3 actions that could be easy wealth generators

Finding market returns is a real challenge for investors at any level. Even finding individual stocks that can simply generate positive returns over long periods is no easy task. According to one JP Morgan The study, more than 40% of stocks had negative returns between 1980 and 2021.

For this reason, early stage investors do best when they stick to real winners. Let’s look at three proven winning stocks to buy that have what it takes to continue to help investors build wealth over time.

1. Apple

There is a reason why Apple (AAPL 0.25%) is the largest holding company of the famous investor Warren Buffett. Apple has done what few consumer electronics companies have been able to do and established itself as a luxury brand. At the same time, they create products that consumers upgrade to every few years and are considered so important that cell phone carriers help fund the purchases.

The driving force behind Apple’s future success, however, is its services business, which is led by its app store. Currently, Apple takes a 30% cut (15% for smaller developers) for nearly every dollar spent by customers in its app store. That makes it a very high-margin business segment and the company’s fastest-growing, with annual revenue up 14% last quarter to $24.2 billion. Its services business had gross margins of 74% last quarter, compared to its products businesses, which had gross margins of about 35%.

Although there have been regulatory challenges that have forced Apple to open up its business in the European Union to third-party app stores, the company has come up with creative ways to still make a lot of money. This includes charging third-party app stores 50 euro cents ($0.56) per user per year, and the same amount from any app developer that sees more than 1 million installs per year for every new install over 1 million.

With a very sticky business, the company should start benefiting from artificial intelligence (AI) innovations in the coming years. This will be from both a product update cycle and higher service revenue from new AI application innovations where it will be reduced.

Apple has proven to be a generator of wealth over time and that should continue in the future. It has also shown great adaptability, growing from a nearly bankrupt computer manufacturer to one of the largest companies in the world.

2. Amazon

Amazon (AMZN -0.20%) has proven to be one of the most adaptive and innovative companies of the last three decades. And ultimately, that business ethos is what will continue to make stocks a wealth generator.

The company started as an online bookseller, but has adapted its model to become an e-commerce marketplace and logistics giant. He also developed the first public cloud service with Amazon Web Services (AWS), which grew to become his most valuable business.

With artificial intelligence as a huge opportunity, there’s no doubt that Amazon will invest to win, a formula that has helped make the company what it is today. The company is attacking AI in several ways. This includes helping AWS customers build their own AI solutions through the SageMaker and Bedrock platforms. SageMaker helps customers develop their own AI models, while BedRock provides customers with large base language models (LLMs) from both Amazon and AI start-ups. The company is also developing its own AI chips as well as applying AI to its own marketplace and logistics business to help increase revenue and increase efficiency.

Amazon should continue to dominate the e-commerce landscape and has plenty of AI-related growth opportunities ahead of it. The company has proven to be a wealth generator over the years, and its ability to adapt and innovate should continue to drive wealth creation over the long term.

3. Walmart

Walmart (WMT -1.03%) faced a huge threat from the growth of Amazon and e-commerce, but not only adapted, but learned to thrive. The company went from being a general merchandise retailer to the nation’s largest grocery store operator.

With its scale and buying power, Walmart continues to be the nation’s largest low-cost retailer, but it has also managed to attract more higher-income customers over the years. It has attracted those customers through things like its Walmart+ membership, which for about $98 a year offers members free same-store delivery on orders of $35 or more, with items priced the same as in its stores. It also rolled out features like scan and shop, allowing Walmart+ members to skip the line and check out from their phones.

Image source: Getty Images.

The combination of everyday low prices plus the added convenience of these offerings has really started to resonate with higher-income consumers. Meanwhile, the company sees solid e-commerce sales. In addition, its Walmart Connect advertising business is experiencing strong growth, providing both online and offline solutions for brands and marketplace sellers looking to promote their products on Walmart sites.

Walmart is poised to remain the world’s largest retailer and has proven to be a winner in almost any economic environment. As such, it will continue to help investors build wealth over the long term.

Wealth Building Stocks

What all three of these companies have demonstrated over the years is adaptability. It has made them long-term winners and will continue to make them winners in the future, helping investors build long-term wealth.