If you’re hoping to create lasting generational wealth through the stock market, it’s important that you focus on growth stocks. These are stocks that are poised to outperform the broader market. They do this by providing products and services that are very high in demand, leading to a business with extremely high growth rates.
Investing in the right growth stocks could help your portfolio outperform the market and, over time, create generational wealth. However, there are so many traps in the stock market. Many very promising growth stocks, in the past, have fallen into obscurity for a number of reasons. For example, they may have bad leadership. If a company’s leadership team isn’t able to realize how the industry is moving, then they risk being left behind.
In this article, I’ll discuss two stocks that could create lasting generational wealth. I believe both of these companies have outstanding businesses and great leadership.
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My favourite stock
When thinking about stocks that could create generational wealth, Constellation Software (TSX: CSU) is the first one that comes to mind. This company doesn’t operate a consumer-facing business, which is why many Canadians may not have heard of it. If you’re one of those that hasn’t heard of Constellation Software, you should know that its business focuses on acquiring vertical market software (VMS) businesses.
For most of its history, Constellation Software has focused on acquiring small- and medium-sized VMS businesses. While that allowed the company to specialize in those kinds of acquisitions, it did leave many great opportunities on the table. However, despite that, Constellation Software stock was able to grow at a tremendous rate. It has a compound annual growth rate of more than 30% over its first 15 years on the market.
In 2021, Constellation Software announced a major shift in its business. It stated that the company would finally begin targeting large VMS businesses for acquisition. This shows shareholders that Constellation Software continues to be dedicated to growth. Despite its massive performance in the stock market, Constellation Software continues to look for ways to grow the company and please shareholders.
Over the past year, Constellation Software stock has gained nearly 54%. This suggests that institutional investors are increasingly pleased with the path Constellation Software has taken. With its founder, Mark Leonard, still leading the company, I have full confidence that Constellation Software stock could continue to grow at a fast rate over the coming years.
A top international company for your portfolio
If you’re interested in investing in an international stock, consider Sea Limited (NYSE: SE). This is a Singapore-based company that trades in the United States. Sea Limited’s business has three arms: e-sports, e-commerce, and digital banking. Although I’m very intrigued by all three of these business segments, Sea Limited’s e-commerce arm is the most intriguing to me.
Shopee, Sea Limited’s e-commerce arm, is one of the most popular e-commerce marketplaces in southeast Asia. What’s even more impressive, and largely unnoticed, is that Shopee has managed to expand into North and South America. If it can further penetrate the global ecommerce market, then Shopee could be a business to watch in the future.
I think Sea Limited is a much riskier investment than Constellation Software, but the potential here is massive. If you’re interested in taking part in perhaps one of the biggest growth stories of the 2020s, then take a look at Sea Limited today.
