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The stock market is one of the best ways to build lasting wealth.Over time, it becomes widespread S&P500 On average, they earn about 10% annually.
But if you look back at history, you’ll see that there are several companies that disrupted the market by turning small investments into seven-figure sums.
Let’s take a closer look here apple (AAPL 0.41%), costco (Fee -0.10%)and home depot (HD -0.16%)3 Great Consumer Stocks That Turned $1,000 into Over $1 Million.
1. Apple
First on this list are the most valuable brands in the world. Apple is a leader in selling some of the most popular electronic products. And this was the driving force, FAANG stocks 191,000% over the past approximately 43 years, and including dividends, $1,000 now turns into $1.9 million.
While the iPhone still brings in more than half of its revenue, the business has also seen success with other devices such as MacBooks, AirPods, and Watches. In total, hardware accounted for 81% of his total sales in the first quarter of 2024.
However, the software and services sector is growing rapidly and becoming a more important business driver. Services include Apple Card, Pay, Music, TV+, iCloud, Ads, and more. The division’s revenue increased by 11%, outperforming the entire company. With gross profit margins exceeding his 70%, the service could boost Apple’s profitability over time.
Investors expecting similar returns from this business for decades to come will probably need to temper their expectations. Apple’s huge revenue base has struggled to grow at a high rate. Sales in fiscal 2023 will decrease by 2.8%, indicating that the company is maturing.
and now price versus revenue (P/E) ratio of 29.3 is very expensive, at least based on the average valuation over the past 10 years. This may also limit future returns.
2.Costco
Costco is the world’s third-largest retailer with sales of $241 billion in the past 12 months. The company operates hundreds of warehouses around the world, providing shoppers with high-quality products at extremely low prices. This business model has remained unchanged for decades.
Costco sounds like a boring company, but its returns are exciting.of retail inventory Including dividends, it’s up 123,000% over the past 49 years. Even in recent years, stocks have crushed the overall market. Special one-time dividends, such as the $15 dividend announced in December, have boosted profits.
What sets Costco apart from regular retailers is its successful membership model. Consumers must pay an annual fee for the right to shop at the warehouse, which provides a high-margin, recurring revenue stream. Last quarter’s membership sales increased by 8.2% and the worldwide renewal rate was over 90%.
Like Apple, Costco is not a cheap stock, with a P/E ratio of 49.4x. This is 47% higher than the average over the past 10 years. It might not be a wise idea to buy the stock now, even though management is on track to open new stores and there is significant growth potential, which will certainly boost the profit numbers.
3. Home Depot
Another top retailer that turned $1,000 into more than $1 million. home depot (HD -0.16%). The home improvement giant’s stock has been, perhaps unexpectedly, an even bigger historical winner than Apple or Costco. Since 1981, Home Depot stock has grown from an initial capital expenditure of $1,000 to a whopping $29.9 million (including dividends) today.
Like Costco, Home Depot’s business hasn’t changed much over time. Through its large-format stores, the company sells a variety of tools and supplies to do-it-yourself (DIY) and professional customers who want to beautify their homes. It’s a boring business, but the bottom line is great.
Home Depot’s operating profit margin return on invested capital The averages over the past 10 years were 14.2% and 34%, respectively. These metrics are better than the company’s main rivals. lowe’s. Home Depot’s focus on increasing store efficiency through investments in omnichannel capabilities and supply chain enhancements are contributing to these metrics.
The business is facing a slight slowdown due to strong demand trends during the pandemic. However, industry tailwinds support solid long-term growth. Investors may want to consider this stock, as the stock is trading at a reasonable P/E of 23.3.
Although it is unlikely that these three companies will be able to repeat their past performance in the future, they are still industry leaders that continue to lead the way.
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