Key Points

Investing in the right growth stocks can help you build wealth for retirement. Companies that are seeing above-average growth in their businesses are usually in a competitively strong position that leads to years of compounding returns for shareholders.

If you have $5,000, or even less, that you can afford to commit to a long-term investment strategy, there are attractive opportunities to put that money to work. To give you some ideas, read why three Fool.com contributors believe Amazon (NASDAQ: AMZN) , MercadoLibre (NASDAQ: MELI) , and Shopify (NASDAQ: SHOP) are well positioned to deliver solid returns for decades to come.

Winners tend to keep on winning

John Ballard (Amazon): Amazon has delivered incredible returns for investors, and the recent pullback is a great opportunity to buy shares at a more attractive valuation. Amazon has multiple ways to drive growth to fuel shareholder returns.

Amazon is known for its online store, where it held 37% share of the U.S. e-commerce market in 2023, according to Statista. What's attractive about Amazon's competitive position is that it generates a lot of online sales from repeat purchases from over 200 million Prime members, who pay subscription fees to get free shipping and other benefits. This provides high visibility for future sales, which typically gets rewarded by a higher valuation by investors.

Another reason Amazon is a stock you can confidently hold forever is that it's a forward-thinking company. Founder Jeff Bezos infused the company with an experimental culture that is willing to take risks. Large companies often fall into the trap of playing defense and don't take enough risks to keep innovating. Businesses that don't continue to take risks leave the door open for disruptive new entrants to offer something better to consumers.

Amazon will continue to win because of its investments in artificial intelligence (AI). Amazon Web Services (AWS) generated $112 billion in revenue over the last year, making it the leading cloud services provider. Companies are spending billions with AWS to use AI with their data, and of course, Amazon is benefiting from the same technology.

Amazon has a huge opportunity to lower costs in its online retail business using robotics, which could lead to massive growth in earnings and cash flow. AI is enabling Amazon's customers to order products using their voice with Alexa. There are over 600 million Alexa devices in customers' homes, which strengthens Amazon's competitive advantage.

The company's cost reduction efforts have significantly increased its operating cash flow over the past few years, but the stock has yet to catch up to what is happening here. The stock has historically traded around 27 times its cash from operations, but investors can currently buy the shares at 20 times cash flow.

As good as it is today for this e-commerce giant, it's only going to get better

Jennifer Saibil (MercadoLibre): MercadoLibre stock is absolutely crushing the market this year, up 48% while the S&P 500 is roughly flat. That's nothing new. It routinely beats the market as it demonstrates phenomenal results, and investors expect a lot more to come.

The company sees a huge market opportunity as its regions slowly shift toward a tech future. Its main business is e-commerce, and it has also built up a robust fintech segment, with services like credit cards and digital payments. The e-commerce market in its region is still underpenetrated and lags the U.S. by about 10 years. Eighty-five percent of retail sales still happen offline, and MercadoLibre controls about 5% of all retail in the region. It has a combined population of more than 500 million in its markets and a gross domestic product (GDP) of more than $5 trillion, and as the leader in the industry, it's well positioned to benefit from the shift that it's also helping to create. One way it's bringing more people online is by offering free shipping as well as flexible shipping options, and it's reducing costs to support these initiatives as well as others. Despite strong competition and its large size, its gross merchandise volume (GMV) is still outpacing competitors in Mexico and Brazil. Total GMV increased 40% year over year (currency neutral).

It's a similar story in fintech. Monthly active users increased 31% year over year, and management is launching products that offer a better user experience to keep bringing over new business. It noted that its savings rates are at benchmark or higher, while most of the population's money is still tied up in legacy banks that offer lower yields. Assets under management increased 103% year over year in the first quarter, which led to higher engagement and an increase in the total credit portfolio of 75% year over year.

These are incremental steps in a long story, and each step comes with huge sales and profits for MercadoLibre. As it keeps rolling out new products, improving its platform, and capturing market share, expect the stock to match its growth.

An e-commerce company that keeps growing and growing

Jeremy Bowman (Shopify): Shopify essentially invented e-commerce software. Founder Tobi Lütke created the original platform to help his snowboard shop and then realized the software was a better business idea.

Over the last decade, Shopify has delivered incredible growth as it's become the de facto platform for online sellers big and small, handling and assisting everything from payments to marketing to web design to fulfillment.

These days, Shopify continues to deliver steady growth and is innovating with new technology like AI.

In the first quarter, revenue jumped 27% to $2.36 billion, and its profit margins have significantly improved as it reported net income excluding equity investments of $226 million, a profit margin of nearly 10%.

Shopify is still seeing impressive growth in gross merchandise volume (GMV), which was up 23% from the quarter a year ago. Shopify's leadership in the industry gives it pricing power, and the company should be able to continue passing along price increases for its subscription pricing tiers as needed.

The company is also investing in AI, increasing its value proposition for its merchants with products like Shopify Magic, a suite of AI-powered tools to handle things like product descriptions, change image background, get FAQ suggestions, help with email correspondence with customers, and handle live chats.

Shopify has long been at the forefront of e-commerce technology, and the addition of Shopify Magic should only burnish that reputation.

If you have $5,000 to invest, Shopify, which is down about 15% from its peak a few weeks ago, looks like as good a bet as any for long-term investors.

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