Investing in the right growth stocks can be a strong strategy for building wealth as you approach retirement. Companies experiencing above-average business growth often find themselves in a favorable competitive position, which can lead to years of compounding returns for shareholders.

If you have $5,000, or even less, available for a long-term investment, several attractive opportunities await. Here’s an overview of why three financial contributors believe that Amazon (NASDAQ: AMZN), MercadoLibre (NASDAQ: MELI), and Shopify (NASDAQ: SHOP) are well-positioned to deliver solid returns over the coming years.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

Amazon: A Leader in E-commerce and Innovation

John Ballard (Amazon): Amazon has provided remarkable returns for its investors. Recent market pullbacks present a chance to acquire shares at a more appealing valuation. The company has multiple avenues for driving growth and enhancing shareholder returns.

A dominant player in e-commerce, Amazon captured a 37% share of the U.S. market in 2023, according to Statista. Its competitive advantage stems from a loyal customer base, with over 200 million Prime members generating repeat purchases. This ensures high visibility for future sales, typically translating into a favorable valuation for investors.

Moreover, Amazon’s experimental culture encourages innovation, enabling it to stay competitive. While many established companies become defensive, Amazon continues to take calculated risks to drive growth and fend off disruptive competitors.

The company’s investments in artificial intelligence (AI) are particularly promising. Amazon Web Services (AWS), which generated $112 billion in revenue last year, leads the cloud services market. Businesses are increasingly spending on AWS to leverage AI technology, further benefiting Amazon.

AI is also streamlining Amazon’s retail operations, enhancing capabilities like voice-activated product orders via Alexa. With over 600 million Alexa devices in circulation, this technology strengthens Amazon’s competitive edge.

Despite significant increases in operating cash flow, the company’s stock remains undervalued at 20 times cash flow, compared to a historical average of 27 times. This presents an enticing opportunity for investors.

Image source: Getty Images.

MercadoLibre: Thriving in a Growing Market

Jennifer Saibil (MercadoLibre): MercadoLibre has significantly outperformed the market this year, up 48% as the S&P 500 remains flat. This kind of performance is common for the company as it consistently delivers excellent results, raising investor expectations.

As its regions gradually embrace technology, MercadoLibre sees immense market potential. The company’s core business, e-commerce, is accompanied by a robust fintech segment offering credit cards and digital payments. Currently, the e-commerce market in its area is about ten years behind the U.S., with 85% of retail sales still occurring offline. MercadoLibre now controls approximately 5% of all retail in the region, which has a population exceeding 500 million and a GDP beyond $5 trillion.

Despite strong competition, MercadoLibre’s gross merchandise volume (GMV) continues to outpace rivals in Mexico and Brazil, increasing 40% year over year (currency neutral). The company is also attracting more users with free shipping and various flexible shipping options, even as it reduces costs to support these initiatives.

In fintech, MercadoLibre recorded a 31% increase in monthly active users year over year. Management is continually launching new products that enhance user experience, with assets under management up 103% year over year in the first quarter. The total credit portfolio has also risen by 75% year over year, leading to greater user engagement.

As MercadoLibre continues to innovate and expand its market share, investors can expect its stock performance to align with growth trajectories.

Shopify: A Pioneer in E-commerce Solutions

Jeremy Bowman (Shopify): Shopify revolutionized e-commerce software. Founder Tobi Lütke initially developed the platform to support his snowboard shop before recognizing its broader market potential.

Over the past decade, Shopify has experienced impressive growth, becoming the go-to platform for online sellers of all sizes, offering solutions for payments, marketing, web design, and fulfillment.

Currently, Shopify continues to showcase steady growth while innovating with new technologies, including AI. In the first quarter, revenue surged 27% to $2.36 billion, with net income (excluding equity investments) reported at $226 million—resulting in a profit margin nearing 10%.

As the e-commerce landscape evolves, Shopify is well-positioned to remain a significant player, making it a noteworthy option for long-term investors.