Invest $5,000 Wisely: Stocks That May Double Your Money
A starting investment of $5,000 can set you on a successful path in the stock market. This amount reflects the average monthly income in the U.S., and over time, it has significant potential to grow. Historically, the S&P 500 has produced an average annual return of approximately 9% when dividends are reinvested. This implies that your investment could double every eight years through compounding. For example, by 2032, your $5,000 could grow to $10,000; by 2040, it could increase to $20,000; and by 2048, it could reach $40,000.
For those who seek quicker growth, investing in individual stocks could be the answer. Here are two intriguing options that might accelerate your investment returns.
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Roku: A Streaming Leader Rebounding
Roku (NASDAQ: ROKU) has established itself as a leading streaming platform in the U.S., a significant advantage in a rapidly growing market. Despite being under pressure since its pandemic highs, the stock is now showing renewed activity.
Past challenges, including a slowdown in the digital-advertising sector and a poorly executed expansion strategy, impacted Roku’s performance. However, recent developments indicate a turnaround. In its second-quarter earnings report, Roku reported a revenue growth of 14%, reaching $968.2 million. The company has maintained profitability on an EBITDA basis for the past four quarters and generated free cash flow of $317.9 million during this time. Its financial outlook has improved following workforce reductions.
Furthermore, Roku’s user base has grown, with streaming households climbing 14% to 83.6 million and streaming hours increasing by 20% to 30.1 billion. This trend suggests that viewers are more engaged, enhancing the company’s growth potential. Signs point to a recovery in advertising spending, and initiatives to boost revenue seem to be effective, with forecasts of accelerated growth for Q4 and into 2025. Currently, the stock trades at a price-to-sales (P/S) ratio of just 3, revealing considerable potential for appreciation if it continues on its positive trajectory.
Micron: Capitalizing on AI Demand
Micron (NASDAQ: MU) has benefitted from rising demand for AI chips, especially following the launch of innovative technologies like ChatGPT. The memory chip manufacturer has reported robust growth and profit margin expansion, making it a noteworthy player in the tech sector.
Despite experiencing a pullback since June due to concerns about inflated valuations and a possible AI bubble, Micron remains a strong candidate for future growth. The stock’s forward price-to-earnings (P/E) ratio is a modest 12, suggesting it could gain significantly if it surpasses earnings expectations. Additionally, Micron is in a favorable position to increase its market share as competitor Samsung faces challenges. Recently, Samsung’s high-bandwidth memory (HBM) chips did not pass a crucial test by Nvidia, impacting their ability to supply AI processors.
Micron recently reported a remarkable fiscal Q4, with revenue nearly doubling year-over-year to $7.75 billion. It reversed a prior adjusted per-share loss of $1.07 to a gain of $1.18. The company anticipates continued revenue and margin growth moving forward, bolstered by increasing demand in both AI and traditional markets like PCs and smartphones. Given its current valuation and growth prospects, Micron appears well-positioned for significant stock appreciation.
Opportunity Awaits for Savvy Investors
Do you ever feel you’ve missed out on investing in top-performing stocks? If so, pay attention.
Periodically, analysts recommend specific stocks, dubbed “Double Down” stocks, that they believe are primed for significant gains. If you think you’ve missed your chance to invest in these companies, now might be the perfect moment to act. Historical returns from previous recommendations illustrate this potential:
- Amazon: A $1,000 investment in 2010 would be worth $21,285 today!*
- Apple: A $1,000 investment in 2008 would have grown to $44,456!*
- Netflix: If you invested $1,000 in 2004, it could be worth $411,959!*
Currently, several companies are receiving “Double Down” alerts, presenting a potential opportunity that could be rare.
See 3 “Double Down” stocks »
*Stock Advisor returns as of October 14, 2024
Jeremy Bowman holds positions in Roku. The Motley Fool has positions in and recommends Nvidia and Roku. Please refer to their disclosure policy for more information.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
