There are two major ways to invest for capital appreciation. One is “growth” investing, where traders pursue companies expanding profits and sales at an impressive pace, and the other is “value” investing, where investors seek out companies with strong underlying value based on the underlying assets or the overall value of the company compared with metrics such as debt or other liabilities.
Growth stocks can deliver more impressive results, as successful companies expand rapidly and their stock prices rise in unison. But there can also be more risk because startups often fail to deliver on their hyped-up promises, or a once-vibrant market buckles under competition or changing consumer tastes.
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For those looking for long-term growth without as much risk, it can pay to invest in companies that are large and established but still expanding at a good rate. The following picks all are valued at more than $20 billion each but should grow further in the years ahead based on track records of expanding sales and profit along with favorable growth forecasts:
— AbbVie Inc. (ticker: ABBV)
— Adobe Inc. (ADBE)
— Apple Inc. (AAPL)
— Booking Holdings Inc. (BKNG)
— Costco Wholesale Corp. (COST)
— DraftKings Inc. (DKNG)
— Enphase Energy Inc. (ENPH)
— Nvidia Corp. (NVDA)
— Palo Alto Networks Inc. (PANW)
AbbVie Inc. (ABBV)
AbbVie is among the top pharmaceutical companies in the world based on sales, with about $55 billion in revenue forecast this year and projections for $58 billion in 2025. The company’s offerings include a one-two punch of blockbuster anti-inflammatory drugs, Skyrizi and Rinvoq, which treat ailments such as Crohn’s disease and arthritis and are projected to collectively bring in $16 billion in sales this year. And by 2027, the company forecasts that figure to grow to $27 billion. Few things are certain when it comes to investing, but banking on the long-term health care needs of an aging population is pretty close to a sure thing.
Adobe Inc. (ADBE)
Creative software and services firm Adobe is the go-to platform for digital designers around the world. But with analysts predicting a 20% revenue growth rate this year and another 11.5% forecasted for 2025, the company is hardly resting on its laurels. Adobe is looking to the future, including investing heavily in artificial intelligence tools to make it easier for photographers and graphic artists to turn their visions into reality.
Apple Inc. (AAPL)
When you think of long-term growth stocks, one of the first names that springs to mind for many is Apple. The roughly $2.9 trillion company has tripled over the past five years and is up about 790% in the past 10 years, thanks to consistent double-digit revenue and earnings growth over that span, even as it already commands dominant scale. The company also is returning serious cash back to shareholders, including a recently-approved $110 billion stock buyback plan that is the largest in U.S. history. With strong financials and investor support, AAPL is a growth stock to count on for many years to come.
Booking Holdings Inc. (BKNG)
Some investors are scared off by the fact that Booking’s share price is one of the highest on Wall Street right now, at about $3,700. But as the digital travel giant behind brands including its namesake Booking.com along with Kayak, OpenTable and other portals, BKNG maintains a stranglehold on discretionary consumer spending in its category. Despite a significant rollback during the pandemic, BKNG has still outperformed the S&P 500 comfortably over the past five years, with a 107% return in that period versus about 84% for the index. What’s more, projected revenue is expected to top $23 billion this year — way ahead of the $15 billion in 2019 before the pandemic-related travel shutdowns that followed. That shows the company has long-term staying power, even during deep but temporary changes in spending trends.
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Costco Wholesale Corp. (COST)
Consumer king Costco has made a name for itself with an army of loyal customers who adore its Kirkland store-brand products and will shop at the no-frills warehouse for everything from clothes to electronics to prescription eyewear to new tires for their vehicles. COST cashes in on that loyalty via strong sales, but also via a pay-to-play model where memberships provide significant recurring revenue. About 128 million members at around $60 a pop adds up to roughly $7.7 billion, topped with a 93% renewal rate to boot.
With a strong foundation like that, Costco isn’t going anywhere. Well, that’s not entirely true — COST stock seems to only be going up, with a five-year return of about 220% to more than triple the returns of the S&P in the same period.
DraftKings Inc. (DKNG)
While one of the younger stocks on this list, DraftKings is at the center of what is turning out to be one of the biggest multiyear growth trends of the 21st century. The online betting business has been picking up steadily since a 2018 Supreme Court ruling that overturned federal prohibitions on sportsbooks, and DKNG has managed to not just outlast the competition but tighten its grip on the market. With nearly the same market share as privately held FanDuel, analysts predict 34% revenue growth this year and 18% growth in 2025. What’s more, it expects a consistent move into the black over the next fiscal year as it turns that top-line success into lasting profits for years to come.
Enphase Energy Inc. (ENPH)
Solar energy stocks can be volatile in the short term based on energy market prices and supply and demand trends for related technology components. But in the long run, solar has a great long-term growth proposition in the age of climate change. Take ENPH, one of the leading U.S. firms in the industry, which recorded just $624 million in revenue for 2019. Analysts expect $1.5 billion in revenue this year and about $2.2 billion in 2025. Enphase is best known for its specialty as a provider of “microinverters,” which convert energy captured in those cells into usable energy for homes and businesses. And while shares are admittedly down from their 52-week highs, the company has pivoted to include energy storage solutions to address a growing market in California to supplement and expand upon its business. There’s a bit more risk in this stock than others, but with a track record of impressive revenue growth and the durable tailwind of global investment in alternative energy, ENPH seems like a stock that’s worth a look for the coming decade.
Nvidia Corp. (NVDA)
Some investors chase cheap stocks on the premise that they can buy low and sell high. But NVDA is a prime example of the opposite approach: Buy a stock that’s high after a tremendous run and sell when it moves even higher. It’s hard to believe, but 10 years ago Nvidia was a borderline mid-cap at about $10 billion in market value. But its market cap is now up to about $2.3 trillion after an amazing run. And it’s not exactly slowing down, with NVDA stock up about 223% in the past 12 months alone. Yes, a lot of success is already baked in, including forecasts for about 84% revenue growth this fiscal year over the previous year. However, Nvidia has a history of delivering and building new business lines based on the next high-tech trends.
Palo Alto Networks Inc. (PANW)
In an age of chronic cybersecurity concerns, $100 billion leader Palo Alto stands out as a company that has what it takes to protect its customers now and in the years to come. Consider its world-class clientele, including Southwest Airlines Co. (LUV), consulting giant Accenture PLC (ACN) and oil titan Schlumberger Ltd. (SLB), to name a few. Analysts predict 15% revenue growth both this year and next. Shares are up about 322% in the past five years thanks to impressive results, and as PANW remains a leader in the cybersecurity market, it’s hard to imagine the current long-term growth trend running out of steam anytime soon.
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Update 05/17/24: This story was previously published at an earlier date and has been updated with new information.
