雅虎香港財經 The 7 Best Stocks to Buy for Long-Term Growth
When it comes to investing for the long-haul, blue-chip stocks may first come to mind. However, alongside these venerable, steady names, adding a few of the best stocks to buy for long-term growth may be another profitable decision to make.
The emphasis here, of course, is on “long-term,” rather than merely “growth.” There are plenty of fast-growing companies that could be soon approaching a wall in terms of further expansion of their revenues and/or profitability. There are also plenty of high-growth companies in cyclical industries, which due to their volatility, may not make for great choices in a slow-and-steady portfolio.
That said, when it comes to long-term growth stocks, there are many such opportunities available to investors. Shares in these companies have strong potential to deliver steady, above-average gains, as they move higher in tandem with earnings growth.
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Dividend growth can also provide a further boost to long-term total returns. So, what are some of the best long-term growth stocks to buy today? Consider these seven, all of which, due to either overarching or company-specific trends, have extensive growth runway.
Albemarle | $203.78 | |
Dollar Tree | $148.49 | |
Shift4 Payments | $62.59 | |
PDD Holdings | $70.09 | |
SoFi Technologies | $6.08 | |
Texas Roadhouse | $109.23 | |
UnitedHealth | $486.20 |
Albemarle (ALB)
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With the sharp plunge in lithium prices since late last year, I’ll admit recommending Albemarle (NYSE:ALB) as one of the best long-term growth stocks may seem questionable. Taking a look at price trends for spot lithium, at first glance it appears as if there was truly a “lithium bubble,” and it is in the midst of popping.
However, while the price of lithium may be tumbling down from its 2022 highs, growth prospects for ALB stock are much stronger than you think. There’s much to suggest that the lithium price crash is merely a short-term phenomenon.
Long-term tailwinds, namely accelerating global demand due the use of lithium in electric vehicle (or EV) batteries, will outweigh sluggish Chinese demand in the near-term. Even with the current drop in prices, Albemarle is guiding for another year of record growth, as it sells a substantially larger volume of battery-grade lithium.
Dollar Tree (DLTR)
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High inflation has placed pressure on corporate profit margins and household budgets alike, but it’s been a growth booster for Dollar Tree (NASDAQ:DLTR). Last fiscal year, the discount retailer reported a 24.3% jump in diluted earnings per share.
Although the company has guided for a decrease in earnings for this fiscal year, don’t assume that means the days of DLTR stock as a growth play are in the past. With supply chain bottlenecks easing, and with the current economic downturn expected to ease by 2024, analysts expect a re-acceleration in earnings growth over the following two fiscal years.
On a longer timeframe, even as inflation returns to historic norms, trends such as increased traffic from middle class and affluent households, alongside further expansion of its bricks-and-mortar retail footprint, could drive continued above-average increases in earnings growth, sending DLTR to loftier price levels over time.
Shift4 Payments (FOUR)
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Shift4 Payments (NYSE:FOUR) isn’t a household name. Even so, it has, and stands to continue, benefiting greatly from the “future of payments” trend. A fast-growing payment processor, the company has focused on becoming a payments market leader in several specific sectors.
These include casino gaming, live sports, as well as travel and hospitality. FOUR stock (which debuted in the public markets in 2020) initially took off like a rocket, but was hammered during the 2021-2022 tech sell-off. Although shares have since bounced back, don’t assume that it’s too late to lock down a position in what may be one of the best long-term growth stocks.
Despite the current economic challenges, Shift4 Payments is expected to more than double its earnings this year. By 2025, some analysts believe EPS could top $6 per share. Not too shabby, given you can buy FOUR today for around $63 per share.
PDD Holdings (PDD)
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PDD Holdings (NASDAQ:PDD) is best known as the parent company of Pinduoduo, a leading Chinese e-commerce platform that made a name for itself by offering big discounts on group purchasing by retailer customers.
Economic challenges stemming from last year’s “zero Covid” shutdowns in China continue to weigh on fiscal results. This in turn has resulted in a sharp pullback for PDD stock lately. However, as China’s “reopening” continues, the performance of its flagship Pinduoduo are poised to improve, enabling the company to get back on track with revenue/earnings growth.
That’s not all. Besides Pinduoduo, PDD also owns Temu, an American-based online marketplace for discounted goods shipped directly from China. In short, this stock gives you exposure to the continued growth of e-commerce in both the largest and second-largest world economies. To top things off, this long-term growth stock trades at a reasonable 22 times earnings.
SoFi Technologies (SOFI)
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The best stocks to buy for long-term growth discussed above have all been already-profitable companies with strong earnings growth prospects. However, that’s not the case just yet for neobank and fintech firm SoFi Technologies (NASDAQ:SOFI).
But while SoFi continues to report negative earnings, this could change later this year. At least, based on 2023 guidance, which calls for SOFI stock to report positive GAAP earnings by year’s end. From there, the resumption of student loan payments, coupled with continued growth of SoFi’s banking and fintech operations, could drive further increases in its bottom line.
As I have discussed previously, SOFI could report earnings of 50 cents per share by 2026. Assuming that the company could attain an earnings multiple in the 20 to 30 range, a gradual move back to the double-digits is within reach for this stock, which today changes hands for around $6 per share.
Texas Roadhouse (TXRH)
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Texas Roadhouse (NASDAQ:TXRH) is a name I have discussed recently, when talking about the best long-term growth stocks to buy that also offer investors generous dividends. To income investors, TXRH’s forward yield of 2.02% may seem like little to get excited about.
But given the company’s dividend growth track record, this payout could be a big contributor to total returns over a multi-year timeframe. More importantly, besides this solid dividend, TXRH stock, which is up more than five-fold over the past decade, likely has room to run from here.
Mostly, because the company is poised to keep growing at a double-digit clip for years to come. This may enable TXRH to sustain its current valuation (27.4 times earnings). From there, shares could appreciate in line with increased EPS. If you’re searching for growing yields alongside capital growth, consider Texas Roadhouse stock one of your strongest choices.
UnitedHealth Group (UNH)
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UnitedHealth Group (NYSE:UNH) should be considered one of the top long-term growth stocks to buy, as shares in this health insurance and managed healthcare giant offer the stability of a blue chip, coupled with strong growth prospects.
Despite its size (over $250 billion in revenue, $20 billion in net income, and a market cap topping $470 billion), UNH has continued to report annual EPS growth in the low-to-high teens range. This trend continues, as seen in the company’s latest quarterly results. Last quarter, revenue grew 15% year-over-year, with operating earnings growing 16% compared to the prior year’s quarter.
High growth with UNH’s Optum care and prescription benefits management unit were the main driver for these strong results. UNH stock has pulled back after this latest earnings release, after a big earnings run-up, which may perhaps make now the time to start building a position in this long-term growth stock.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.
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