2 Millionaire-Maker Growth Stocks

Add these stocks to your portfolio, hold, and wait for massive gains.

Many stocks have minted millionaires over time, depending on how much they started with. Obviously, it’s a lot easier to turn $500,000 into $1 million than starting from $1,000. You can still get there if you don’t have $500,000, though. If you invest in a group of reliable growth stocks and let your portfolio grow over many years, you can definitely become a millionaire in due time.

Is it that simple? It could be. The first step is choosing the right stocks. MercadoLibre (MELI -0.32%) and On Holding (ONON -1.53%) are two great choices.

1. MercadoLibre: The power of e-commerce plus fintech

MercadoLibre is a powerhouse company operating in 18 Latin American countries. Its core business is an e-commerce platform similar to Amazon, but it has a newer fintech business that’s exploding.

The e-commerce business is riding along smoothly. MercadoLibre’s operating region has a population of more than 500 million, more than the U.S., but is underpenetrated in digital shopping. MercadoLibre is the dominant e-commerce player in the region, and it’s enjoying organic growth opportunities as it widens its net and captures market share.

Gross merchandise volume (GMV) is increasing and even accelerating despite continued high inflation across Latin America. The pressure is high in Argentina, which has been MercadoLibre’s main market for years. With strength in its other large markets (Brazil and Mexico) and overall, it’s still reporting strong growth. Overall GMV rose 71% (currency neutral) year over year in the 2024 first quarter.

Management has been improving the segment’s logistics and speeding up deliveries, and it also recently launched its Meli+ membership program. These initiatives are leading to higher loyalty and more sales. Engagement is increasing across a broader range of categories, and purchase frequency is on the rise.

The fintech segment, though, is where the fastest growth is happening. Total payment volume (TPV) increased 86% year over year in the first quarter, and the credit portfolio grew $4.4 billion, a 46% increase over last year. Monthly active users (MAUs) also increased 38% in the quarter. It has the most MAUs of any fintech company in all of its markets, except Brazil, where it has the second-place spot.

MercadoLibre stock trades at a price-to-sales ratio of 5 and forward 1-year price-to-earnings ratio of 35. That’s a bargain valuation for a stock of MercadoLibre’s caliber. It’s still in its early innings and can supercharge an investment portfolio.

2. On Holding: Challenging the activewear giants

If you’ve seen what Nike and Lululemon Athletica stocks have been able to do for shareholders over time, you might be interested in hearing more about challenger company On Holding. On is even more premium than Lululemon, but it targets the superior athlete rather than the luxury buyer, which opens it up to a broad range of economic demographics. It’s developed a loyal following of customers who prefer its unique designs — and it’s just getting started.

On is known for its CloudTec sneakers, which feature an innovative sole that’s supposed to offer extreme comfort. It also offers a large range of footwear for various types of sports, all of which have the On sole, and a range of lifestyle footwear and athletic apparel.

The Swiss-based company has been reporting incredible growth, but it’s been decelerating in the inflationary environment. Sales increased 29% year over year in the 2024 first quarter (currency neutral), led by a 49% increase in its direct-to-consumer business. Direct-to-consumer sales accounted for 38% of the total, and the expansion in its overall contribution is helping the already high margins.

The high margins are also supported by On’s premium pricing. Gross margin widened to an industry-leading 59.7%, and that’s trickling down to the bottom line — net income more than doubled in the quarter over last year.

On is still relatively unknown in almost all its markets, including Switzerland, where, according to its internal data, it has only 49% brand penetration. That’s a powerful combination of high loyalty and huge opportunity to establish brand presence, which could lead to incredible long-term gains for investors.

On’s stock trades at a high price-to-sales ratio of more than 8 but a reasonable forward 1-year price-to-earnings ratio of 34. It’s not quite bargain territory, but it’s a fitting valuation for a high-growth stock with tons of opportunity. If you invest today as part of a growth portfolio, On stock could help you create a millionaire-maker portfolio over time.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil has positions in MercadoLibre. The Motley Fool has positions in and recommends Amazon, Lululemon Athletica, MercadoLibre, and Nike. The Motley Fool recommends On Holding and recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.

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