What one considers to be a sizeable capital amount is a subjective notion. This is dependent on a wide range of factors that includes one’s net worth, annual income, and expenditure. $10,000 is an amount that may be hefty for many, and petty cash for the super-rich. However, for those who have just started in the investment world, $10,000 is an ample amount of saving. For this reason, a beginning investor starting from scratch would need to be highly intentional and strategic about what to include in their long-term portfolio of financial assets. In this article, we attempt to shed light on the best approach one could take. We select four high-potential stocks from vastly distinct industries, that could drive your future net worth to new heights. A portfolio that is well-diversified would ensure minimum risk, whilst delivering high growth.
$10,000 Investment in Brookfield Renewable Corporation
Whenever looking towards the future, it is hard to sideline the renewable energies industry. Even more difficult is to ignore a rising star as good as Brookfield Renewable Corporation (NYSE: BEPC). When the company released its first-quarter earnings for 2022, it showed remarkable improvement in its financial performance. Its funds from operations (FFO) during the period had climbed by 18% on a year-on-year basis.
In fact, BEPC management is optimistic about committing to up to 20% FFO growth right through 2026. It has laid out multiple levers through which it shall execute its strategy of attaining such growth. These levers include inflation escalations embedded within its contracts, as well as margin enhancement strategies. This makes BEPC an extremely robust and inflation-proof stock to hold, especially amidst recessionary fears. It also aims to strengthen its portfolio through mergers and acquisitions. Through this, it could create synergies and facilitate business expansion.
Moreover, BEPC remains extremely secure in terms of short-term volatilities. This is because its average power purchase contract has a term period of above 14 years. This makes the company’s prospects secure and stable. This is critical for an early investor who does not want their capital to sink immediately.
BEPC Positioned to Ride the Renewable Growth Wave
What draws me so much to Brookfield Renewable, however, is the inevitability of its growth. It is a company positioned to win with the lowering of renewable costs, and the trend towards decarbonization. With the trillions of dollars continuously poured into renewables, the company’s addressable market sees a direct expansion over time. For someone with $10,000 committed to a particular stock, such growth prospects are extremely enticing. Moreover, its dividend growth has seen a 6% increase since 2013 on a consistent basis. For one looking to grow their portfolio, dividend payments could multiply such growth significantly. This would be the case when dividends are reinvested into the stock.
$10,000 Investment in ChargePoint Holdings
The next stock we propose is in an extremely high promise area of the future, which is electric vehicles. There is no doubt the EV market is well on its way to dominating road transport within the next few decades. What we bring forward under this category is not an electric vehicle stock, but that of an EV charge station. Charge station stocks are far more likely to thrive as compared to EV manufacturing stocks. The reason is a lower competitive risk, and being immune to consumer preference shifts. Charge stations will always be in, given that they serve the critical infrastructural environment for EVs to function within. This would be regardless of which electric vehicle company dominates the roads.
The stock we propose in light of the above argument is ChargePoint Holdings, Inc. (NYSE: CHPT). It is perhaps the best option amongst EV charge station stocks because of its large scale, robust business model, and low valuation given the present bearish market conditions. Due to these conditions, CHPT remains one of the most dominant EV market players, whereas competitors continue their struggle to leave their mark. ChargePoint holds a total of 188,000 charging stations across the globe. Additionally, it has signed deals with Four Seasons, Marriott as well as Mcdonald’s.
Given CHPT’s positioning in the EV charge station market, the stock is poised to grow big in the coming years. Towards the end of June 2022, the Biden administration announced to catalyze the charge station ecosystem in the US through federal support of over $700 million. For an emerging champion like ChargePoint, this boost could prove directly beneficial in terms of business growth.
CHPT Trading at a Bargain Price
There is no better time to spend your $10,000 worth of savings on CHPT than now. At present CHPT is trading at about $14, which is significantly below its all-time high of $46 achieved in late 2020. In fact, things look far better for the company now than they did back then. CHPT is essentially trading at a discount and hence is too good to buy. Its business performance and the market position it acquires are major green flags to consider. Moreover, the catalyst support from the US government could trigger an upward swing.
$10,000 Investment in Splunk Inc.
The final area to consider for investment for those starting from scratch is the dynamically growing tech spaces. IT specifically has achieved exponential growth acceleration since the outbreak of the Covid-19 pandemic. With lockdowns pushing people toward remote work organizations and digital shopping, the digital transformation has reached new heights. The result is increased demand for software and cloud solutions, as well as data management, cyber security, and machine learning automation.
A company that provides all of the aforementioned services and many more is Splunk Inc. (NASDAQ: SPLK). In addition to providing a real-time data platform, the company offers a highly valuable cyber security software package. It also caters to education services, maintenance, and customer support channels. What started off as a simple machine learning service has now grown into a solutions provider with usage that is almost infinite. There hardly is a sector or industry that is not included in Splunk’s addressable market. Moreover, its focus on machine learning makes it the largest player in its domain, with a critical competitive advantage. The renowned software industry analyst, Gartner, had gone on to describe Splunk as being a market leader. It further elaborated it as possessing the highest capability to execute.
SPLK: King of Machine Learning
As a result of the nature of its service offerings, the company has been experiencing spectacular performance growth as of late. In the first quarter of 2022, the company’s revenue climbed by an incredible 34% on a year-on-year basis. This hints at how much one’s portfolio could grow with an early investment in this star tech stock. This revenue is also far more sustainable than that earned by its competitors. Unlike most software companies, Splunk follows a robust business model that employs usage-based pricing. Therefore, instead of fixed timely payments, the company charges its clients on the basis of computing power and data volume. This is ideal in terms of long-term growth. As its client companies expand, so does its usage of Splunk services, which delivers higher revenue.
Splunk holds perhaps one of the most incredible investment opportunities for those starting from scratch. The company, which is an industry leader only reports 35% of its revenue from foreign markets. This reflects substantial upside potential. $10,000 poured into SPLK now could yield a fortune a few decades down the line.
Conclusion
Each of the stocks presented above offers great investment opportunities for one to jumpstart their rise towards a six-figure portfolio value. The first investment one makes typically determines the future net worth, and hence the entire life story of the individual. For this reason, we have proposed stocks with the highest possible growth potential and lowest risk. Our list of recommendations is based on where the future world is headed, and which stocks are likely to dominate on the basis of that forward-looking direction. This would ensure a safe portfolio that would generally be immune to short-term volatilities.
