Keithen Drury, The Motley Fool
·4 min read
Finding companies that have transformed a simple $1,000 investment into $1 million is rare. That growth requires an investment to increase by 999 times. So, if a company goes public at a $1 billion valuation, it needs to be worth $1 trillion now.
The companies that fit this list are often older, as it takes time to put up these returns. But investors can learn many lessons from the behemoths that have achieved this feat and use them to find the next stock that could turn $1,000 into $1 million.
Apple's incredible return could have been achieved by acting on a famous commercial
The three stocks I'll be focussing on that have achieved this feat are Apple (NASDAQ AAPL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN). These three are gigantic trillion-dollar companies today, but they weren't always that large.
Apple debuted on the public markets in 1980. If you invested $1,000 in the company, then your investment would now be worth nearly $1.5 million. But how many people buy a stock on its IPO? Very few, especially in the 1980s when stocks weren't as accessible as they are now. Instead, if you bought Apple when its famous "1984" commercial aired during Super Bowl XVIII on January 22, 1984, you'd still be up to $1.5 million with your $1,000 investment.
Microsoft investors had to hold through a decade of stagnation
Microsoft's return is even more impressive than Apple's, as it turned $1,000 invested in its 1986 IPO to $4.1 million now. However, Microsoft's stock ride was rather bumpy, as its stock turned $1,000 into nearly $600,0000 by the turn of the century.
That said, Microsoft subsequently lost a lot of those gains and did nothing from 2000 until 2007.
The second wave of Microsoft's growth kick-started after the stock bottomed in the Great Recession, and it hardly looked back over the past decade.
So with Microsoft, you had to hold the stock through many highs and lows, but eventually, you'd be left with a return that created unbelievable wealth.
Amazon was highly affected by the dot-com bubble bursting
Amazon shares a similar story to Microsoft, as it was affected by the dot-com bubble bursting in the early 2000s. From its IPO in 1996 to 2000, the stock increased nearly 40 times in value. However, it dropped around 85% in the next two years, giving up a lot of its gains.
Still, Amazon continued to grow and eventually recovered and set new all-time highs starting in 2008. Overall, if you held Amazon from its IPO to today, you'd be up $1.59 million from your initial $1,000 investment.
A few factors are clear if you want to find the next stock that can turn $1,000 into $1 million.
Sometimes, life-changing investments are right in front of you.
You'll have to hold the stock through grim times.
You must get in early before others have found the stock or widely adopted the technology.
All three of these companies display these characteristics to a tee. So, while finding the next company to turn $1,000 into $1 million is like finding a needle in a haystack, you can apply these principles to other promising companies and still be rewarded with a sizable gain.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keithen Drury has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Apple, and Microsoft. The Motley Fool has a disclosure policy.
3 Stocks That Turned $1,000 into $1 Million (or More) was originally published by The Motley Fool
