Everyone desires to be a millionaire and enjoy the luxury of a comfortable retirement, where you need not worry about money. The path to riches can be achieved through investing and is not necessarily as tough as it sounds, but it does require patience and discipline. By consistently parking money in well-managed, strong businesses, you can gradually build up a portfolio of stocks whose value continues rising over the years and decades.
The key to selecting stocks that you can hold for the long term boils down to your filtering process. You should screen for stocks with sustainable catalysts that allow them to grow their revenue, profits, and cash flow over time. These stocks should also ride on long-term trends or be market leaders in their respective industries. Armed with such attractive attributes, these stocks should sit comfortably in your investment portfolio and help you to compound your wealth.
Here are three stocks with the above characteristics that could help put you on the path to becoming a millionaire.
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1. Lululemon
Lululemon Athletica (LULU 1.31%) makes and sells performance apparel for athleisure customers for yoga, running, or training. The company focuses on innovative materials for its apparel and footwear and has 670 patents globally, which gives it an edge over rivals.
Back in 2019, Lululemon announced its strategic five-year growth plan -- called "The Power of Three" -- to drive revenue growth. From fiscal 2021 (ended Jan. 31) to fiscal 2023, the company saw its revenue nearly double from $4.4 billion to $8.1 billion, while net income surged from $588.9 million to $854.8 million. The sports apparel specialist also generated positive free cash flow for all three years to boot.
Last year, the company announced that it was on track to achieve its "Power of Three" growth targets ahead of schedule and unveiled a refreshed growth strategy to again double men's and digital revenues and quadruple international revenues by 2026. Aptly titled "The Power of Three x2," the strategy will again hinge on Lululemon's three core pillars of product innovation, enhancing customer experience, and market expansion.
The company aims to achieve $12.5 billion in revenue by 2026, an ambitious target driven by optimism in its key markets, as revenue for the first quarter of fiscal 2023 jumped 24% year over year and net income soared 52.8% year over year to $290.4 million. During the quarter, international revenue grew 60% year over year, and the company opened its 100th store in China, ending the quarter with 662 stores globally.
With this healthy momentum and bright prospects, investors should expect more good news from Lululemon in the years to come.
2. Fortinet
Fortinet (FTNT 0.23%) is a cybersecurity specialist offering data and device security to its 660,000 customers with a portfolio of more than 50 enterprise-grade products. In an era of rapid digitalization, cloud computing, and the release of generative artificial intelligence products, data security is more paramount than ever, making Fortinet's solutions an integral part of the digital landscape.
The company has reported steadily growing revenue throughout the pandemic, going from $2.6 billion in 2020 to $4.4 billion in 2022. Net income surged from $488.5 million to $857.3 million over the same period, and the business also generated positive free cash flow over the three years.
Fortinet's growth momentum has carried on into the first quarter of 2023. Total revenue climbed 32% year over year to $1.26 billion, while net income surged 79% year over year to $247.7 million. Billings have improved by 30% over the prior year to hit $1.5 billion, and the business generated a positive free cash flow of $647.2 million for the quarter.
The company has identified a large total addressable market of $180 billion that is growing at 16% per year. By 2026, this market should expand to $280 billion, offering ample opportunities for Fortinet to post further growth in its top and bottom lines.
3. Stryker
Stryker (SYK -0.46%) is a medical technology company specializing in orthopedic and spine solutions with devices for joint replacement, as well as a neurotechnology division that manufactures medical and surgical equipment.
The World Health Organization projects that by 2030, 1.4 billion people, or one in six, will be 60 years or older. And by 2050, this number is set to double, constituting a tailwind for Stryker as older people will increasingly rely on its products and devices.
From 2020 to 2022, Stryker grew its sales from $14.4 billion to $18.4 billion, while its net earnings jumped from $1.6 billion to $2.4 billion. Like Lululemon and Fortinet, Stryker also generated healthy free cash flow every year.
The company has continued to report encouraging numbers for the first quarter of this year, with sales rising 11.8% year over year to $4.8 billion and net income shooting up 83.3% year over year to $592 million. Stryker also paid out a quarterly dividend of $0.75 to boot, and its quarterly dividend has seen an uninterrupted rise since 2010 when it paid out just $0.15 per quarter. Growing dividends act as a stream of passive income that can serve you well during your golden years.
Stryker is also an active acquirer of different technologies over the years to bolster its product slate and enter adjacent categories. The company estimates that there is a total addressable market of $72 billion for both its orthopedic and neurotechnology divisions that should sustain growth for many years to come.
