If you’re looking for a get-rich-quick scheme, this isn’t going to be your cup of tea. Making a lot of money in a really short amount of time is possible, but involves taking on such a high level of risk that you can just as easily lose a lot of money too.
However, if you want to find ways to generate significant wealth over the long term, you’re in luck. All you need is enough money to invest, the right stocks, and time to allow the stocks to appreciate in value.
But how much money is enough? Which stocks are good picks? And how much time will you have to wait? I think that investing $5,000 in these three stocks could make you rich. Just how rich depends on how long you’re willing to let them run.
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1. Fastly: Meeting the need for speed
Organizations are migrating their apps and data to the cloud at a frantic pace. But doing so can come at a cost: Accessing apps and data on the cloud can be slower than desired. Edge computing addresses this problem by shifting processing closer to the edge of the cloud where information is generated and used. Fastly (NYSE:FSLY) provides a leading-edge computing platform that’s secure and programmable.
The company’s growth has lived up to its name. Fastly reported first-quarter revenue of $62.9 million, a 38% year-over-year jump. It ended Q1 with 297 enterprise customers (defined as those that spend $100,000 or more over a 12-month period), up from 243 in the prior-year period. These customers are spending increasingly more with Fastly: It boasts an impressive dollar-based net expansion rate of 133%.
If the company keeps up its current rate of growth (and I believe it can), by the end of this decade Fastly could be generating annual sales of well over $6 billion. And it would still only claim less than 17% of the close to $36 billion addressable market projected for 2022. I think that an initial investment of $5,000 in Fastly now could turn into $30,000 and perhaps even more within the next 10 years.
What’s the catch? Fastly isn’t cheap. Its shares trade at nearly 26 times trailing-12-month sales. The company also isn’t profitable yet. But with its tremendous growth opportunity, I think Fastly is worth the premium price tag.
2. Livongo Health: A game-changer for managing chronic disease
An estimated 147 million people in the U.S. have at least one chronic condition, with roughly half of that total having either diabetes or hypertension. These chronic conditions affect individuals’ quality of life — and they drive higher healthcare costs for payers. Livongo Health‘s (NASDAQ:LVGO) technology uses personalized health signals that help people better manage their chronic conditions and reduce costs.
Employers and health plans have especially embraced Livongo’s platform. Over 30% of the Fortune 500 are Livongo Health customers. The company reported 1,252 clients at the end of the first quarter, up 44% from the previous quarter. Revenue continues to soar, more than doubling year over year in Q1 to $68.8 million. And Livongo recorded profits for its first time ever in Q1.
Livongo estimates that it has an addressable market of nearly $47 billion in the U.S. targeting diabetes and hypertension. Its total opportunity is even greater with the company also focusing on behavioral health, prediabetes, and weight management. With more payers recognizing the value of Livongo’s model, it wouldn’t be surprising for the healthcare stock to double at least twice over the next decade.
As you might expect, Livongo Health’s valuation isn’t for the faint of heart. Its shares trade at a staggering 31 times sales. However, the company’s revenue growth is so strong that this valuation shouldn’t scare off investors looking for outsized returns.
3. The Trade Desk: Profiting from two unstoppable advertising trends
You’re probably aware that digital ads are more prevalent than ever before. But you might not be familiar with another major transition in advertising — the shift to programmatic buying and selling from back-and-forth personal negotiations. These advertising trends are unstoppable. And The Trade Desk (NASDAQ:TTD) is poised to profit from both of them with its industry-leading buy-side programmatic advertising platform.
The company delivered impressive 33% year-over-year revenue growth in Q1 even with some advertisers beginning to reign in spending at the end of the quarter because of the COVID-19 pandemic. This growth was fueled in large part by a big jump in connected TV (CTV) advertising spending.
CTV is a key reason why programmatic advertising is growing five times faster than the overall ad market. That overall market should reach $1 trillion within the next five years. All The Trade Desk has to do is ride the wave to see its stock triple or more by the end of this decade.
I know this sounds like a broken record, but The Trade Desk is a bit pricey with a price-to-sales multiple of 25. But, as was the case for both Fastly and Livongo Health, my view is that the growth prospects for The Trade Desk justify its lofty valuation. Owning shares of fast-growing businesses like these with huge market opportunities is a smart way to get rich over the long run.
Keith Speights owns shares of Fastly, Livongo Health Inc, and The Trade Desk. The Motley Fool owns shares of and recommends Fastly, Livongo Health Inc, and The Trade Desk. The Motley Fool has a disclosure policy.