Some individuals believe they can retire with $1 million in the bank and lead a comfortable life without ever having to work for another day. But building a $1 million portfolio is far from easy. For example, you need to invest $209,004 for a period of 15 years and generate returns of 11% annually to increase your portfolio value to $1 million.
But investing in growth stocks can help you reach your financial goals much faster. So, if you have $50,000 to invest right now, you can identify quality growth stocks that have the potential to increase revenue and cash flows at a consistent pace over the next decade.
Here are three such growth stocks that could turn a $50,000 investment into $1 million by 2033.
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Shopify stock
One of the largest tech stocks in Canada, Shopify (TSX: SHOP) has trailed the broader markets by a wide margin in the last 15 months. Shopify stock is currently down 72% from all-time highs, which means it has to surge by 350% just to reclaim its historical highs.
Shopify is already the second largest e-commerce platform in the United States after Amazon and has a merchant base of more than two million. The Canadian tech giant recently increased prices on its subscription plans in more than a decade, which might help it improve profit margins and revenue growth, which has decelerated in recent months.
Shopify is also building a network of fulfillment centres to optimize the supply chain of its customers, unlocking another billion-dollar revenue stream in the process.
Analysts remain bullish on Shopify stock and expect shares to gain more than 30% in the next 12 months.
Datadog stock
A leading monitoring and security platform for cloud applications, Datadog (NASDAQ: DDOG) is currently valued at a market cap of US$23 billion. Cloud spending as a percentage of total IT spending is expected to increase to 17% by 2026, widening the total market size to US$850 billion from less than US$500 billion in 2022. This rapidly expanding market should act as a massive tailwind for Datadog.
The company ended 2022 with US$1.68 billion in sales — an increase of 63% year over year. Its net dollar-based retention rate stood at 130%, which suggests existing customers increased spending by 30% on the Datadog platform in the last 12 months.
The number of customers that account for US$1 million in annual recurring revenue has grown from just 11 in 2017 to 317 in 2022. Datadog should increase its revenue at a brisk pace, as long it can keep its net dollar-based retention rates at 130%.
It also ended the year with a free cash flow margin of 21%, making Datadog one of the few high-growth tech stocks that is profitable.
Curaleaf stock
The final growth stock on my list is Curaleaf (CNSX:CURA), one of the largest cannabis companies in the world. Curaleaf has increased its revenue from US$221 million in 2019 to US$1.3 billion in the last 12 months. Its gross profits have also increased from US$141.5 million to US$679.6 million in this period.
Curaleaf is well poised to benefit as cannabis legalization gains pace south of the border. It has a scalable, vertically integrated business model, which should allow it to reduce costs across the supply chain over time.
Down 77% from record highs, analysts tracking Curaleaf stock expect shares of the marijuana producer to more than double in the next 12 months.
