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Investing in stocks is the best way for most people to grow wealthy. After all, the stock market has historically generated around 10% in annualized returns, good enough to double your money about every eight years. That compounding power is enough to turn $250 per month invested into a cool million dollars in 35 years.
It also takes the patience and time to find the best stocks to buy and hold them for the long term, not selling just because the market is up or down, and letting the performance of the business itself generate big returns. If you’re looking for stocks you can buy right now to help you reach retirement a millionaire, NV5 Global Inc (NASDAQ:NVEE) and First Solar, Inc. (NASDAQ:FSLR) fit the bill.
There’s a lot that has to go right, and it’s going to take years of growth for things to play out, but these two companies could make for serious millionaire-maker investments. Keep reading to learn what sets them apart, and why you should consider investing in them.
Global infrastructure spending is set for decades of growth
According to consulting giant McKinsey, there’s a major global shortfall of infrastructure spending. A fast-growing global middle class and expanding wealth in the developing world is only exacerbating this reality, with McKinsey estimating that global infrastructure investment needing to increase $800 billion per year, to a staggering $3.3 trillion to support expected rates of global growth. The U.S. alone needs to spend $770 billion annually to meet domestic infrastructure needs by 2040, according to the American Society of Civil Engineers.
This is a significant opportunity for engineering and infrastructure consulting company NV5 Global Inc., both in the U.S. and around the globe. At this writing, NV5 is a very small player in this massive global industry, on track to generate less than $350 million in revenue this year. But led by a very experienced and accomplished management team with significant insider ownership (executives own more than one-third) of the company, NV5 is incredibly well-positioned for many years of accelerated growth.
With 2,000 employees and 100 locations, NV5 isn’t exactly tiny, but it’s a fraction of the size of some of its biggest competitors. But with more than 140,000 total engineering firms in the U.S. — the vast majority of which are fewer than 10 offices in size — there is significant opportunity for growth through acquisition. So far the company has done well here, having made 26 acquisitions since going public.
Lastly, NV5 is a bargain growth stock, trading around 25 times guidance for 2017 earnings per share. With a market capitalization of less than $500 million, NV5 Global has huge room to grow for many years to come.
A top company in another massive global growth industry
Solar investors have been taken to the woodshed over the past couple of years as the industry swings from one part of the cycle to the next. And while it’s been painful for anyone who invested at the peak of the cycle, there are two very important things that investors have to remember:
- The long-term prospects for solar remain incredibly strong.
- The short-term cyclical swings create great opportunities to invest in the best solar companies.
Right now, there isn’t a better solar panel maker to buy than First Solar. With an incredibly strong balance sheet and a leading technology that gives it a major advantage in extreme environments, First Solar is a favorite in many of the places where large-scale solar installations make sense. Its thin-film technology is also very low cost, helping compete on price against panels that it also outperforms.
Back to that balance sheet. First Solar has $2.2 billion in net cash, which gives it a huge advantage over many of its competitors as the downturn persists. While most panel makers are slashing spending to make ends meet, First Solar is planning major investments in accelerating development of its next generation of panels. The company plans to spend as much as $635 million on capital expenditures this year toward bringing its “Series 6” panels to market in 2018, including converting 12 lines in two plants to production of these panels over the next 18 months.
At the same time, the company expects to continue generating a strong $350 million to $450 million in operating cash flows from its existing manufacturing, helping to offset how much of its cash position it will be required to burn on capital improvements.
First Solar’s balance sheet and technology strength is a huge competitive advantage, and is likely to prove very durable over the long term. If you want to profit from the long-term growth of solar, First Solar is a stock that’s worth buying now.
Jason Hall owns shares of First Solar and NV5 Global. Jason Hall has the following options: long January 2018 $45 calls on First Solar. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.