Want $1 Million in Retirement? Invest $50,000 in These 3 Stocks and Wait a Decade

Hyper-growth stocks like MDA (TSX:MDA) could help you retire.

Plenty of Canadians haven’t saved enough for retirement. If you’re getting close to the age of retirement and don’t have enough cash set aside to fund your life after, you may need to adopt an aggressive growth strategy. To turn a small investment (say $50,000) into a retirement-worthy nest egg (say $1 million) within 10 years you need to compound your wealth at an annual rate of 35%. 

Here are three stocks that could potentially make this miracle happen. 

Hyper-growth stock #1

WELL Health (TSX: WELL) is a prime example of a hyper-growth stock. Since going public in 2016, the stock has delivered a total return of 4,218%. That’s a compound annual growth rate (CAGR) of 70% over seven years! That’s well above our 35% benchmark.

In fact, if you invested $50,000 in this stock when it went public, you’d have $2.1 million right now. This growth rate has slowed down in recent years but is still higher than our benchmark. The company generated $569.1 million in revenue last year — 88% higher than in 2021. 

WELL Health management expects revenue to expand to $685 million in 2023, which implies a 20% growth rate. Meanwhile, cash flow should accelerate faster. The company is now cash flow positive and generated $58.8 million in adjusted free cash flow last year. 

If the company can sustain this pace of growth, the stock has the potential to turn $50,000 into $1 million within the next decade. 

Hyper-growth stock #2

Constellation Software (TSX: CSU) is perhaps my favourite large-cap growth stock at the moment. The company has flawlessly executed a growth-via-acquisition strategy for three decades. That’s how the stock has delivered a total return of 14,035% return since going public in 2006. That’s a CAGR of 33.7%. 

Constellation’s growth accelerates when it can deploy more capital into acquisitions and when the valuation of these targets is lower. That’s precisely what’s happening this year. The ongoing bear market in the software sector has pushed valuations lower. That’s creating attractive opportunities for Constellation. The team has already deployed more than $1.05 billion in acquisitions in the first quarter of 2023. This ferocious pace of company buyouts is likely to boost growth in the years ahead.   

Keep an eye on this hyper-growth stock. 

Hyper-growth stock #3

MDA (TSX: MDA) is the final and perhaps the riskiest pick on this list. The company is a legacy space tech developer that has worked on iconic missions with NASA and the Canadian Space Agency. Now, the team is working to develop a fleet of satellites for the new iPhone’s emergency contact service. It’s also working on a robotic arm that will help astronauts on the Artemis lunar gateway mission. 

MDA has a strong pipeline of orders worth $1.4 billion from both government agencies and commercial partners. This means the company has several years of robust potential revenue ahead. Meanwhile, its expanding earnings at an impressive clip. MDA registered $145 million in earnings before interest, taxes, depreciation, and amortization last year — 26% higher than the previous year. 

In 2023, the company expects $750-$800 million in revenue this year. That implies a growth rate of roughly 20%. Gross profit grew 60% last year and could have a strong boost this year too. Keep an eye on this growth opportunity. 

Fool contributor Vishesh Raisinghani has positions in Constellation Software, Mda, and Well Health Technologies. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.

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