Even a relatively small investment can lead to huge profits. And those big wins can give you life. Consider how a $10,000 investment Netflix that was made 10 years ago has grown to more than $280,000 today. At the top of the stock, that initial $10,000 grew to more than $858,000. Needless to say, this kind of money can be life-changing.
Let’s look at two other companies that I think can deliver life-changing returns: Alphabet (GOOG 3.28%) (GOOGL 3.13%) and Snowflake (SNOW 1.50%).
Image source: Getty Images.
Expect Alphabet to maintain its strength in the long run
Alphabet, the parent company of Google and YouTube, is a technological juggernaut. The crown jewel of the business is its Google Search platform, which has a staggering 83% market share of online searches.
With a near-monopoly on search, Alphabet holds an impressive amount of revenue from placing ads in its search results. In its most recent quarter (the three months ending June 30, 2022), the company generated $40.7 billion in revenue from its Google Search and Other division, up from $35.9 billion a year earlier.
But Alphabet’s advertising prowess isn’t limited to search. Its segment on YouTube is a force in its own right. Just consider what this is doing for the music industry alone. Alphabet announced that between July 2021 and June 2022, YouTube paid more than $6 billion to the music industry through royalties. Along with the rise of audio streaming, YouTube is helping the industry reach revenue levels not seen since the turn of the century. Best of all, it’s a win-win-win for everyone involved: Artists and record companies receive royalties, YouTube viewers benefit from a wide variety of music content that is ad supported on demand, and YouTube gets ad revenue.
However, like many stocks this year, Alphabet’s fundamentals have been overshadowed by a bear market that won’t let up. Shares are down 32% year to date. But on both a relative and absolute basis, that decline presents an opportunity. Investors can now buy Alphabet shares for less than $100 after the company’s recent stock split.
GOOG PE Ratio data by YCharts
Furthermore, Alphabet’s current price-to-earnings ratio is at a 10-year low of 18.25, below its 10-year average of 30.7. Smart long-term investors will be eager to grab Alphabet stock today, snapping up shares now so they can reap the benefits of owning this amazing company for years to come.
Snowflake continues to grow its customer base
The second game-changing stock that can help set you up for life is Snowflake.
The snowflake is riding the wave of a major secular trend: The Cloud. In particular, Snowflake specializes in cloud-based data analytics, helping organizations “see” all of their cloud-based data, which, in turn, helps those organizations run more efficiently.
Cloud-based data analytics is becoming more important as cloud spending continues to increase. Organizations are eager to move their applications, security, and data to a centralized location where it is easier — and Cheaper — to manage their digital assets. Global end-user cloud spending increased from $145 billion in 2017 to $411 billion in 2021. By 2023, total spending should reach $600 billion.
What helps Snowflake stand out from other cloud players is its business model. Instead of competing directly with cloud computing giants, such as Amazon, Microsoft, and Alphabet, Snowflake provides a service that enables organizations to break down the silos that often form when an organization uses multiple cloud vendors. As such, the endless competition between cloud giants is a benefit for Snowflake that should continue to pay off as organizations switch vendors.
The company’s CEO is Frank Slootman, who previously served as chairman of the Service Today. Slootman has led the data specialist since its initial public offering in 2019. Under his leadership, Snowflake is growing its customer base and recording exceptional revenue growth.
The business now has clients in many different sectors:
- Tech companies want it Adobe and Okta
- Health care providers want Elevance Health and Novartis
- Financial companies want Capital One and Pacific Life
In fact, Snowflake has more than 245 customers who have spent more than $1 million on its products in the past 12 months — an increase of 112% year over year. For revenue, Snowflake generated $1.64 billion in the past 12 months. Quarterly revenue grew 83% year over year.
Furthermore, analysts expect Snowflake to earn $0.16 per share this year, up significantly from $0.01 per share last year. By 2024, Wall Street sees the company growing its earnings to $0.43 per share. Long-term investors love to see EPS projections increase in the years ahead, and Snowflake looks poised to deliver exactly that. It’s just one more reason to own this game-changing stock today — and for many years to come.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in Adobe Inc., Alphabet (C shares), Amazon, and Novartis. The Motley Fool has positions in and recommends Adobe Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Microsoft, Netflix, Okta, ServiceNow, Inc., and Snowflake Inc. The Motley Fool recommends the following options: long January 2024 $420 calls on Adobe Inc. and short January 2024 $430 calls on Adobe Inc. The Motley Fool has a disclosure policy.