You shouldn’t expect most investments to make you a lot of money right away. More often than not, investing comes down to looking for companies and stocks that can deliver long-term wealth creation results.
The history books are filled with extraordinary winners who spent many years in the dungeons of Wall Street before they got big.
- Netflix barely kept up with the S&P 500 index in its first three years on the market, but has posted market-high returns of 19,300% since that modest start.
- Apple almost went out of business in 1997, saved by the return of Steve Jobs and a $ 150 million cash infusion from Microsoft. Now, Apple’s stock has the largest market capitalization on the planet.
The first investors who kept their Apple and Netflix stock over the years are fabulously wealthy now. Thanks to the magic of compound returns, a $ 10,000 investment from Apple or Netflix at the end of 2004 would be worth more than $ 1 million today. And that’s just an 18-year period, selected only because I wanted to show you a tidy hundredfold gain. Stretching the timeline further back results in even greater returns.
Apples and Netflix for the next 20 years are available right now. They hide in plain sight as small or mid cap stocks with relatively modest revenue streams and even leaner profits. Let me show you two names that I believe may follow in the footsteps of those proven business giants.
The underlying stock is a little larger than Netflix’s in 2004, but smaller than Apple at the time. They may not make you rich in 2023 or 2024, but I expect them to deliver groundbreaking investment returns over the next two decades.
Silvergate is the smart investor’s cryptocurrency choice
I believe cryptocurrencies are about to change the world in a thousand small ways. Strongly encrypted digital currencies offer a whole new way of managing financial transactions, ownership records and asset ownership. The new tools are inherently safer than the old spreadsheet entries and database posts, and could pose a real challenge for gold and paper money in the long run.
But I’m not asking you to pick a long-term winner out of the thousands of different cryptocurrencies on the market today. Names of veterans like Bitcoin And Ethereum they have already been around for a decade and could stay in office for the next century, or newer alternatives could replace them with fundamentally superior projects. I’m comfortable enough with the old guard to own a small portion of each, but I’m also ready to lose it all if something better comes along.
Instead, I suggest you look at the nuts and bolts of the cryptocurrency market. Regional bank Capital Silvergate (NYSE: YES) fit that description to a T.
Silvergate was one of the first financial institutions willing to provide loans and liquidity tools to the brand new and unproven cryptocurrency industry. It still performs that vital function for many of the major cryptocurrency exchanges and many smaller projects.
Additionally, Silvergate has created its own digital trading service, Silvergate Exchange Network (SEN), which helps clients serve and settle cryptocurrency trades quickly and inexpensively, around the clock, with no weekends or holidays.
Loans could come from any bank that has learned to trust digital traders, but there are no drop-in replacements available for the SEN platform. If you take Silvergate out of the equation, many giants in the cryptocurrency trading world will struggle to do what they do.
That’s why I expect Silvergate to continue to play this pivotal role in the cryptocurrency industry for years to come. Digital currencies will come and go, as will the trading services that make them available to consumers and businesses. But Silvergate remains to make the whole system work and the business will grow along with the cryptocurrency industry as a whole.
And Silvergate stock is quite affordable right now, trading at just 9x earnings and 10x free cash flows. This small-cap bank has a long and bright future and savvy investors should buy some shares at this bargain price.
Fiverr changes how Working works
Freelance Services Manager International Fiverr (NYSE: FVRR) he’s shooting for the stars. The final target market is the global total of freelance services and contractors in creative, technical and professional activities. This industry generated $ 247 billion in revenue last year in the United States alone.
The company earns a small percentage of that massive business opportunity as a research fee to connect freelancers to the people and companies that need them. So far, most service pairings are done offline, but the online portion is growing year on year.
Fiverr is not the only name in this industry, but it is a firmly established leader and innovator in the so-called gig economy. As the digital freelance industry grows, the company works to stay at the forefront of that revolution. As time goes by, it continues to expand its target market potential by launching services in new geographies, building additional services in its service search platform, and exploring new business ideas in adjacent industries.
That growth is a long-term project and Fiverr has just scratched the surface of the huge market opportunity. The latest management indications indicate full-year sales of only $ 337 million. Don’t forget that the freelance market is a moving target, expanding as more of the global workforce move out of traditional nine-to-five careers and move to flexible freelancers.
As a high-growth stock, Fiverr pours every available penny of available cash into sales, research and corporate infrastructure costs. Therefore, its rating ratios are skyrocketing and I can’t call the title “affordable”. But I believe the company is in the dawn of a revolutionary growth spurt and that the pennies you invest today should be worth dollars in 20 years, just like in the Netflix and Apple examples above.
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Anders Bylund has positions in Bitcoin, Ethereum, Fiverr International, Netflix and Silvergate Capital Corporation. The Motley Fool has positions and recommends Apple, Bitcoin, Ethereum, Fiverr International, Microsoft and Netflix. The Motley Fool recommends Silvergate Capital Corporation and recommends the following options: $ 120 March 2023 long calls on Apple and March 2023 $ 130 short calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.