It’s a natural desire to want to grow your money so that you can better prepare for retirement. The natural step will be to invest your money in growth stocks that can enjoy steady share price appreciation. By doing so, you can grow your money into something much larger over time.
The key to growing your wealth is to look for businesses that can grow their revenue and profits sustainably. In other words, these stocks should not be one-trick ponies that fizzle out after a brief run. What you need to look for are businesses with a strong competitive edge that have a track record of growing their revenue and earnings. They should also possess catalysts that can help them to continue growing in the foreseeable future.
If you have some spare cash, it’s time to look into these three attractive growth stocks that could help you to eventually double your money.
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Cummins(NYSE: CMI) is a leader in power solutions that manufactures and sells a wide range of products, such as diesel engines, fuel systems, and turbochargers. The company has displayed solid growth over the years, with sales rising from $24 billion in 2021 to $34.1 billion in 2023. Net income (excluding exceptional items) increased from $2.1 billion to $2.7 billion over the same period. The business is also a consistent free-cash-flow generator, with free cash flow rising from $1.5 billion in 2021 to $2.8 billion in 2023. Cummins also increased its quarterly dividend per share from $1.35 in 2021 to $1.68 by 2023.
The business continued to grow in the first nine months of this year, albeit at a slower pace. Revenue inched up 0.5% year over year to $25.7 billion while operating income crept up 1.5% year over year to $3 billion. Net income soared 63% year over year to $3.5 billion because of a one-off gain on the disposal of Atmus, a filtration technology company. Excluding the $1.3 billion non-taxable gain, Cummins’ net income would have risen by close to 3% year over year to $2.2 billion. The board further increased the company’s quarterly dividend by around 8.3% to $1.82.
Cummins shared its growth plan during its recent Investor Day event and management is raising its targets for 2030. Its core business is expected to achieve $39 billion to $42 billion of revenue by 2030 while generating more than $35 billion of operating cash flow from 2022 to 2030. Accelera, its zero-emissions brand launched in March 2023, is projected to contribute around $3 billion to $9 billion in incremental revenue and should break even by 2027.
In total, Cummins expects revenue to hit $43 billion to $48 billion by 2030 with $34 billion to $36 billion of operating cash flow generated. Management has identified margin expansion drivers for each of its five business segments and set clear financial targets for steady, sustained growth. Sales should enjoy a 5% to 7% per annum growth with earnings per share growing at between 7% to 9% until 2030, driven by enduring themes such as continued OEM outsourcing, global data center investments, and growth in the aftermarket segment.
Paycom Software(NYSE: PAYC) offers businesses a cloud solution for human resources and payroll processing. The company’s platform offers the entire suite of services from onboarding to talent management, allowing its customers to streamline processes and increase efficiency. Paycom grew its revenue from $1.1 billion in 2021 to $1.7 billion in 2023, with more than 98% of its revenue being recurring in 2023. Net income increased from $196 million to $340.8 million over the same period. The business also generated copious and increasing amounts of free cash flow. Free cash flow went from $193.2 million in 2021 to $288.2 million in 2023. The cloud company also paid out a consistent quarterly dividend of $0.375 per share since May 2023.
Paycom reported a strong set of earnings for the first nine months of 2024. Revenue rose 10.3% year over year to $1.4 billion while operating income climbed 41% year over year to $485.8 million. Net income surged 50% year over year to $388.4 million. The company also continued to churn out healthy free cash flow to the tune of $232 million, up 8% year over year.
During Paycom’s recent earnings call, CEO Chad Richardson remarked that demand for automated solutions remains strong, acting as a tailwind for the business. The company has developed its artificial intelligence (AI) solutions internally to improve service response times by 25% and believes that there are other opportunities to monetize AI. Paycom is also active in four countries and recently onboarded a multinational manufacturing company, which implies that there is potential for international expansion. It still holds less than 5% of its total addressable market, indicating strong opportunities for potential growth in the coming years.
Walmart(NYSE: WMT) operates more than 10,500 stores in 19 countries and employs 2.1 million staff globally, with 1.6 million in the U.S. alone. The company saw steady growth in its top and bottom lines over the past several years, attesting to the strength of its business model and brand franchise. Revenue rose from $572.8 million in fiscal 2022 (ending Jan. 31) to $648.1 million in fiscal 2024. Net income improved from $13.7 billion to $15.5 billion over the same period.
Another positive point is the retailer’s strong free-cash-flow generation, which went from $11.1 billion in fiscal 2022 to $15.1 billion in fiscal 2024. This increase in free cash flow helped fund Walmart’s dividend rise, which went from $0.183 to $0.2075 (note: shares have undergone a 3-for-1 split recently). This increase marks the 51st consecutive year that Walmart has increased its dividend, and the recent 9% year-over-year increase marks the largest such increase in over a decade.
The first nine months of fiscal 2025 saw this momentum continue. Total revenue climbed 5.4% year over year to $500.4 billion with operating income increasing by 8.8% year over year to $21.5 billion. Net income surged by 41% year over year to $14.2 billion, and the retailer continued to churn out healthy free cash flow of $6.2 billion, up 43% year over year. For the third quarter alone, Walmart saw global e-commerce sales jump 27% while its global advertising business grew 28%.
Walmart is well-positioned for further growth. Earlier this year, the retailer announced that it plans to build or convert more than 150 stores while remodeling existing stores. These new or remodeled stores will represent Walmart’s “Store of the Future” concept, which features improved layouts, a wider product selection, and technological advancements to help staff to better assist customers and make the shopping experience more enjoyable.
Two months ago, Walmart also expanded its core pet care offerings by increasing access to virtual veterinary care and offering pet grooming services and pet food and supplies. Earlier this month, Walmart completed its acquisition of Vizio, which will help advertisers to better reach its customers to enhance their shopping journeys. This purchase will help to further boost the company’s advertising business. With these initiatives in place, investors can look forward to more growth from Walmart along with a continued increase in its quarterly dividend.
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Royston Yang has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Paycom Software and Walmart. The Motley Fool recommends Cummins. The Motley Fool has a disclosure policy.
