on the limited ad business and high-flying stock price. I am convinced that the price correction went too far by a long shot, giving investors a buying opportunity that should not be missed. After all, Roku is one of the binge-worthiest picks in the flourishing streaming industry.
Shopify: retail therapy for your portfolio
And then there's Shopify, the champ of e-commerce tools for small and medium businesses. People are getting comfortable with shopping online, and Shopify leads the charge in providing handy e-commerce tools for retailers of every stripe. The company's cloud-based shopping platform helps businesses set up and manage their online stores, quickly and easily. The package also includes payment and shipping services as well as a full set of marketing tools. Shopify is a one-stop shop for modern entrepreneurs.
Shopify has been delivering impressive revenue growth and profits. Fourth-quarter sales rose 25.7% year over year despite the ongoing inflation challenges.
The company is investing heavily in new markets and technologies to maintain its market-defining leadership in any economy. As a result, Shopify has deep-rooted partnerships with major retail and e-commerce players like Amazon, Google and Walmart, as well as a steady stream of new features. Shopify's innovations keep making it easier for businesses to find more customers and sell more goods online.
The company's culture of innovation and creativity is the very heart of this juggernaut. It wants to make the online shopping experience more personalized, more engaging, and more fun, giving consumers all the more reason to fill those online shopping baskets. In turn, happy customers will inspire more retailers to sign up for Shopify's tools and services. And the fast-growing customer base -- currently at 2.1 million daily active businesses serving 218 million consumers over the last year -- proves that Shopify's business plan is working.
With its impressive track record of rapid growth and game-changing innovation, this e-commerce champion should deliver pocket-padding shareholder returns over the long haul.
Diversify your portfolio with these winners
I'm not saying that Roku, AMD, and Shopify are birds of a feather. I get it. You might think I'm comparing an apple, an orange, and a banana here. But these diverse companies still have many shareholder-friendly qualities in common. Thanks to these positive attributes, one or more of them may be a good fit for your retirement portfolio.
They have strong management teams that know how to execute growth plans and deliver value to shareholders. They're well-positioned to keep riding the secular trends that fuel their respective industries, and that means they have the potential to make you rich by retirement.
There you have it. AMD, Roku, and Shopify are some of the first tech stocks that you should seriously consider adding to your retirement portfolio. With their impressive track records and bright futures, owning shares of these winners could help you retire in style.
