It’s usually not difficult to find an attractive growth stock to get into. However, choosing a growth stock that you are confident you can hold on to for ten years or more is a different story. Some story stocks simply don’t have enough proven potential for investors to commit to them for the long term.
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Yet there are investments that meet this requirement. If you can stomach the risk, these three stocks have the potential to be monster winners for investors who buy and hold for at least a decade.
Investing in pharmaceutical companies can be a tricky business. If you dive in too early, you may find out the hard way that the potential miracle drug in development is actually a failure. If you wait too long, you could miss out on most of a stock’s profits.
With that in mind, risk-tolerant investors should take a look Iovance Biotherapeutics(NASDAQ: IOVA) while shares are still down more than 80% from their early 2021 peak.
Such pullbacks are not particularly unusual for the younger names in the biopharmaceutical industry. Iovance soared when its flagship drug first started showing promise in clinical trials in 2019 and 2020. Investors, however, were somewhat ahead of the curve. The first regulatory approval of cancer-fighting Amtagvi only came in February this year. While the market rewarded the company for this performance with a share price increase, the bullish euphoria had already faded by then. And most of the gains the stock made earlier this year have since evaporated.
But you can use the stock’s current weakness to your advantage.
While Amtagvi’s FDA-approved uses may be relatively limited in scope at this time — it is only approved for the treatment of certain types of solid tumors — this T-cell therapy is a potential treatment for a much broader range of cancer types. The drug is currently being tested in twelve other clinical trials, and a handful of them promise promising late-stage studies.
But even without future approvals, Iovance is already doing quite well with Amtagvi. Last quarter’s revenue of $58.6 million was a marked improvement over the actual initial revenue of $31.1 million in the second quarter, putting the company on track for annual revenue of approximately $160 million. Sales are expected to rise to between $450 million and $475 million next year. However, that’s just the beginning. The analyst community predicts sales of more than $700 million by 2026, while research firm GlobalData believes Amtagvi’s annual sales could exceed $1 billion by 2030.
However, there are risks that investors should be aware of. Chief among them is the enormous amount of money Iovance continues to lose despite strong initial demand for its flagship T-cell therapy. While there is nothing unusual about early losses within the biopharmaceutical industry, there is no clear picture of when the company will come out of the red and into the black. Even analysts don’t expect actual profits until 2027 at the earliest. A lot can happen between now and then, so you’ll want to carefully consider the size of any position in this stock.
Amtagvi needs time to reach its proverbial cruising speed, so the challenge for investors will be to have the patience to let Iovance seize the opportunity.
As long as computers and networks with an internet connection exist, there will be criminals who want to exploit them digitally. That’s right, cybersecurity outfit Check Point software reports that the number of weekly cyber attacks increased by a record-breaking 75% year over year in the third quarter, compared to the 30% increase in the second quarter.
This problem won’t go away anytime soon, but… Palo Alto Networks(NASDAQ: PANW) is ready to answer the call.
In the simplest terms, Palo Alto helps businesses of all shapes and sizes protect themselves from cybercrime and other forms of digital disruption. From threat detection to malware defense to phishing protection to remote employee logins (and more), this company can meet almost any cybersecurity need. And this is possible with user-friendly ready-made solutions that enable a minimum number of user interfaces.
That’s one of the reasons why Palo Alto was re-ranked in 2024 by technology market research firm Gartner as a leader in the endpoint protection platform market. In addition, Gartner rated Palo Alto a leader in the network firewall market for the eleventh year in a row. The company is good at what it does.
This is also evident from the budget results. Not only has revenue grown every quarter for the past decade-plus, but operating income and EBITDA (earnings before interest, taxes, depreciation and amortization) have grown almost as reliably.
Data per YCharts.
Then there’s the detail about this progress that isn’t immediately clear: Palo Alto Networks’ profit margins are also growing. Whether the software is sold to 100 or 1,000 customers, the cost of coding and deploying it is approximately the same. That’s the power of scale. The recurring revenue it makes from subscription-based access to its tools doesn’t hurt either.
Palo Alto is positioned to benefit from growth in the cybersecurity sector, as analysts expect the company to post 14% revenue growth in fiscal 2025 before accelerating to nearly 16% the following year.
Finally, add Wolf speed(NYSE: WOLF) to your list of potential monster stocks you may want to hold for the next decade.
Unless you’re an electrical engineer, the term “silicon carbide” probably doesn’t mean much to you. However, that will happen in the near future, and Wolfspeed will get its time in the spotlight as a result.
The layman’s explanation: Almost all electrically powered devices require the use of at least some silicon-based components. In the past, plain silicon was perfectly good enough to meet the needs of the technology of the time. However, things are changing. Thanks to dramatic improvements in other technologies, the silicon of yesteryear is no longer energy efficient enough, nor able to efficiently handle the higher voltages required for heavy equipment such as electric vehicles or data center energy platforms.
Meet Wolfspeed, which has mastered (and patented) the art and science of adding carbon to silicon to make the material more efficient and able to handle higher electrical loads.
Although its potential applications are vast, the most practical application of silicon carbide today is in the areas of heavy machinery and industry. Wolfspeed’s technology is increasingly found in electric vehicles as part of their powertrains and in their charging devices, resulting in 80% less power loss than most commonly used battery/inversion/motor combinations currently suffer. You can also find the technology in a growing number of construction vehicles, agricultural machinery and even locomotives.
At the other end of the scale, silicon carbide is found in the chips and components attached to printed circuit boards in HVAC equipment and data center power supplies, where the offering can achieve up to 99% energy efficiency at half the size of regular silicon.
While the benefits of silicon carbide are clear, not every potential customer consistently supports Wolfspeed’s products. After rising 24% in fiscal 2023 (end-June 2023), growth came to a virtual standstill in fiscal 2024, continuing a pattern of revenue inconsistency that has frustrated investors for more than a decade. Wolfspeed is reporting steep losses as a result. The analyst community doesn’t see net profitability returning until fiscal 2027, when the next generation of electric cars hits the road And when the company finally puts some restructuring costs and significant capital expenditures in the rearview mirror. All this strategic maneuvering and spending is a big reason why shareholders have been on a wild rollercoaster ride.
However, if you can tolerate the continued volatility, this stock is worth it. Analysts expect Wolfspeed to report revenue growth of 44% in fiscal 2026, which the company itself believes will be enough to generate breakeven operating cash flow. And management believes the company can return to EBITDA profitability in the second half of this year, on track to return to profitability in fiscal 2027.
And over the longer term, Global Market Insights believes the global silicon carbide market is likely to grow at a compound annual rate of more than 30% through 2032. But most of this growth won’t occur until the second half of this time frame, when the technology becomes industry standard.
Owning these high-potential stocks means living with above-average short-term risk. Investors should continue to focus on how well this silicon carbide leader can handle the long-term potential of the sector. In the meantime, the market should start rewarding Wolfspeed’s progress toward profitability.
Before you buy shares in Palo Alto Networks, consider the following:
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James Brumley has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Iovance Biotherapeutics and Wolfspeed. The Motley Fool recommends Gartner and Palo Alto Networks. The Motley Fool has a disclosure policy.
3 Monster Stocks to Hold for the Next 10 Years was originally published by The Motley Fool
