What's your most important financial goal? For most people, it's building a retirement nest egg. The sooner you reach that goal, the better. Most people also know their best shot at funding a nice retirement -- and maybe even retiring earlier than initially planned -- is investing in the stock market.
With that as the backdrop, here's a rundown of three of the market's best bets for building above-average wealth in below-average time. While there may be faster-growing companies out there, what these names might lack in future growth, they more than make up for with less risk and greater reliability.
1. Amazon
It's such a frequently suggested stock pick that it's almost become cliché. Yet, there's a perfectly good reason e-commerce giant Amazon (AMZN +2.05%) is such a commonly held stock. That is, it still offers incredible growth potential.
OK, there's no denying that the company's fastest growth and the stock's fastest gains are in the rearview mirror. The online shopping market's pretty mature now; competitors have finally figured out how to fight back.
Amazon is still the powerhouse of North America's and the Western Hemisphere's e-commerce arena, though. It's not going to be easily dethroned. Meanwhile, the U.S. Census Bureau reports only about 15% of the United States' retail sales are done online. The rest are still made at an actual brick-and-mortar store. That's another 85% of a $7 trillion market still up for grabs by an online alternative.
NASDAQ: AMZN
Key Data Points
That being said, e-commerce is only half of Amazon's future. The company's cloud computing arm, Amazon Web Services (or AWS), is also the global cloud computing market's revenue leader, making up 16% of Amazon's top line but accounting for a whopping 74% of its operating income. With an outlook from Precedence Research calling for annualized growth of 17% through 2032 for the worldwide cloud computing industry, Amazon's profit growth will not only improve but accelerate from the growth pace seen in the past.
Amazon shares won't come cheap. The stock's trading at 38 times next year's expected per-share profits, making it one of the market's frothier-priced tickers of its ilk. It's one of those tickers, however, with a history of shrugging off steep valuations and rallying anyway.
This might help: Analysts' current consensus price target of $175.82 is 20% above the stock's recent price, and 48 of the 58 analysts keeping tabs on Amazon rate the stock a strong buy. None of them call it anything less than a hold.
2. Coca-Cola
If you're looking for Amazon-like growth potential, you certainly won't find it with The Coca-Cola Company (KO 0.91%). What you will find with Coca-Cola is incredible consistency and a dividend pedigree that's second to none.
The Coca-Cola Company is, of course, the owner of its namesake cola brand. Other beverages under the Coca-Cola umbrella, however, include Gold Peak tea, Minute Maid juice, Powerade sports drink, Dasani water, and Costa coffee, just to name a few. It's got a product that appeals to nearly everybody in any environment.
But, the company's branding and marketing acumen is only half the story for investors.
While its well-marketed beverages are capable of growing sales even in challenging economic and competitive environments, that's not quite the business The Coca-Cola Company is in.
Although it clearly has a vested interest in demand for its products, it's spent the last several years backing away from being in the bottling business so it could better focus on what it does best. That's establishing licensing and royalty partnerships with bottlers and distributors and then marketing the daylights out of its brands.
This means less revenue but ultimately means more profits since royalty and licensing revenue tends to sport very high profit margins. Greater profits mean Coca-Cola's dividend payments are well protected.
More important than its reliable dividends is Coca-Cola stock's dividend growth track record. The company has upped its annualized payout every year for the past 61 years, with no end to this track record in sight. These haven't been tepid payout increases, either. The quarterly per-share payment of $0.46 now is 64% better than its quarterly payout of $0.28 from just 10 years back, maintaining a cadence of dividend payment growth extending back for decades.
KO Dividend data by YCharts.
Don't dismiss the upside of this dividend's reliability and consistent growth. Reinvesting the cash payments made by the company into more shares of Coca-Cola is what's made this beverage giant a surprisingly big long-term winner in many investors' portfolios.
3. Nvidia
Last but not least, add technology outfit Nvidia (NVDA +2.59%) to your list of stocks that could help you retire early.
You're probably at least a little familiar with the company. Nvidia's roots are in the personal computer space; its graphic cards turned early PCs into high-performance video gaming machines. It's still the top name in the graphics processing space, too, selling more stand-alone graphics cards than rivals Intel and Advanced Micro Devices combined.
Personal computers aren't its biggest business any longer, however. Neither are professional applications like animation, video editing, or computer-aided designing. As it turns out, the same technological architecture used in graphic processors is perfectly suited for artificial intelligence applications and other heavy-duty number-crunching duties handled by data centers.
That's how Nvidia became not only the biggest hardware name in the AI business but how artificial intelligence became Nvidia's biggest business. Thanks to last quarter's enormous growth on this front, AI now accounts for roughly three-fourths of Nvidia's top line.
NASDAQ: NVDA
Key Data Points
This is still just the beginning, though. An outlook from Precedence Research suggests the artificial intelligence hardware market is set to grow at an annualized pace of 24.5% between now and 2030, from this year's $53.7 billion to $248 billion then.
Nvidia is already positioned to capture more than its fair share of this growth by virtue of its dominance of the market. It now offers custom-built artificial intelligence software that works seamlessly with its hardware, giving customers a turnkey solution to begin their enterprise-level AI journeys.
New investors won't have to wait to see this growth. Following what will likely be a year-over-year doubling of the company's revenue in calendar 2023, analysts are looking for more than 50% sales growth next year. That should inflate last year's earnings of $3.34 per share last year to an estimated $11.39 this year and an incredible $18.99 per share in the coming year. Then the AI party really starts thumping.
