If you want to make money in the stock market, patience is the key. While you could take a chance on the next big meme stock, you might end up incurring a significant loss by doing so. When you’re looking at investing for retirement, safety is key.
One stock that strikes a good balance between being safe and having strong growth opportunities is Intuitive Surgical (NASDAQ: ISRG). The company is profitable and it’s growing, but can this be a good enough investment to make you a millionaire?
The future is full of growth potential
Investing in tech can be a surefire way to make money. And one of the hottest trends in the future will be robotics, including robot-assisted surgery. Intuitive’s da Vinci devices help surgeons perform complex operations more precisely than if they were to do them on their own. There’s tons of growth potential in the industry, but there’s a caveat: It could take a long time to materialize.
According to Grand View Research, the global market for surgical robots was worth just $3.6 billion in 2021. By 2030, it will be worth approximately $18.2 billion with a compound annual growth rate (CAGR) of 19.3% until then. That’s still not a terribly large industry; by comparison, the same researchers estimated that the emerging telehealth industry was already worth more than three times that in 2021 at a value of $62.4 billion.
But the key is that the surgical robotics industry is still in its early growth stages, and that can make investing in it optimal right now, especially if you have 20-plus investing years left before you retire.
Intuitive is already generating impressive results
What makes Intuitive a particularly strong long-term investment is the company’s steady growth. There aren’t significant jumps in its sales, but there also aren’t steep losses and reckless spending that can sometimes be prevalent in fast-growing companies.
Revenue of $3.1 billion in 2017 has since risen by 82% to $5.7 billion this past year. That averages out to a CAGR of 16.2%. Profits during that time have nearly tripled, rising from $660 million to $1.7 billion, equating to a CAGR of 26.8%. Intuitive’s high gross margins of more than 65% also put the healthcare company in a great position to always turn a profit, which can help set it up for long-term success.
Can the stock make you a millionaire?
Investors are currently paying a multiple of 42 times earnings for Intuitive’s stock. That will likely come down as the company’s growth slows, which might not be for years. Here’s a table that summarizes how much a $50,000 investment in the company could potentially be worth over the next 20, 25, and 30 years, assuming that the price-to-earnings multiple drops to 30 and the business grows, on average, at a rate of 15%:
The big assumption is certainly that earnings continue growing at a rate of 15%. That might be a bit too optimistic. It’s also possible that the earnings multiple will fall lower than 30. So it’s worth noting the risks.
But given the growth opportunities in the industry, there is the potential to become a millionaire by investing in a top growth stock like this one. With Intuitive Surgical, you’re getting a fairly low-risk investment you can hang on to for decades.