Investors are always looking for potential buying opportunities that could be big winners down the line. A good place to find these types of situations is to identify past winners. This can help you narrow down your list of places to park your capital.
Looking at history, today there are some dominant companies that have built shareholder capital in a remarkable way. In fact, here are three stocks that turned an initial $1,000 investment into $1 million (or more).
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Amazon (NASDAQ: AMZN) is first on this list. Since his initial public offering (IPO) in May 1997, the company saw its shares rise 222,600% (as of December 5). That profit turned $1,000 into over $2.2 million today.
The company started by disrupting the retail industry, leading to its current leading position in the e-commerce niche. Nearly 38% of all online spending in the US happens on Amazon.com, demonstrating the company’s dominance.
However, Amazon is benefiting from other powerful secular trends. The cloud platform, Amazon Web Services, has a leading market share and achieved a turnover of $ 103 billion in the past year. The company also has a popular streaming service in Prime Video and a large presence in digital advertising.
Amazon is winning over investors by focusing more on the bottom line. During the three-month period ended September 30, the company generated $17.4 billion in operating revenues, up 55% year over year. The leadership team has relentlessly focused on cost savings and operational efficiency. Wall Street analysts see operating income rising 38.9% annually between 2023 and 2026.
Shares may be at an all-time high, but investors are still presented with a great buying opportunity. The current one future price-earnings ratio (P/E). of 43.1 is reasonable considering the company’s impressive earnings trajectory.
With a current market capitalization of just under $3.7 trillion, Apple (NASDAQ: AAPL) has long been the most valuable company in the world. This has come about thanks to a stock that has generated a total return of 245,800% since December 1980, turning $1,000 into just under $2.5 million today.
Apple has become a consumer electronics giant by providing its users with beautifully designed hardware products equipped with the company’s in-house software capabilities. Innovation has been the key to Apple’s success as it has developed extremely popular products over the years such as the iPod, iPhone, iPad, MacBook, Watch and AirPods.
Apple brought in $391 billion in revenue in fiscal 2024 (ending September 28), showing just how big the company has become. It’s very difficult to expand that figure, especially if the company’s flagship product, the iPhone, doesn’t introduce revolutionary updates like it used to.
But this is a financially healthy company. Apple generates large amounts of free cash flow and has a strong balance.
Apple doesn’t seem like a smart stock to buy. It trades at a steep price-to-earnings ratio of 32.9, which represents a 15% premium to the two-year average. That’s an expensive valuation for a low-growth company, no matter how exceptional.
To see Home Depot (NYSE:HD) on this list might surprise some people, as it’s not really a tech-focused or disruptive name. But the stock has performed phenomenally well, gaining $1,000 since its initial public offering in September 1981, to a whopping $36.2 million today. That’s a ridiculous profit.
Home Depot’s business model hasn’t really changed over the years. The company still sells various tools, equipment and devices through its stores. Today, it has an online presence to serve customers in the way that is most convenient for them.
In recent years, Home Depot has struggled to grow, largely due to macroeconomic headwinds. Households remain reluctant to spend on expensive items and tackle renovation projects. Home Depots sales in the same store fell 3.2% in fiscal 2023, with management expecting this metric to decline again in the current fiscal year.
However, with sales of $155 billion in the last twelve months, it is the clear leader in the home improvement industry. And as economic conditions improve, Home Depot should return to healthy growth. Conditions in the sector, such as the increasing age of homes and the shortage of housing stock, also support demand.
Investors can buy shares at a price-to-earnings ratio of 28.2. That is a high rating. So, like Apple, investors might be better off waiting for a pullback before buying Home Depot stock.
Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.
On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Nvidia: If you had invested $1,000 when we doubled in 2009, you would have $369,349!*
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Apple: If you had invested $1,000 when we doubled in 2008, you would have $45,990!*
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Netflix: If you had invested $1,000 when we doubled in 2004, you would have $504,097!*
We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns December 2, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Neil Patel and his clients have no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Amazon, Apple, and Home Depot. The Motley Fool has a disclosure policy.
3 Stocks That Turned $1,000 into $1 Million (or More) originally published by The Motley Fool
