You don’t have to stay on top of the stock market and make quick trading decisions to be a successful investor. Some people outperform the market by investing in solid, long-term stocks and letting time do its magic. These investors can then focus on growing their income so they can make higher portfolio contributions in the future.
Better, long-term stocks have promising growth prospects and operate in promising industries. If you wait long enough, these seven growth stocks, for example, can generate meaningful returns.
Celsius Holdings (CELH)
Celsius Holdings (NASDAQ:CELH) offers a healthy sports drink that is captivating Gen Z and broader audiences. Drinks contain seven essential vitamins and do not include any sugar, high fructose corn syrup, artificial colors, or aspartame. Celsius compensates by putting a lot of caffeine in its drinks.
Celsius is positioned as the front-runner for healthy energy drinks. As people look for healthy choices that don’t require them to make inconvenient sacrifices, Celsius can continue to gain market share. The beverage tastes good based on its 104% year-over-year revenue growth in the third quarter of 2023. People aren’t going to buy that much product if it tastes bad.
Celsius Holdings has generated meaningful long-term value for shareholders. The equity has gained 5,247% over the past five years. The stock is also up by 94% over the past year but has been trading sideways for the past six months. The reduced activity over the past six months makes the stock more attractive heading into earnings.
Visa (V)
Another one of the top long-term stocks to consider is Visa (NYSE:V), which offers stability and growth for long-term investors. Credit and debit cards are integral to society and are the preferred payment method for many consumers. It’s hard to resist cashback rewards and other perks that come with these cards.
Visa’s latest earnings report showcased this truth. Revenue jumped by 9% year-over-year in Q1 FY24 while GAAP net income increased by 17% year-over-year. GAAP EPS growth outpaced GAAP net income growth due to the company’s commitment to repurchase shares.
Visa bought back $3.4 billion worth of shares in the quarter. The fintech company distributed $1.06 billion in dividends during the quarter. Visa hiked its dividend near the end of 2023 by 15.5% year-over-year. The quarterly dividend per share jumped from $0.45 to $0.52 as part of the hike.
Visa has been a steady gainer. The stock is up by 21% over the past year and has gained 92% over the past five years.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is an advertising leader and stands to reward shareholders as another one of the top long-term stocks to own. The company recently achieved 13% year-over-year revenue growth in Q4 2023 compared to a 1% year-over-year growth rate.
Ad revenue will likely increase even more in 2024 due to the Olympics, Elections, and other factors. While advertisements are the majority of Alphabet’s revenue, the company has reinvested its revenue into other ventures.
Google Cloud is the most successful segment outside of Google advertisements. Cloud revenue jumped from $7.3 billion to $9.2 billion year-over-year. This component of Alphabet’s business recently became profitable.
Alphabet will continue to use some of its capital to fund “Other Bets.” It’s a small category filled with unprofitable high-growth opportunities that can become meaningful segments in the future. Alphabet has been a staple in many funds. Shares are up by 57% over the past year and have gained 167% over the past five years.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) continues to deliver top-line and bottom-line growth for investors. The tech giant reported 18% year-over-year revenue growth and 33% year-over-year net income growth in the second quarter of fiscal 2024. It’s also another one of the top long-term stocks to buy and hold.
Microsoft CEO Satya Nadella cited “applying AI at scale” as a reason the company is winning new customers and driving productivity gains across every sector. Microsoft Cloud has also been a core component of the company’s success. Cloud revenue increased by 24% year-over-year and made up more than half of the company’s total revenue.
Microsoft is currently the most valuable company on the stock market with a market cap above $3 trillion. Shares have rallied by 49% over the past year and have surged by 275% over the past five years.
Many funds have large amounts of this stock, and it’s a top holding in the Nasdaq 100 and the S&P 500. The company offers a healthy blend of stability and growth while trading at a 37 P/E ratio. The stock’s dividend yield is currently 0.75%.
Mastercard (MA)
Mastercard (NYSE:MA) is a leader in the credit and debit card industry that offers healthy profit margins. The fintech company closed out 2023 with 13% year-over-year revenue growth and 11% year-over-year net income growth. Those growth rates helped the company maintain a net profit margin above 40%.
The dividend growth stock has rewarded investors with a 26% gain over the past year and is up by 109% over the past five years. The stock only offers a 0.57% dividend yield, but growth has been impressive. Mastercard raised its quarterly dividend per share from $0.57 to $0.66 in 2024. That’s a 15.8% year-over-year increase.
Mastercard didn’t stop with dividends. The company also repurchased 4.5 million shares for $1.8 billion. For comparison, Mastercard only distributed $534 million in dividends during the same quarter. Buybacks exceeded dividends by a wide margin in 2023, which suggests the company has a lot of room to hike its dividends.
CEO Michael Miebach cited strong consumer spending and cross-border volume growth as key catalysts for the successful quarter. Mastercard has various rewards cards to the point where there’s something for everyone.
Elf Beauty (ELF)
Many investors look at a stock’s historical performance to gauge if it is a promising investment. While stock analyses must go deeper than one-year and five-year charts, strong gains during both of these timeframes can make a stock look more attractive.
Investors with this mentality will want to give Elf Beauty (NYSE:ELF) a closer look. The stock has gained 123% over the past year and is up by 1,678% over the past five years. Any investor would want those numbers, but they must also consider if a rapidly growing stock still offers a good opportunity at the current price.
Elf Beauty once again delivers on this front, and the recent Q3 FY24 report demonstrates why investors are accumulating more shares. During this quarter, Elf Beauty achieved 85% year-over-year net sales growth and 184% year-over-year net income growth. The quarter marked the 20th consecutive quarter in which Elf Beauty gained market share and reported net sales growth.
That type of track record makes the stock more promising for long-term investors. Shares currently trade at a 48.5 forward P/E ratio that can get lower as the firm continues to deliver impressive results.
Duolingo (DUOL)
Duolingo (NASDAQ:DUOL) offers compelling growth in a high-demand vertical. The company’s language learning app grew its revenue by 43% year-over-year in the third quarter of 2023. Duolingo also experienced meaningful growth in its active users. Monthly active users were up by 47% year-over-year while daily active users increased by 63% year-over-year.
The company’s financial growth and business opportunities will attract growth investors. The only concern is the stock’s valuation. Duolingo currently trades with a 93-forward P/E ratio. That’s not for everyone but the valuation will become more manageable within a few years.
Long-term investors may want to nibble on the stock and build positions as the valuation becomes easier to justify. The asset will look more attractive on pullbacks. While this is true about any stock, Duolingo has the distinction of meaningful revenue and net income growth. Not every publicly traded corporation can make that same claim.
On this date of publication, Marc Guberti held long positions in CELH, GOOG, MSFT, and ELF. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
