The stock market continues to run at full speed. Opens up opportunities to make money. – This duo of stocks offers more unique growth opportunities than most.
There are few better ways to build wealth over your lifetime than investing in the stock market. The long-term average return for the S&P 500 is about 11% per year, across depressions and recessions, wars and turmoil.
The only certainty seems to be that no matter how bad things get, they always get better and even improve. The beauty of investing in stocks is that you don't have to have a lot of money to turn a small amount into a retirement fund.
You could park $500 in the stock market for 25 years without adding another dollar, and at those averages it would turn into 7.500 US dollars will. But the following two stocks should help you turn your small investment into a mighty portfolio, and probably before the next decade begins.
Fiverr
The gig economy is on the rise, and Fiverr (WKN: A2PLX6) has been instrumental in gaining acceptance as an alternative source of income. The freelancing platform has evolved far beyond its early days, when each gig cost just $5, and that has helped it become an important resource for creatives and those who need its services. The pandemic has even made it indispensable.
Fiverr's technology platform matches freelancers with individuals and businesses in need of their services. Instead of going to an agency, buyers find freelancers on Fiverr through posted gigs or packages with set prices for their work, including experience and the number of jobs they already have under their belt.
2020 sales rose 77% to $189.5 million, and although the stock market is treating the stock as if no one needs to buy a gig when the economy rebounds (shares are down 2% year to date, while the S&P 500 is up 19%), management forecasts that sales will still rise 50% this year.
Despite Fiverr's decline, the shares remain expensive: they trade at 27 times sales, or about nine times the index. However, there are some good reasons that the freelancing platform can grow into its valuation.
Although the Israeli company estimates the total freelance market at $750 billion annually and the U.S. Share it can target at more than $100 billion, Fiverr is looking forward to expanding its business far beyond the English-speaking world, which currently accounts for about 70% of its revenue. International expansion will be a key focus for the future.
Wall Street forecasts that Fiverr's adjusted earnings can rise from $0.12 per share last year to $1.57 per share by 2023, an annual average growth rate of 135%. Since stock prices tend to follow earnings, the gig store's stock should follow that trend as well, so its current seemingly inflated valuation represents a very good opportunity.
Genuine Parts
The shortage of computer chips continues to plague the auto industry, and that's good news for Genuine Parts (WKN: 858406), the owner of the NAPA Auto Parts chain of auto parts stores. With sales set to drop 7% this year to 15.5 million vehicles because manufacturers aren't getting chips to deliver cars to dealers, the used car market is looking better and the parts market is looking even better.
Ford For example, has only 42 days of new car inventory, Nissan only 27 and Honda and Toyota only 17 days each. With few cars to buy, prices of those at dealerships rising and the crisis driving used car prices, consumers will want to keep their existing cars much longer.
You can see that in Genuine Parts' results, where first-half sales were up 17% from a year ago. But the effect leads to an acceleration of sales, which increased by 25% in the second quarter. They were also up 12% from the same quarter before the pandemic.
Wall Street expects the auto parts retailer's sales to grow steadily at 5% per year over the next five years. It may not sound that spectacular, but when you factor in the dividend payout, investors have a sure and steady winner on their hands.
Genuine Parts has been paying dividends for nearly 100 years and has increased its payout for 65 consecutive years, making it one of an elite group of stocks known as dividend kings. The dividend is currently 2.6% per year, and since the retailer pays out less than 30% of its free cash flow in dividends, this is a safe source of income that investors can rely on for years to come.