Got $5,000? 2 Top-Growth Stocks to Buy That Could Double Your Money

If you’re looking to get started investing, $5,000 is a nice nest egg to start with.

That’s about what the average American makes in a month, and it can grow on the stock market faster than you might expect. The S&P 500 has historically returned an average of 9% a year with dividends reinvested, which means it would double every eight years thanks to the power of compounding. That means you would expect it to turn into $10,000 by 2032, $20,000 by 2040, and $40,000 by 2048.

However, you can grow your money even faster with individual stocks, especially if you choose the right ones. Keep reading to see two stocks that could double your money faster than you think.

1. Roku

Roku (NASDAQ: ROKU) is the leading streaming-distribution platform in the U.S., a strong position to occupy in a growing industry, but the stock is still down sharply from its pandemic heights.

An earlier slowdown in the digital-advertising industry and a poorly timed spending ramp helped sink the stock, but after a few years of underperformance, the stock is finally starting to show signs of life.

In the second-quarter earnings report, revenue growth accelerated to 14%, reaching $968.2 million, and the company has now been profitable on an earnings before interest, taxes, depreciation, and amortization (EBITDA) basis for four straight quarters, and it generated free cash flow of $317.9 million over the last four quarters. Its profitability has also improved after several rounds of layoffs.

Roku’s user base continues to grow, with streaming households up 14% to 83.6 million and streaming hours rising 20% to 30.1 billion, showing individual customers are spending more time on the platform.

That bodes well for the platform’s continued growth, and there are signs that ad spending is coming back to life as its core vertical, media and entertainment companies remain soft due to the drive for profitability among legacy-media companies.

Roku has started to rebound in recent months, and initiatives to drive accelerating-revenue growth seem to be paying off as the company is forecasting revenue would accelerate in Q4 and into 2025. With the stock trading at a price-to-sales (P/S) ratio of just 3, there’s plenty of upside potential for Roku if it can move toward profitability and accelerate revenue growth.

2. Micron

Chip stocks have soared since the launch of ChatGPT over excitement for all things AI, and Micron (NASDAQ: MU) has been among the winners as the cyclical-memory chip maker has reported strong growth and expanding profit margins.

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However, the stock has pulled back from its peak in June in line with a broader retreat in chip stocks on concerns about stretched valuations in the sector and a possible AI bubble.

Since then, demand remained high for AI chips, and Micron looks like a good bet to double. The stock looks cheap at a forward price-to-earnings (P/E) ratio of just 12, meaning the stock could soar if it can top those estimates. Micron also has an opportunity to pick up market share as rival Samsung is struggling. Samsung’s high-bandwidth memory (HBM) chips have failed a test run by Nvidia to be included in the chip leader’s AI processors.

While Samsung just apologized for a weak-earnings report, Micron is coming off a stellar quarter. Revenue nearly doubled year over year in fiscal Q4, reaching $7.75 billion, and it flipped an adjusted per-share loss of $1.07 to $1.18. On a sequential basis, earnings per share (EPS) nearly doubled as the company benefited from revenue growth and expanding-gross margins.

The company sees both margin expansion and revenue growth continuing into the new fiscal year. In addition to AI demand, Micron should also benefit from a rebound in PC and smartphone sales. While the stock is sensitive to competitive dynamics around supply and demand, its valuation and growth rate could easily support a surge in the stock, especially if it tops analyst estimates.

If you’re looking for a chip stock with a lot of upside potential, Micron is a great bet.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,285!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,456!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $411,959!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 14, 2024

Jeremy Bowman has positions in Roku. The Motley Fool has positions in and recommends Nvidia and Roku. The Motley Fool has a disclosure policy.

Got $5,000? 2 Top-Growth Stocks to Buy That Could Double Your Money was originally published by The Motley Fool