Some stocks can give you life-changing returns in the long run.
If you had invested $3,500 in Apple (NASDAQ: AAPL) 20 years ago, you'd have a total return of $1.1 million by now. The rise of smartphones worked wonders for the empire Steve Jobs created.
The same $3,500 investment in October 2004 would be worth $1.9 million today if you had picked up some Netflix (NASDAQ: NFLX) stock instead. The serial innovator dominated video stores like Blockbuster into bankruptcy, then switched gears to deliver even richer gains with video-streaming services.
And a $3,500 investment in Nvidia (NASDAQ: NVDA) would work out to a $4.7 million return in 20 years. The designer of graphics processing units (GPUs) and other number-crunching microchips caught fire in November 2022, earnings a 1,050% return in the last two years alone. Wall Street absolutely loves Nvidia's leading role in the market for artificial intelligence (AI) processing hardware.
Those big gains already happened, though. I can't go back in time and catch them again. This trio of proven millionaire-makers is still rising to new highs, but they probably won't multiply many times over from this lofty plateau. It gets harder and harder to unleash big percentage gains from a massive market cap.
So Netflix, Apple, and Nvidia may be solid stocks if you're looking for stable and robust long-term returns, and I own two of them with that mentality. However, they don't seem likely to deliver game-changing growth again.
Tomorrow's potential millionaire-makers may be small today, but they're staring down a long runway of future growth and innovation. Many of today's top growth stocks will fizzle and fail, but getting in on just one of these early stage opportunities can make you forget about the misses.
On that note, I can't stop buying stock in Roku (NASDAQ: ROKU) and Duolingo (NASDAQ: DUOL). These modest mid-cap stocks have truly wealth-building growth potential. I can't promise millionaire-making returns, but Roku and Duolingo are two of my best bets in this category.
Duolingo is already on a roll. The language-learning expert has posted a 242% stock return in the last two years. Trailing twelve-month sales rose 87% over the same period while free cash flows (FCF) soared 553% higher. In other words, this little company is experiencing high-octane growth today and market makers are paying attention.
So Duolingo's stock isn't cheap. These shares are valued at 55 times FCF and 203 times earnings -- lofty multiples even for a terrific growth stock.