Investing in growth stocks can lead to significant long-run returns. It isn't always evident, however, how a company's future will pan out. Some businesses that look like surefire winners will end up failing. Others will benefit from unexpected catalysts, such as artificial intelligence (AI), that you couldn't have predicted when you first invested in them.
That's why investing in multiple growth stocks can be a great idea because all you need is one big winner, one huge return to make it worth your while. Three stocks that are excellent examples of how just a single investment can yield life-changing returns are Nvidia (NVDA +1.90%), Netflix (NFLX 2.32%), and Booking Holdings (BKNG 4.87%). By investing just $5,000 into any of these stocks 20 years ago and hanging on until today, you would be up more than $1 million.
Image source: Getty Images.
Nvidia
One of the biggest growth stories in recent years has been that of chipmaker Nvidia. It has made many millionaires as its business has taken off due to AI. Its chips are no longer used for just gaming, but are now critical in the development of AI technologies, including chatbots.
While Nvidia has been a solid growth stock for years, things have gone to a whole other level since ChatGPT came on the scene in late 2022. That led to a flurry of tech spending and AI-related investments. In the trailing 12 months, Nvidia has generated a whopping $77 billion in profit. Just a few years ago it wasn't even bringing in that much in revenue.
NASDAQ: NVDA
Key Data Points
As a leading AI chipmaker, Nvidia still possesses a lot of long-term potential, which is why as long as you're looking for a stock to buy and hold, you're likely better off buying now than hoping for a big dip in price. If you'd invested $5,000 into this stock 20 years ago, you'd be sitting on an investment worth more than $3.1 million today.
Netflix
The trajectory for Netflix has been more consistent over the years, with the company revolutionizing its business model over time under great management. It went from mailing out DVDs to customers to offering streaming to now getting into live TV, sports, and even gaming. It has even been making its own content, as a way to expand its library and be less dependent on studios for licensing deals.
The company is now a $40 billion business, and a highly profitable one, with net margins of more than 23%. It has been the model that other companies look to as proof that the streaming business can indeed be lucrative.
It has pushed through multiple price hikes over the years and cracked down on password sharing, and while those moves may have appeared controversial when they took place, they have clearly paid off for the business, simply because Netflix provides consumers with such an attractive value proposition.
NASDAQ: NFLX
Key Data Points
A $5,000 investment in the company 20 years ago would now be worth about $3 million, not far behind Nvidia. Although the streaming stock is trading at all-time highs, Netflix can still make for a good long-term investment as it continually finds ways to expand.
Booking Holdings
Another millionaire-making investment during the past 20 years has been Booking Holdings. Just a $5,000 investment in the company back then would have grown to a little less than $1.1 million today.
The company is a leader in online travel sites and services. When you're looking to book online travel, you may find yourself using one of its highly popular websites -- kayak.com, priceline.com, or booking.com. The internet has revolutionized travel and what decades ago involved calling or seeing a travel agent can now easily be done online, potentially soon via AI agents. And to compare prices, websites like the ones Booking owns can ensure you're getting the best deal out there.
NASDAQ: BKNG
Key Data Points
Last year, the company generated $23.7 billion in sales (up more than 11% from the previous year), earning a profit of $5.9 billion. And while the business has grown significantly over the years, it doesn't look all that expensive given its growth potential, trading at 33 times its trailing earnings. The business has great margins and can be an excellent way to invest in the travel industry.
