Patience is one of the most valuable qualities to invest in. Without it, you can invest in, say, Amazon.com (NASDAQ: AMZN) in 2010, when it traded at about $ 180 a share, and then sold it for about $ 400 a share three years later – more than doubling your money, but losing a lot because the stock exceeded $ 3,000 a share.
The trick to making big money in the stock market is usually just to buy big companies and hang on to them for a long time through ups and downs – because big companies will recover from declines and reach new highs. You do want to keep up with them, to make sure their prospects stay rosy, but otherwise there is little to do.
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Here are three growth stocks to consider for places to sleep in your long-term portfolio. It looks like it could well reward shareholders in the coming decade.
1. Veeva Systems
Maybe you have not heard of it yet Veeva Systems (NYSE: VEEV), but it is a significant company with a recent market value of $ 39 billion – larger than that of Twitter, Ford Motor Company, Hershey, of Southwest Airlines. Veeva offers cloud-based technology and services that help companies bring new products and services to market while complying with industry regulations. This is especially useful in the pharmaceutical field, where drugs being developed have to undergo rigorous clinical trials.
Interestingly, Veeva has recently become a “Public Benefit Corporation”, which means that it is legally required to consider not only the interests of shareholders in its decision-making and actions, but also of customers, employees and other stakeholders. If you are interested in socially responsible investments, please do so.
How is his business actually doing? Well, the latest results in the financial year increased total revenue by 33% year-on-year and net income by 26%. Management noted that “Veeva ended the year with 993 customers, compared to 861 the previous year.” (This is a jump of 15%.) Also: ‘Revenue revenue for the subscription was 124% for the year’, which means that customers on average not only held on, but spent more.
With a recent price-to-earnings ratio (109), Veeva Systems’ share is not cheap. But if you plan to last at least ten years, you’ll probably get out. Or to be safer, add it to your watchlist and hope for a setback in the price.
2. Netflix
Netflix (NASDAQ: NFLX) requires little introduction as a commonly used service and also as a stock. Over the past 19 years, its shares have risen a total of 44,557% – enough to turn a $ 1,000 investment into $ 446,287. This is an average annual growth rate of over 38%! (In this context, the total annual average return over long periods was closer to 10%.)
It has been one of the top performers in the stock market in recent decades. Netflix also serves as a great object reading that shows how big companies can stumble and catch their stock, and yet they can still recover and move on to great heights. In 2011, Netflix CEO Reed Hastings saw streaming video hold a lot of promise, which is why he announced plans to eliminate the DVDs per DVD company in ‘Qwikster’, while Netflix is focusing on streaming. There was widespread mockery or ridicule about the plan, customers were upset at the thought of paying for two subscriptions instead of one, and the stock got a big hit. The plans were scrapped and Netflix’s business began to grow again.
Today it’s a flowing mouth, with a recent market value of $ 229 billion – worth more than Nike or PepsiCo. In the last quarter, Netflix added more than 8 million new subscribers, bringing the total to more than 200 million. Revenue for the quarter rose 21.5% year-on-year, and another bit of good news was that the company said it did not intend to take on debt to finance its operations anymore. In other words, there is a lot of cash coming in – and expect it to equal cash flow in the coming year.
Netflix’s share may seem strong, with a P / E ratio of 85 and a price-to-cash flow ratio of 97, but both of these numbers are well below their five-year averages. For long-term investors, buying a stock seems like a reasonable moment. (If you are skeptical but still like the company’s long-term prospects, consider buying just a small position in the company to get started.)
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3. Square
Finally there is Square (NYSE: SQ). You may know it as the company behind the small square credit card readers connected to the smartphones that some merchants use, but the fintech company (financial technology) is now about much more than that, as the recent market capitalization of $ 110 billion indicates. (That price tag makes it more valued than American Express and FedEx.)
Square currently has two main businesses – its “Seller” division, which helps merchants process credit card transactions via different devices, and the newer (and faster-growing) Cash App service, which is much like PayPal’s Venmo. It has banking features, such as direct deposit, and allows users to send and receive money – and even invest in shares.
Square was challenged during the pandemic because closed stores mean fewer cases for it. But we are on the verge of putting the pandemic behind us and fully opening up our economy, and Square is likely to benefit from it. Meanwhile, the company is growing and increasing its active Cash App user base year-on-year by 50% in the last quarter. It has also entered the bitcoin world, with CEO Jack Dorsey commenting on a recent call from the company’s earnings: “We believe it is most likely to bring more people into the economy at a fair price. way to empower. “
Square is probably the strongest price of these three portfolio candidates, with a recent P / E ratio of 550. (However, its forward-looking P / E is a slightly more palatable 192 based on next year’s expected earnings.) Again If If after more research you are very positive about Square, you can buy stocks now – or buy a smaller position now or just add it to your watchlist if it pulls back.
If you are not interested in any of these companies, there are many other fast growing businesses to explore and to possibly invest in.
This article represents the opinion of the author, who may not be in agreement with the ‘official’ recommendation position of a Motley Fool premium advisory service. We are furry! When we question an investment thesis – even one of our own – it helps us all to think critically about investing and to make decisions that help us become smarter, happier and richer.