It's never too early to start building a portfolio that may eventually make you a millionaire. You can get to work on this no matter what the market is doing because, at any point, the market offers you opportunities.
In a bull market, you may pick up some of the safer stocks that investors are ignoring. And in today's difficult market, you can grab great deals on growth stocks.
Today, many growth stocks are suffering, but in some cases, prospects over time remain bright. So right now is the perfect time to snap up these players at a bargain price and potentially benefit months or years down the road. Let's talk about three magnificent growth stocks that, as part of a portfolio of solid companies, could help you along the path to wealth
1. Amazon
Amazon (AMZN 0.20%) was on an earnings roll, delivering gains in net income year after year -- until last year, when the company swung to a loss for the first time since 2014. That occurred as rising inflation weighed on Amazon's costs and its customers' buying power. At the same time, the retail giant found itself with excess capacity after expanding its fulfillment network.
That may sound grim, but there are two huge positive points here. First, today's tough economic environment is temporary. Second, the situation has pushed Amazon to improve its cost structure and make moves that should benefit earnings now and over the long term. For example, Amazon is switching its U.S. fulfillment network from a national model to a regional one -- a move that should speed up deliveries and reduce costs.
Other cost-cutting efforts are starting to bear fruit, as well. In Amazon's most recent earnings report, operating cash flow increased in the double-digits. And free cash flow improved to an outflow of $3.3 billion from more than five times that amount a year ago.
Amazon remains a leader in two high-growth markets -- e-commerce and cloud computing -- and should benefit from this down the road. Meanwhile, today you can pick up the shares for nearly their lowest in relation to sales since 2016.
2. Moderna
Moderna (MRNA 0.93%) isn't exactly in the doldrums today because of the economic environment. Instead, the drop in coronavirus vaccine sales is hurting the stock. The vaccine is Moderna's only product right now.
But here's why you shouldn't flee Moderna and pick up the shares, instead. The company has set out a path that may lead to huge market share in the respiratory vaccines market. The market size for coronavirus, flu, and respiratory syncytial virus (RSV) vaccines should total about $30 billion by 2027. And Moderna aims to take as much as half of that by that time.
The company also forecasts $4 billion to $9 billion in annual free cash flow from respiratory vaccines, if all goes well. And that level could move higher.
The biotech company already has set out to reach its goals. It aims to launch flu and RSV vaccines next year. And it continues to work on updated coronavirus vaccines, including a candidate that offers protection against more than one respiratory virus.
All of this sounds great, but Moderna's growth potential doesn't stop here. That's because the company has more than 40 programs in development across therapeutic areas. If even a handful make it to commercialization, this could further add to earnings growth.
Moderna trades for less than 9 times forward earnings estimates -- and that looks like a steal, considering the potential products on the horizon.
3. Chewy
Chewy (CHWY 1.63%), an online seller of pet supplies, announced record revenue, profit, and free cash flow in its full-year 2022 earnings report. In spite of today's difficult environment, pet owners still are spending on their furry (and sometimes not-so-furry) friends.
But Chewy doesn't sell just pet supplies. The company also offers online vet visits, as well as pet insurance. Shoppers can turn to Chewy for pretty much all of their pet needs. And considering the total U.S. pet market is worth about $130 billion, there's still plenty of room for the company to grow.
Chewy has an excellent track record. It's more than tripled revenue over the past four years to surpass $10 billion. And over that time period, it's expanded its gross margin to 28% from 20%. Finally, it's widened adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins to 3% from negative 6.5%.
Today, Chewy is taking steps to boost earnings even more over time. The company is transforming its supply chain to favor automation. It's already opened three automated fulfillment centers and is getting ready to open a fourth.
Chewy's share price doesn't reflect the company's growth. The stock has dropped 9% this year, after falling nearly 40% last year.
Right now, the stock trades at 67 times forward earnings estimates, down from 120 just a few months ago. The company still is in the early stages of its growth story -- so there's plenty of room for earnings and share-price gains down the road. And that makes it a great addition to your "make me a millionaire" portfolio.
