You don’t need to be rich to make a lot of money on the stock market. While it certainly helps if you can invest larger sums of money, it’s possible to generate some life-changing returns with more modest sums. You just need to buy the right stocks. Three stocks that turned a $10,000 investment into $100,000 over the past five years are Super Micro Computer (NASDAQ: SMCI), Tesla (NASDAQ: TSLA), and Builders FirstSource (NYSE: BLDR).
Here’s a closer look at each one of these businesses, including a discussion about why their shares took off and whether they remain good investments for your portfolio today.
1. Super Micro Computer
A $10,000 investment in Supermicro just five years ago would now be worth more than $429,140. The stock surged as investors saw it as a promising artificial intelligence (AI) play. Supermicro provides companies with AI solutions, including servers, which can help train complex artificial intelligence models.
Business is booming for Supermicro, and the tech company recently raised its guidance. For its current fiscal year (which ends in June), management expects revenue to come in between $14.7 billion and $15.1 billion (the previous guidance called for revenue between $14.3 billion and $14.7 billion). At the midpoint, that would imply an annual growth rate of 110% (Supermicro generated $7.1 billion in sales in its previous fiscal year).
Despite Supermicro’s surging numbers, its share price isn’t obscene from a valuation perspective. Investors pay 24 times Supermicro’s expected future earnings for a piece of the business. With so much growth still ahead in AI, there could be more gains for investors who buy the stock today.
2. Tesla
Tesla’s stock has struggled this year. It’s trading down 28% since January. However, it has still made for a terrific investment over the past five years. Over that time, a $10,000 investment would have grown to $142,290.
The electric vehicle (EV) maker’s business continues to grow at a rapid rate. The company more than tripled its revenue from less than $32 billion in 2020 to nearly $97 billion by the end of 2023. Profits also grew, with Tesla reporting a profit margin of 15% in 2023.
Tesla does face some challenges ahead, including increased competition from Chinese EV makers and a drop in product demand partially related to macroeconomic conditions. However, Tesla’s leadership status in the EV market could still make for a good long-term play. Trading at 46 times its trailing earnings, Tesla is not a cheap stock. But if you’re bullish on the EV market, it could make for a much more attractive long-term investment at its current reduced price.
3. Builders FirstSource
You don’t necessarily need to invest in tech to earn a great return. Builders FirstSource is a solid example of that. Its five-year gains are the lowest among the three stocks, but an investor would still end up with more than $108,660 today if he or she invested $10,000 into the business five years ago.
Builders FirstSource provides building materials, supplies, and construction services to homebuilders and contractors, and it has benefited from a boom in the housing market in recent years. Like with Tesla, business has slowed somewhat recently for Builders FirstSource as it deals with some challenging macroeconomic conditions.
In the first three months of the year, net sales totaled just $3.9 billion (essentially flat year over year). And the company’s net income of $258.8 million fell by 23% compared to the prior-year quarter. Builders FirstSource management isn’t expecting a huge year in 2024 — it projects sales to total between $17.5 billion and $18.5 billion, suggesting just 5% growth at the midpoint.
Trading at a relatively modest 15 times earnings, this is a stock that could be a sleeper pick right now. The housing market is likely to rebound in the long run, and with a strong business, Builders FirstSource could make for an underrated buy.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
3 Stocks That Turned $10,000 Into More Than $100,000 in Just 5 Years was originally published by The Motley Fool
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