To become a millionaire, most investors probably need to generate robust investment returns for years and even decades. To do that, you'll want to find high-quality businesses that are poised to grow their profit steadily over the long term.
Let's look at three such companies.
1. Berkshire Hathaway
CEO Warren Buffett has managed Berkshire Hathaway (BRK.A 0.39%) (BRK.B 0.27%) for nearly six decades, delivering fortune-building gains for its shareholders. Yet Buffett's crowning achievement may be how he's built the company to thrive even after the legendary investor eventually steps down.
NYSE: BRK.B
Key Data Points
Berkshire is a financial powerhouse, with diverse and battle-tested revenue streams. The investment conglomerate houses over 60 operating subsidiaries across a wide variety of industries, including insurance, railroads, real estate, energy, and retail. These competitively advantaged businesses generate annual free cash flow of approximately $27 billion.
Berkshire's massive cash reserves also help to lessen the risks for its shareowners. With $157 billion in cash and equivalents on its fortress-like balance sheet as of Sept. 30, Buffett and his lieutenants have plenty of dry powder to use on new investment opportunities. Berkshire's equity portfolio is chock-full of quality stocks including Apple, Occidental Petroleum, and American Express -- and Buffett is always on the hunt for new additions.
Importantly, Buffett has made certain Berkshire will remain in able hands after he retires. His hand-picked successor, Greg Abel, will take on the role of chief executive officer. And Buffett's trusted deputies, Ted Weschler and Todd Combs, are slated to manage the company's investments. Buffett, in turn, is confident that "there will be no finish line" for Berkshire Hathaway.
2. Palo Alto Networks
Betting on powerful long-term trends is another proven path to wealth. The rising need for effective cyber defenses is one such trend -- and Palo Alto Networks (PANW +1.21%) is a formidable force in this rapidly expanding industry.
NASDAQ: PANW
Key Data Points
As more of the world shifts online, massive amounts of data are being stored in the cloud. Demand for tools that safeguard this sensitive information could top $500 billion by 2030, according to Grand View Research. Looking further ahead, consulting firm McKinsey estimates that the total addressable market for cybersecurity services could eventually approach a staggering $2 trillion.
Palo Alto Networks' broad array of products and entrenched customer relationships give it an edge over its rivals. From next-generation firewalls to endpoint protection, the cyber guardian's platform provides a simplified yet comprehensive solution to its customers' growing lists of challenges. Moreover, with over 80,000 corporate clients, Palo Alto Networks can collect more data to strengthen its artificial intelligence (AI)-powered threat detection and prevention offerings.
With demand for its services booming, analysts see Palo Alto Networks growing its profits by more than 22% annually over the next half-decade. Buy shares today, and you can position yourself to profit alongside this cybersecurity leader.
3. Palantir Technologies
Like Palo Alto Networks, Palantir Technologies (PLTR +3.03%) stands to benefit from advances in AI. The data analytics specialist helps its customers reap valuable insights from their mountains of data.
NASDAQ: PLTR
Key Data Points
Palantir earned its stripes as a counterterrorism partner with the U.S. Defense Department and its allies. The company's software continues to play an important role in helping the U.S. government and its allies protect their citizens from a growing list of threats. Palantir was recently awarded contracts from the U.S. Army and the U.S. Special Operations Command that together could be worth more than $700 million.
Businesses are also keen to harness the power of Palantir's technology. Its U.S. commercial revenue surged by 70% year over year to $131 million in the fourth quarter. The gains were driven by a 55% jump in customers, to 221.
In a letter to shareholders, CEO Alex Karp said that "unrelenting" demand for AI models is creating enormous interest in Palantir's new Artificial Intelligence Platform. The decision-centric system combines the company's powerful machine-learning technology with real-time data and secure access to advanced AI models.
Better still, Palantir's profitability is rapidly improving as it scales its revenue base. Its adjusted operating margin has expanded for five straight quarters. Management, in turn, expects the AI leader to generate an adjusted operating profit of as much as $850 million in 2024, up from $633 million in 2023.
