Patience is one of the most valuable characteristics to invest. Without it, you can invest in, say, Amazon.com (NASDAQ: AMZN) in 2010, when it is trading for around $ 180 a share, and then selling it for about $ 400 a share three years later – more than doubling your money, but losing a lot, as the shares have gone over $ 3,000 per share.
The trick to making a lot of money in the stock market is usually just to buy from big companies and keep them for a long time, amid ups and downs – because big companies will recover from declines and reach new highs. You want to keep up with them, to make sure their prospects remain lively, but other than that, there is little to do.
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Here are three growth actions to consider for cribs in your long-term portfolio. Each seems to be able to reward shareholders well in the next decade.
1. Veeva Systems
You may not have heard Veeva Systems (NYSE: VEEV), but it is a considerable company, with a recent market value of US $ 39 billion – higher than that of Twitter, Ford Motor Company, Hershey, or Southwest Airlines. Veeva offers cloud-based technology and services that help companies bring new products and services to market, while meeting industry regulations. This is especially useful in the pharmaceutical field, where drugs in development must undergo rigorous rounds of clinical testing.
Interestingly, Veeva has recently become a “Public Benefit Corporation”, which means that it is legally obliged to consider the interests of not only shareholders in their decisions and actions, but also of customers, employees and other interested parties. If you are interested in socially responsible investments, this should please you.
So, how is your business really doing? Well, the results for the most recent fiscal year showed a 33% year-over-year increase in total revenue and a 26% net profit. Management noted that “Veeva ended the year with 993 customers, compared with 861 the previous year.” (This is a 15% jump.) In addition: “Subscription revenue retention was 124% in the year” – which means that, on average, customers not only stayed, but spent more.
With a recent price / earnings (P / E) ratio of 109, Veeva Systems’ shares are not cheap. But if you are planning to hold on for at least 10 years, you are likely to do well. Or, to be more secure, add it to your watch list and expect a reduction in price.
2. Netflix
Netflix (NASDAQ: NFLX) it needs little introduction as a widely used service and also as a stock. In the past 19 years, its shares have shot up a total of 44,557% – enough to turn a $ 1,000 investment into $ 446,287. This is an average annual growth rate of more than 38%! (For contextual purposes, the average annual return on the stock market in general over long periods was closer to 10%.)
It has been one of the best performances in the stock market in recent decades. Netflix also serves as an excellent practical lesson, showing how big companies can stumble and their stocks can sink, and yet they can recover and move to great heights. In 2011, Netflix CEO Reed Hastings saw that streaming video was very promising, so he announced plans to turn Netflix’s DVD mailing business into a so-called “Qwikster”, while Netflix focuses on streaming. The plan was widely ridiculed or ridiculed, customers were upset at the idea of paying for two subscriptions instead of one, and the stock was a huge success. The plans were discarded and Netflix’s business grew again.
Today, it is a streaming giant, with a recent market cap of $ 229 billion – more valuable than Nike or PepsiCo. In the last quarter, Netflix added more than 8 million new subscribers, bringing its total to more than 200 million. Its quarterly revenue increased 21.5% year-over-year, and another good news was that the company said it no longer plans to borrow to finance its operations. In other words, it has a lot of money coming in – and hopes to strike a balance with cash flow next year.
Netflix shares may be priced high, with a P / E ratio of 85 and a price / cash flow ratio of 97, but both numbers are well below their five-year averages. For long-term investors, this looks like a reasonable time to buy shares. (If you’re skeptical but still like the company’s long-term prospects, consider buying only a small position in the company to begin with.)
Image source: Getty Images.
3. Square
Finally, there is Square (NYSE: SQ). You may know it as the company behind those small square credit card readers connected to smartphones that some merchants use, but the fintech (financial technology) company is now much more than that, as its recent market capitalization suggests of $ 110 billion. (This price makes it more valued than American Express and FedEx.)
Square currently has two main businesses – its “Seller” division, which helps merchants to process credit card transactions through multiple devices, and its latest (and fastest growing) Cash App service, which is very Looks like From PayPal Venmo. It has banking resources, such as direct deposit, and allows the user to send and receive money – and even invest in shares.
Square was challenged during the pandemic, as closed stores mean less business for him. But we are on our way to put the pandemic behind us and fully open our economy, and Square is likely to benefit from it. Meanwhile, the company is growing, increasing its base of active Cash App users by 50% year-over-year in the last quarter. He also entered the world of bitcoin, with CEO Jack Dorsey noting in a recent conference call on the company’s earnings that “We believe he is most likely to empower more people in the economy fairly.”
Square is arguably the steepest price of these three portfolio contenders, with a recent P / E ratio of 550. (Its prospective P / L, however, based on expected earnings for next year, is a 192. slightly more palatable) . , if after more research you are very optimistic about Square, you can buy some shares now – or buy a smaller position now, or just add it to your watch list in case you back off.
If none of these companies are interested enough, there are many other fast-growing companies to investigate and possibly invest in.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even our own – helps all of us to think critically about investing and making decisions that help us become smarter, happier and wealthier.