Investors who want to turn $100,000 into $1 million will need patience. Even if we assume that it takes him 30 years for his portfolio to grow 10 times his size, that would require an annual growth rate of 8.33%. Still, many growth stocks have outperformed that result over the past 30 years.
Growing your nest egg 10x or more over the long term doesn’t necessarily require risky investments, as there are predictable ways to invest for growth. Here we will introduce four of them.
1. Choose a good real estate investment trust
It hasn’t been a great year for real estate investment trusts (REITs), but they have long been one of the best investments in the stock market. The problem is that some of his REITs are inherently riskier than others.
One of the most reliable REITs is real estate income (oh -0.15%), has returned 13.8% per year with dividends reinvested over the past 30 years. If he had invested $100,000 in October 1993 and reinvested the dividends, he would now have holdings worth nearly $4.3 million.
Real estate income provides a degree of security due to its size and variety. The company owns and leases more than 13,100 commercial properties across 85 different industries. The company focuses on high-quality companies as tenants, so they are considered a better risk when borrowing money to add to a portfolio, and are rated A- (intermediate or above) by Standard & Poor’s. A rating is given. This means you can borrow at a better rate than many of your competitors, even during times when interest rates are rising.
Dividends are paid monthly to maintain investor loyalty, and dividends have increased 122 times, including 104 consecutive quarters.
Through the first six months of 2023, real estate revenues reported a 21.3% year-over-year increase in revenue to $1.9 billion and a 13.3% increase in funds from operations (FFO) to $1.37 million. Adjusted FFO increased approximately 13.6% to $1.32 million.
2. Look for growing companies with big moats
If you purchase something worth $100,000 alphabet (GOOG 0.62%) If you owned the stock at its IPO in 2004, you now own shares worth more than $5.5 million. That’s because the company has had an annualized return of over 23% since then. The company still has an annual profit margin of 20% over the past five years due to its dominance in digital advertising. People’s habits are so ingrained that “Google” has become a generic term for looking up something online.
While some small businesses are struggling this year, S&P500 index is up 13%, and Alphabet’s stock is up more than 58%, nearly fully recovering from its decline during the 2022 tech sector crash. The company continues to invest in growth, and so far it’s paying off.
In the second quarter, revenue from the company’s search, YouTube and cloud divisions led to another strong quarter. Alphabet reported revenue of $74.6 billion, up 6% year over year, net income of $18.4 billion, up 14.7%, and earnings per share (EPS) of $1.44, up 19%. .
3. Find growing companies that are accelerating their growth cycles
Investing in growing companies is a bit riskier, but finding a promising business can yield greater returns in the long run. A good example is vertex pharmaceuticals (VRTX -1.41%).
The biotech already has a strong lead in cystic fibrosis treatments, but what makes it a growth stock is the company’s other lucrative pipelines, including CRISPR gene-editing therapy and non-opioid painkillers. It lies in the ability to reach out to the field.
Vertex stock is up more than 29% so far this year, so this isn’t a new phenomenon. If he had invested $100,000 in this stock 25 years ago and held onto it, the stock would now be worth more than $3.2 million with compound interest.
The company has a high share of the cystic fibrosis market thanks to its treatments such as Keilideco, Orkambi, Syndeco, and Trikafta. These treatments are the only drugs on the market for this type of disease. Investors are also excited about the potential of exa-cel, a gene editing therapy with which Vertex has collaborated. Crispr TherapeuticsAnd it has the potential to provide a functional treatment for two inherited blood disorders: transfusion-dependent beta-thalassemia and sickle cell disease. The Food and Drug Administration is expected to decide whether to approve Exacel for sickle cell disease by December 8, and Exacel for beta-thalassemia by March 30, 2024.
Vertex also achieved positive results in a Phase 2 trial of its non-opioid painkiller candidate VX-548 as a treatment for acute pain following abdominoplasty (tummy tuck) and bunion removal. The drug is also in phase 2 trials to treat neuropathic pain. The ongoing opioid crisis highlights the need for non-opioid options to treat acute and chronic pain.
In the second quarter, Vertex reported revenue of $2.49 billion, up 14% year-over-year, with management raising its full-year outlook to a range of $9.7 billion to $9.8 billion, up from 2022 revenue of $8.75 billion. I pulled it up. The company also reported second-quarter net income of $915.7 million, an increase of 13% year over year, and EPS of $3.52, an increase of 12.4%.
4. Ride the can’t-miss trends
Stock prices of major pharmaceutical companies from the beginning of the year to the present Eli Lilly (LLY -4.30%) and novo nordisk (NVO -3.92%) The company surged about 68% and 49%, respectively, thanks to sales of diabetes and weight-loss drugs, particularly drugs in the GLP-1 class. The combination of increasing global obesity and aging populations in many countries will likely increase the demand for effective diabetes and weight loss drugs.
Novo Nordisk has raised its annual revenue forecast three times this year as sales of GLP-1 drugs used for weight loss (Wegovy, used for weight loss, and Ozempic, used to treat diabetes) have increased significantly. The company said it now expects sales to increase 32% to 33% in 2023 and profit before interest and taxes to increase 40% to 46%.
Lily’s GLP-1 drug Munjaro is driving a surge in sales and has raised its full-year outlook twice this year. The company announced second-quarter sales of $8.3 billion, an increase of 28% year over year, and EPS of $1.95, an increase of 86%. The company now says it expects full-year sales to be between $33.4 billion and $33.9 billion, pushing annual EPS from $9.70 to $9.90.
That’s just the beginning. Both companies have large pipelines, and increased profits will allow them to fund potential moonshots or purchase enough profitable treatments to secure further growth. It will be.
