Famous investors such as Warren Buffett and Peter Lynch agree that you only need to hit homeruns with one or two stocks to make a lot of money. A single stock can make an investor’s career and lead them to riches. These are often referred to as compounders, stocks that consistently beat the market over many years, driven higher by incredible earnings growth and profitability. Consider that $10,000 invested in Amazon (NASDAQ:AMZN) on the day that it held its initial public offering (IPO) in 1997 would be worth more than $16 million today, and it gives you a sense of the impact that one well-placed investment decision can have on a person’s life. The good news is that there are many stocks today that are compounders and whose growth is crushing the broader market. Here are three growth stocks to turn $100,000 into $1 million: January 2024.
Super Micro Computer (SMCI)
The stock of Super Micro Computer (NASDAQ:SMCI) is defying the laws of gravity. The company, which makes high-efficiency computer servers, is the hottest thing in the market right now. Three weeks into the new year, and SMCI stock is up 58%. That brings its gain over the last 12 months to 510%, more than double the growth in the stock of Nvidia (NASDAQ:NVDA) with which it has a partnership. Through five years, SMCI stock is up an astounding 2,900%.
If any stock can help investors turn $100,000 into $1 million, it is Super Micro Computer. The company’s share price has been surging ever since it announced a partnership with Nvidia last year. More recently, the company pre-announced better-than-expected financial results and raised its forward guidance on growing demand for its servers, which is being driven by the boom in artificial intelligence (AI). Of course there’s a risk anytime a stock runs this hot. But, right now, SMCI stock looks unstoppable.
Datadog (DDOG)
Another stock that continues to enjoy impressive growth is software company Datadog (NASDAQ:DDOG). The company’s shares rose 28% in a single trading session late last year after it reported better-than-expected third-quarter financial results and raised its full-year guidance. So far in 2024, DDOG stock has added another 13%, bringing its 12-month return to 72%. Since going public in 2019, the company’s share price has more than tripled.
Datadog, whose software is used in cloud computing, most recently reported earnings per share (EPS) of 45 cents, beating consensus forecasts of 34 cents. Revenue during Q3 came in at $547.5 million, up 25% from a year earlier and beating Wall Street estimates that called for sales of $524.1 million. Datadog also raised its full-year guidance, saying it expects Q4 revenue of $564 million to $568 million, and full-year revenue of $2.1 billion. Both figures exceeded consensus analyst forecasts.
Palo Alto Networks (PANW)
Another area of the market that continues to be hot is cybersecurity. And leading the pack of cybersecurity stocks is Palo Alto Networks (NASDAQ:PANW). So far in 2024, PANW has risen 20%, bringing its 12-month gain to 130%. In the last five years, the company’s share price has climbed nearly 400%, making it a strong growth stock and one to turn $100,000 into $1 million. Like Super Micro Computer and Datadog, PANW stock has been supercharged by earnings in recent quarters.
In November, Palo Alto Networks reported EPS of $1.38, which was better than the $1.16 forecast among analysts. Revenue in the quarter amounted to $1.88 billion, up 20% from a year ago and above Wall Street forecasts of 1.84 billion. Looking ahead, Palo Alto Networks forecast revenue of $1.955 billion to $1.985 billion, in line with analyst views for $1.97 billion of revenue for the current first quarter of 2024. The company sees profit for Q1 2024 of $1.29 to $1.31 a share, above consensus estimates of $1.25.
On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
