A buy-and-hold strategy can generate life-changing returns for investors, and the stocks listed below are prime examples of that. While there can be risks with investing in companies in their early stages, there can also be considerable gains to be made, which is why it can be enticing to do so, particularly if you have many investing years left and can take on some uncertainty.
Nvidia (NASDAQ: NVDA), Netflix (NASDAQ: NFLX), and Booking Holdings (NASDAQ: BKNG) have been tremendous investments over the past 20 years. If you invested $5,000 into each one of these stocks in May 2006, your portfolio would be worth roughly $4 million right now. Here’s a look at how much these investments have grown over the past 20 years, and why they can still be good growth stocks to buy and hold.
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Nvidia: up 44,000%
A $5,000 investment 20 years ago in leading chipmaker Nvidia would today be worth roughly $2.2 million. While Nvidia has been a big name in tech for years, things really took off within the past few years, with the emergence of ChatGPT and the soaring demand that artificial intelligence (AI) investments created for its cutting-edge chips.
It’s been an incredible transformation for Nvidia, which went from generating $27 billion in revenue for its 2023 fiscal year (which ends in January) to just under $216 billion three years later. It wasn’t a predictable path, especially the speed at which it took place.
Today, Nvidia is the most valuable company in the world, with a market cap of around $5.5 trillion. Given its strong position in AI and the ongoing need for its chips, the stock may still possess some more gains in the future, but it may be a good idea to temper your expectations because with such a rich valuation and it trading at 46 times earnings, its upside, particularly in the near term, may be limited.
Netflix: up 20,000%
Streaming giant Netflix has been another tremendously successful growth stock over the past 20 years. It transformed how people watch TV and movies and has proven that streaming can be a profitable business to be in. While other companies struggle, Netflix has been thriving, even as it has developed its own content.
A $5,000 investment in the stock 20 years ago would now be worth just over $1 million. The business has evolved from mailing out DVDs to now allowing people to stream movies, TV shows, and even live content, including sports. And what’s particularly impressive is that Netflix has been able to accomplish all this while generating terrific margins. Last year, it generated $45 billion in sales, and its earnings totaled $11 billion, which equates to a profit margin of 24%.
Today, the stock trades at 28 times earnings and continues to be a solid growth stock to own. Netflix is a company that remains in pursuit of more growth opportunities, which is why it may be a compelling investment to buy and hold. Like Nvidia, its gains from here on out may be much more limited, but it can still be a solid blue chip stock to hold for the long haul.
Booking Holdings: up 16,000%
Although it’s in the third spot on this list, Booking Holdings stock is no slouch when it comes to growth. Its 16,000% returns over the past 20 years mean that a $5,000 investment over that stretch would have turned into around $790,000 today. Combined, that means the total value of the investments in all the stocks on this list today would be worth almost exactly $4 million (assuming someone invested $5,000 into each one of them).
Booking Holdings is a top name in travel as it operates all over the world, helping people book trips through one of its many sites, including booking.com, priceline.com, and kayak.com. As the travel industry has taken off, Booking Holdings has been one of the biggest winners, with its sites providing travelers with easy and flexible ways to make travel plans. Last year, the company generated $5.4 billion in profit on revenue totaling $26.9 billion.
This year, the travel stock is down 28% as high oil prices have the market concerned about future travel demand. And while that may be a worry in the short term, it’s likely to be a temporary issue. Buying Booking Holdings stock may be a good move today, with its valuation coming down and the stock trading at a very reasonable 20 times its trailing earnings.
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Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $469,293!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,381,332!*
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Booking Holdings, Netflix, and Nvidia. The Motley Fool has a disclosure policy.
