Do you have an extra $3,000 you know you won't be needing anytime soon? Would you like a shot at growing that money into a much, much bigger sum?
If your answer to both questions is "yes," you might want to consider adding these three stocks to your portfolio. The only thing you need to do besides buying them is remain patient and leave them alone for as long as you can. In no particular ranked order...
1. ASML
ASML (ASML 4.79%) is anything but a household name. The odds are good most people have never even heard of it. However, the odds are also quite good that you or someone in your household regularly uses a piece of technology that its equipment helped manufacture.
In simplest terms, ASML makes tools used by chipmakers like Intel and Samsung. Its core proprietary technology is lithography systems that use light to "etch" a circuit or chip onto a silicon wafer. This isn't the only way to fabricate a microchip, but it's arguably the best way. This process is not only cost-effective, but it also creates a superior semiconductor.
Here's the juicy part of this bullish story: Thanks to a combination of patent protection and the sheer cost and complexity of its tech, no other company makes EUV (extreme ultraviolet) lithography machines. It's not a monopoly in the legal sense, but effectively, it may as well be one.
NASDAQ: ASML
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That doesn't mean its business is hassle-free. For instance, ASML claims a former employee took at least some of the company's know-how to his new employer, Huawei. Although it's reportedly not enough intellectual property for Huawei to build a competing product from scratch, the matter does underscore how sensitive and vulnerable the underlying technology is. In the meantime, Netherlands-based ASML is trapped in the midst of a technology trade war between China and the western half of the world.
Take a step back and look at the bigger picture, however. Consumers and corporations alike are always willing to pay for an improved or superior product. One way or another, sooner or later, technology companies will find a way to deliver them. With no other means of making a better microchip on the horizon, ASML stands as the sole go-to option for a long, long time.
2. Adyen
If you thought PayPal was the only major name in the digital payments platform space, think again. That's a United States-centric assumption based on the company's domestic dominance. Outside of the U.S., other companies are making waves.
Take Adyen (ADYE.Y 0.88%) as an example. Another Netherlands-based company, this payment-tech outfit is doing great in closer-to-home markets. During the first half of this year, Adyen generated 417 million euros worth of revenue in Europe, the Middle East, and Africa. That's more than half of its total business, which was up 21% for the six-month stretch in question. The growing company is profitable too, booking nearly 25 million euros worth of free cash flow in the first half of 2023.
Investors keeping close tabs on this stock likely already know the price hit a three-year low in October. The stock was on a significant downtrend after the release of disappointing results a couple of months ago. However, the third-quarter update posted just a week ago lit a fire underneath Adyen's share prices. The company's still growing its transaction volume at a clip of 21% year over year, pushing revenue higher at a pace of 22% (or 26% higher on a constant-currency basis). Not bad.
OTC: ADYE.Y
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Perhaps more important to investors, the organization is easing a key investor concern that's been holding the stock back. After spending aggressively to build a bigger team without a great deal to show for it, Adyen explains in its Q3 update, "We are in the final months of our accelerated investment phase. ... As of 2024, our scaled-back hiring plans will center around building out our global offices, further growing our commercial teams in key markets and tech hubs."
That growth doesn't exclude expansion into and within the United States, by the way.
3. Amazon
Finally, add Amazon (AMZN +0.48%) to your short list of growth stocks that could make you rich, given enough time.
Amazon is of course North America's dominant e-commerce outfit; it's a pretty respectable player in other parts of the world as well. After a challenging 2022, the company's e-commerce operations are back in the black in 2023. There's every reason to believe its online shopping operation will continue growing its bottom line too.
That's not the chief reason you'd want to own a stake in this company for the long run though. The top bullish argument is the potential of its cloud computing arm Amazon Web Services, or AWS.
In terms of revenue, e-commerce is still Amazon's biggest business and accounts for over 80% of the company's top line. However, in terms of operating income, AWS is responsible for an incredible 60% of Amazon's profits. Its cloud computing operation is also growing faster than the company's other operating segments, with last quarter's sales up 12% year over year, driving operating income higher to the tune of 29%.
This business has still only scratched the surface of potential though. Market research outfit Mordor Intelligence expects the cloud computing market to grow at an average annual pace of more than 16% through 2028, jibing with an outlook from Precedence Research that pegs the cloud market's annualized growth rate to more than 17% through 2032. Either would translate into tremendous growth for Amazon.
NASDAQ: AMZN
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The kicker: Although Amazon's e-commerce platform is enormous, that doesn't mean it's wildly profitable. In fact, profit margins on its online sales are actually a bit on the thin side; only about 5% of last quarter's North American e-commerce revenue was turned into operating income. This number could be on the verge of widening a great deal, however, given the shift in its business model. What shift is that? Amazon is getting serious about its advertising business that allows third-party sellers to promote their goods at Amazon.com. The company collected $12 billion worth of this ad revenue last quarter alone, growing it by 26% from year-earlier levels.
As management learns more about this business and refines the model, don't be surprised to this revenue soar. Market research outfit Insider Intelligence expects Amazon's advertising business to grow from just under $45 billion this year to more than $67 billion in 2025. Yet, that's still just the beginning.
