Only 10% of American retirees have more than $1 million in retirement savings at the time they retire, according to the Federal Reserve's 2019 Survey of Consumer Finances (its most recent survey). That low percentage is troubling since a recent survey by Schwab revealed that most Americans believe they need an average of $1.8 million to retire comfortably.
But if you've saved up at least $100,000, have a decade to spare, and are willing to ride out a few market downturns, you can still retire with more than $1 million by buying a few evergreen growth stocks.
Assuming their valuations and margins hold steady, you could turn $100,000 into $1 million by investing in companies that can grow their revenues at a compound annual rate of at least 26% for the next 10 years. Maintaining that kind of growth isn't easy, but I believe these three disruptive companies have a shot at achieving it: Cloudflare (NET 1.44%), CrowdStrike (CRWD 2.03%), and Snowflake (SNOW 3.69%).
Image source: Getty Images.
1. Cloudflare
Cloudflare is a leading provider of content delivery networks (CDN), which accelerate the delivery of digital media and other data from websites to their visitors. It accomplishes that by storing cached copies of its clients' files on numerous "edge servers," which are located physically closer to their end users than the origin servers.
Cloudflare currently handles about 46 million HTTP requests every second, and delivers data from servers in 300 cities in more than 100 countries across the world. It also secures those websites with bot-blocking tools and other cybersecurity services. It claims that its platform will eventually become a "water filtration system" for the entire internet.
Cloudflare went public in 2019, and its annual revenue rose at a compound annual growth rate (CAGR) of 50% between 2019 and 2022. Its growth has been throttled somewhat by macroeconomic headwinds over the past year, but analysts still expect a revenue CAGR of 31% from 2022 to 2025. And according to Grand View Research, the global CDN market could see a CAGR of 23% from 2022 to 2030.
Based on those growth rates, it's rational to expect Cloudflare to maintain a CAGR of at least 26% over the next decade -- which would cause its annual revenue to grow more than tenfold from $975 million in 2022 to about $10 billion in 2032.
2. CrowdStrike
Most cybersecurity companies install on-site appliances in their clients' offices to provide their services. However, those systems are expensive, require frequent maintenance, and can be difficult to scale as an organization expands. CrowdStrike addresses those problems by only providing its end-to-end security tools as cloud-based services.
CrowdStrike's elimination of cumbersome on-site appliances enabled it to grow like a weed since its inception 12 years ago. It served 23,019 subscription customers as of Jan. 31 -- the end of its fiscal 2023 -- and 63% of its subscribers were using at least five of its cloud-based modules at the end of the second quarter of its fiscal 2024 (July 31).
CrowdStrike went public in 2019. Between its fiscal 2020 and fiscal 2023, its annual revenue grew at a CAGR of 67%. Like many of its industry peers, CrowdStrike has seen its growth cool off over the past year as companies reined in their spending. Nevertheless, analysts still expect its revenue to grow at a CAGR of 30% from fiscal 2023 to fiscal 2026 as it continues to disrupt its legacy cybersecurity rivals and gain new customers.
According to Market.us, the global cloud security market could expand at a CAGR of 22.5% between 2023 and 2032. If CrowdStrike stays ahead of the market with a 26% CAGR over the next decade, its annual revenue could rise from $2.2 billion in fiscal 2023 to $22 billion in fiscal 2033.
3. Snowflake
Snowflake's cloud-based data warehousing platform aggregates large amounts of data from different computing platforms across an organization, cleans it up, and makes it easier for third-party analytics and data visualization applications to process. That approach breaks down silos across large organizations, ensures that everyone is on the same page, and makes it easier to make data-driven decisions.
Snowflake served 7,828 customers as of Jan. 31 -- which was the end of its fiscal 2023, too. By the end of the second quarter of its fiscal 2024, 402 of its customers were generating more than $1 million in trailing 12-month product revenue for Snowflake.
Snowflake went public in 2020, and its annual product revenue more than doubled in both its fiscal 2021 and fiscal 2022 before cooling off to 70% growth in fiscal 2023.
Management expects its product revenue to only rise 34% in fiscal 2024. That growth deceleration spooked the bulls, but Snowflake still expects its product revenue to rise from $1.9 billion in fiscal 2023 to at least $10 billion in fiscal 2029.
That rosy outlook implies it will grow its annual product revenue at a CAGR of more than 32% from fiscal 2023 to fiscal 2029. If it can maintain that growth rate for another three years, it could generate $23 billion in product revenue by fiscal 2032 -- which would represent a 12-fold gain in its annual product sales in less than a decade.
