Returns as of 12/27/2021
Returns as of 12/27/2021
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Got patience? More to the point, are you willing and able to leave an investment alone for years on end and let time (and compounding) do its thing? If so, good. You’ll probably end up richer than your more active investing peers. That’s because the urge to extract a little more profit often means trading away gains (ironically enough.)
With that as the backdrop, here’s a look at three stocks that could — and arguably should — easily double their current values by 2030. It should come as no surprise that each of them is tech-driven, which lends itself to rapid adaptation to ever-evolving marketplaces.
Shares of iconic EV maker Tesla (NASDAQ:TSLA) are already overextended by almost any measure. Up 44% for the past year and higher to the tune of 1,100% for the past two years, the current price near $938 is markedly above analysts’ consensus target of $860 per share. That price also values the stock at a whopping 114 times next year’s projected per-share earnings of $8.22. Never even mind the fact that this red-hot stock has something of a penchant for big pullbacks.
Largely lost in any discussion of Tesla, however, is that what the company’s been doing for the past nine years is setting the stage for what’s to take shape over the coming nine years. That’s complete and overwhelming support for the premise of electric vehicles.
Take, for instance, Mordor Intelligence’s long-term outlook for worldwide spending on EV charging stations. The company estimates that last year’s $5 billion worth of investment in EV chargers will swell to nearly $39 billion in 2026. That’s an annualized growth rate of 44%, facilitating new demand for otherwise difficult-to-utilize battery-powered cars. In this vein, the U.S. Energy Information Administration estimates that the global count of actively used electric light-duty vehicles will swell from around 1 million now to 672 million by 2050.
Tesla won’t win all of the new EV business, to be clear. But, its name is nearly synonymous with electric vehicles, and as the market leader, it’s positioned to remain the top dog. There’s enough growth potential in the cards that the stock will likely easily grow into its currently rich valuation.
You may know Nvidia (NASDAQ:NVDA) as a video gaming hardware company, and it still does that very well to be sure. Recent research from John Peddie indicates that as of the end of the third quarter, Nvidia accounts for 80% of the video gaming market’s purchase of discrete (removable/upgradable) graphics processors, extending its long-standing dominance within this particular market.
What most investors may not realize is how well the company is penetrating higher-growth arenas. Namely, data centers, and the artificial intelligence (AI) hardware market in particular. Of last quarter’s $7.1 billion worth of revenue, $2.9 billion of it came from sales made to data center operators, rivaling gaming sales of $3.2 billion. In some recent quarters, data center revenue has even exceeded video gaming-oriented sales, and certainly has outpaced gaming revenue over the past couple of years.
Image source: Getty Images.
Look for more of the same, too. Technology market research company Technavio estimates that worldwide data center spending will swell by 21% per year through 2025, growing by more than $500 billion during that period.
That’s good news for Nvidia, made even better by the fact that investments in AI capabilities will lead this charge. Another technology market research organization called IDC estimates that spending on AI will expand at an annual pace of 24% through 2025 when it reaches $200 billion. It all plays right into Nvidia’s hand. See, Nvidia’s DGX systems were built from the ground up to serve as the basis for a variety of AI applications. The fact that Nvidia’s tech powers nearly 70% of the world’s supercomputers speaks volumes about just how important the company is to the AI evolution.
Finally, add Amazon (NASDAQ:AMZN) to your list of stocks that are apt to double in value between now and 2030.
Yes, it’s an obvious choice; it’s almost a cliche choice. Amazon is not only one of the world’s most recognized brands, it’s also one of the world’s biggest companies, made so by its dominance within the e-commerce market. eMarketer estimates the company controls 40% of the U.S. online spending market, while its next-nearest competitor — Walmart — controls considerably less at 7%. Amazon is crushing it for a reason, and that’s why this stock has hammered out an incredible 1,700% gain over the past 10 years.
If you think Amazon can’t grow just as much again for the same time frame, though, think again. Data collected by the U.S. Federal Reserve indicates that only 12% of retail commerce within the country is done online, leaving the company plenty of opportunity to build its online shopping customer base. Amazon isn’t quite the same force in overseas markets as it is in North America, but it’s getting there.
In the meantime, Amazon’s cloud computing business continues to explode. Last quarter, Amazon Web Services (or AWS) saw year-over-year top-line growth of 39%, accelerating revenue growth through the first three quarters of the year. AWS’ operating income is growing just as firmly, suggesting the company’s still got lots of pricing power on this front.
Given how consumers’ need for lots of items delivered quickly and businesses’ need for digital infrastructure will never fade, Amazon is right where investors should want it to be for the long haul.
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Stock Advisor launched in February of 2002. Returns as of 12/27/2021.
Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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