3 Monster Stocks to Hold for the Next 10 Years
Are you looking for high-odds, high-growth prospects to buy and hold for the next decade? That’s a tall order to be sure. Most growth stocks can require a holding period of forever to realize their full potential. Conversely, shorter-term holdings often end up needing more time to pay off.
There are a handful of stocks that currently fit the bill, though. They are companies with a product or service that will remain marketable for a long while, but also companies in businesses that are entering a prolonged period of above-average growth. Here are three to consider adding to your portfolio.
Few investors would deny that the advent of artificial intelligence (AI) has game-changing implications. But most people would also struggle to name a single specific problem AI is actually addressing that couldn’t be solved another way. To date, these tools are mostly being used to fetch information from the web in a conversational way, or fluidly allow your smartphone or computer to handle some of life’s more annoying micro-tasks.
That’s changing. As could have been anticipated, for instance, AI is now being used to create drugs. Recursion Pharmaceuticals (NASDAQ: RXRX) is leading the charge.
With nothing more than a passing glance it looks like just another drug development company. It’s got roughly a dozen different clinical trials underway right now, some of which are its own, some of which are those of other pharmaceutical companies, and none of which are beyond phase 2 testing — meaning they’re all still years away from even possibly bearing revenue.
Dig deeper, though. It’s not the drugs in Recursion’s R&D pipeline making this company such an interesting investment prospect. It’s how all these drugs were initially designed. Before any clinical experiments to see what might work, these ideas were run through a purpose-built AI-powered modeling software called RecursionOS. With this technology’s 23 petabytes’ worth of chemical and molecular data, testing that might otherwise take weeks to complete (only to end in expensive failure) is instead virtually completed in a matter of minutes at a fraction of the normal testing cost. This not only reduces the amount of time and money required to be in the pharmaceutical development business, but raises the odds of eventual success by allowing companies to focus on their most promising prospects.
The pharma industry is increasingly willing to pay Recursion for access to such a platform. Last fiscal year’s top line is projected to improve by more than 50% year over year, with more than 20% growth expected for the fiscal year now underway.
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That’s still just the beginning, though. Straits Research believes the AI drug discovery and development industry is poised to grow at an annualized pace of more than 30% through 2030.
Recursion Pharmaceuticals isn’t currently profitable. But with this sort of tailwind already blowing, this drug-development technology provider could conceivably make its way out of the red and into the black within the next 10 years.
To say the television entertainment business has evolved over the course of just the past five years would be a considerable understatement. It’s been radically and permanently changed.
Think about it. Cable television was already on the defensive thanks to the advent of streaming platforms like Netflix. Then the COVID-19 pandemic pushed a slew of streaming platforms into the mainstream. The number of U.S. cable customers has been cut nearly in half since its peak in 2013. Conversely, Netflix’s Canadian/U.S. customer headcount has swollen to nearly 90 million, nearing cable’s reach at its peak of just over 100 million households. The Walt Disney Company’s Disney+ boasts 56 million Canadian and U.S. customers. Paramount, Warner Bros. Discovery, and Comcast also entered the on-demand video race around that time.
This rise of the streaming business, however, would look markedly different were it not for a once-little start-up called Roku (NASDAQ: ROKU), which makes tech allowing consumers to easily access all of these streaming services via the television in their living rooms. Industry research firm Pixalate reports Roku delivers 37% of North America’s connected-television advertisements, easily topping next-nearest Samsung’s 17% share. Not even the venerable Amazon and Apple are serious threats.
There’s enough future growth for the streaming business to go around and still drive strong growth for Roku’s top and bottom lines. Precedence Research says the global streaming market is set to grow at a compound annual rate of nearly 21% over the coming 10 years.
Roku’s dominance of the industry’s most important market means it should be able to it should be able to capture a significant share of this growth.
Finally, add Rocket Lab USA (NASDAQ: RKLB) to your list of monster stocks to buy and hold for the next 10 years.
Launching satellites isn’t anything new. Indeed, it seems relatively commonplace, with Elon Musk’s SpaceX sending up its massive Falcon rockets a few times per month, while Jeff Bezos’ Blue Origin has ferried 47 people into space with nine different manned flights. These launches underscore the idea that a federal government agency is no longer the sole gatekeeper to outer space.
The fact is, however, most trips into space need not be so dramatic. Now that technology has made them more affordable, reliable, and frequent, the bulk of future launches will simply be for the purpose of placing relatively small satellites into orbit.
That’s where Rocket Lab USA comes in. Its medium-sized (and reusable) Electron rockets have made 58 trips into space, successfully deploying 204 different satellites. More are on the way. In the meantime, the company continues to develop its bigger Neutron rocket, which will be capable of starting journeys to Mars and Venus that require larger payloads. It’s expected to be price competitive with Space X’s Falcon launches.
There may be room for two or more competitors in this space, however. Precedence Research believes the global space-launch service industry is poised to grow at an annualized pace of more than 13% between now and 2034.
And that’s just the business of getting payloads into space. Rocket Lab USA also made at least some of the tech found on more than 1,700 satellites already in orbit, including reaction wheels, star trackers, radio communication components, and the software that makes all these technologies work.
Rocket Lab is even involved in some of the groundwork paving the way for manned missions back to the moon, which should also become relatively common again over the coming decade.
There’s above-average risk here to be sure. But there’s also above-average potential gains for patient investors. Just keep your risk in check by limiting the size of any position in this compelling growth company that’s expected to report revenue growth of 39% for the current fiscal year.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Netflix, Roku, Walt Disney, and Warner Bros. Discovery. The Motley Fool recommends Comcast and Rocket Lab USA. The Motley Fool has a disclosure policy.
3 Monster Stocks to Hold for the Next 10 Years was originally published by The Motley Fool
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