Every investor dreams of finding a big, underestimated winner, and then reaping a huge reward for seeing something that most others haven’t seen. However, such deals are few and far between. Most stock picks end up being just average performers.
However, there is something to be learned by studying the few stocks that have turned fairly modest investments into seven-figure sums.
Here is a summary of three names that turned a $1,000 investment made at the right time into $1 million, if not more. See if you can identify what made these stocks so profitable, then apply these insights in your search for the next big winner in the market.
This is not surprising Amazon (Nasdaq: AMZN) He gets top billing on this list. A $1,000 investment in its initial public offering (IPO) in 1997 would be worth approximately $2.5 million today. This is a huge sum, although he earned it by right. In many ways it defined the company E-commerce The industry as it is known today, and with a local market share of up to 40%, it is still a name in the business worthy of supremacy. Things are going well outside too.
Just be sure to familiarize yourself with the unique circumstances that existed at the time when things started. In 1997, the Internet was still relatively new. Home computers were a bit of a luxury. You were almost certainly still using a dial-up connection, as broadband didn’t become popular until the early 2000s. Even then, most websites were a bit outdated.
However, Amazon founder and then-CEO Jeff Bezos still saw the potential for an online mall, and was nimble enough to accept continued losses in exchange for increased market share that eventually led to complete dominance of the North American e-commerce market. The company has also been consistently profitable since 2016, and increasingly so.
To be sure, most of its recent earnings growth stems from its entry into the lucrative cloud computing market. However, this is another upside. Amazon is willing to evolve over time, adding companies that make sense to get into. Moreover, it has been proven that it is capable of doing so.
Almost like Amazon apple (Nasdaq: Apple) It is another name that has made a few millionaires out of small and patient investors. A $1,000 investment in a consumer technology company’s IPO in 1980 would be worth more than $2.4 million today.
Most people probably weren’t so patient, of course. Apple was hanging on by a thread in 1997, when the late Steve Jobs took the helm again and began working some of his magic. However, the bulk of this stock’s astonishing gains have only come since 2007, when the company introduced the first iPhone, starting a race to empower the world with Internet-connected laptops. The popular smartphone still accounts for about half of Apple’s revenue.
It hasn’t been a great growth engine lately. In fact, iPhone revenues have been mostly stagnant since 2015, and have only grown in 2021 during and mostly because of the coronavirus (COVID-19) pandemic. (Consumers had the time and reason to buy them at the time, and the company deftly navigated the supply chain challenges.) Apple’s overall revenue and profits have been similarly stagnant in the meantime. There is nothing capable of replacing the historical growth of this smartphone – except perhaps artificial intelligence.
Although it may be late to the party, the recently launched Apple Intelligence puts the power of AI into people’s pockets in Apple’s usual seamless way. And with technology market research firm IDC forecasting that AI smartphone sales will swell from 234 million units this year to 912 million in 2028 as the world embraces this new kind of digital empowerment, the iPhone may quickly become a growth engine again. .
Last but not least, just to prove that stocks outside of the technology sector are capable of delivering big gains, you need to know this Supply of tractors (Nasdaq: TSCO) It also turned some small investors into nearly millionaires.
It’s a bit surprising, really. Not only is the physical retail landscape saturated, but all of these players are struggling to compete with the aforementioned Amazon while also competing with each other. It seems unlikely that a relatively small chain of convenience stores would be able to survive such a challenge.
However, this line of thinking ignores some important details about this farm and garden supply company.
First, because Tractor Supply was built from the ground up with people in mind, its customers truly enjoy the in-store shopping experience. (Most of its more than 2,200 stores are also located in rural areas where people are more likely to farm, and where more generic competitors are less likely to set up shop.)
Second, Tractor Supply offers a lot of specialty items that are often difficult to obtain.
Whatever the reason for its growth, the reinvestment of any dividends paid by the $1,000 investment in Tractor Supply made in its 1994 IPO would be worth just under $1 million today.
Obviously, this is nowhere near the kind of gains Apple and Amazon made in roughly the same time frame. It’s impressive though, especially given the non-technical nature of its work. It is certainly worth mentioning, if only to highlight the fact that a wide range of companies are capable of making incredible gains. The key is just being able to offer something that consumers want but can’t easily find, and offer it in a way that your competitors can’t.
These companies are great because they offer something that is not only unique, but also timelessly practical.
Let’s take the Apple iPhone as an example. There are other smartphones, but their iOS operating system is easy to use, and a pocket-sized computer that can do almost anything can be considered a personal assistant. Tractor Supply helps consumers live a certain lifestyle, and does so in an intimate way that no competitor can quite replicate. People have a limited amount of time to shop, let alone shop for the perfect purchase at a good price. No platform other than Amazon allows them to browse a wide range of options within seconds.
This is in contrast to previously lauded names like meal kit company Blue Apron or action camera range From GoPro. People certainly appreciate easy-to-make meals like those offered by Blue Apron, but they’re a commodity in a (very) crowded market. They are not unique. Meanwhile, although few would argue that GoPro makes the best action cameras in the world, the world doesn’t need that many of them. Most people are too busy to do activities worth filming, and people who are not too busy can shoot good enough video with their smartphones.
Bottom line? If any stock is going to be a potential millionaire maker, it has to offer something practical over the long term, but it also has to be something that is definitely better than any competitor’s alternative.
Before you buy Amazon stock, consider the following:
the Motley Fool stock advisor The analyst team has just defined what they think it is Top 10 stocks Let investors buy it now…and Amazon wasn’t one of them. The 10 stocks that were discounted could deliver huge returns in the coming years.
Think when Nvidia I prepared this list on April 15, 2005… If you invested $1,000 at the time of our recommendation, You will have $867,372!*
Stock advisor It provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. the Stock advisor The service has More than four times The return of the S&P 500 since 2002*.
*Stock Advisor returns as of October 21, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Bromley He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool recommends Tractor Supply. The Motley Fool has Disclosure policy.
3 Stocks That Turned $1,000 into $1 Million (or More) Originally published by The Motley Fool