Please ensure Javascript is enabled for purposes of website accessibility

2 Breakout Growth Stocks You Can Buy and Hold for the Next Decade

By Keith Noonan – Jan 1, 2022 at 7:15AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Ten years from now, you might be thanking yourself for buying these stocks.

If you invested $10,000 in Microsoft stock 10 years ago, your position would now be worth more than $160,000 after factoring in dividend reinvestment across the stretch. If you put $10,000 in Netflix stock at the beginning of 2012 and held over the next decade, those shares would now be worth roughly $620,000. 

Taking a buy-and-hold approach with the right stocks could change your life. If you're looking for companies capable of delivering huge wins over the long term, you might want to consider adding these two stocks to your portfolio. Here's why.

A rocket launching from a person's hand.

Image source: Getty Images.

1. Unity Software

If you're developing a video game, it often makes financial sense to use a pre-built development engine. It's much more cost-effective, and the advantages of building a custom engine for an individual title are often limited, especially when you consider what Unity Software's (U -4.83%) ever-expanding creation suite can do.

The company's software is the go-to choice for developing mobile games, and roughly 60% of augmented reality (AR) and virtual reality (VR) apps are already built into Unity. Because of its strengths in these categories, Unity stands out as a top pick-and-shovel play for benefiting from the rise of AR, VR, and the metaverse. 

The company's growth opportunities extend far beyond the realm of video games. Businesses are increasingly looking to visual media and interactive digital experiences as core parts of their brand and retail strategies. The metaverse trend is just heating up, and growing demand for interactive content could help Unity continue to notch stellar growth for years to come. 

The average analyst estimate, as polled by Business Insider, calls for Unity software to post roughly $1.09 billion in sales this year. Looking further out, analysts expect the company's sales to hit $2.84 billion in 2025, suggesting growth of roughly 161% from this year's expected sales and 268% compared to the $772.4 million in sales it recorded in 2020. 

Wall Street is already pricing in some very strong growth, and the company is now valued at roughly $42 billion and trades at approximately 38 times this year's expected sales. Unity isn't a low-risk investment, but it's a stock that could deliver big wins for investors who take a long-term approach. 

2. Fiverr International

Fiverr International (FVRR -1.17%) operates a fast-growing gig labor marketplace and has seen its stock price roughly triple since going public in 2019. On the other hand, the company's share price has tumbled dramatically from its peak.

FVRR Chart

FVRR data by YCharts.

Fiverr International hit a lifetime high of roughly $323 per share last February, and it now trades down 64% from that high mark. The gig economy is poised for huge growth over the long term, and I think this is a stock that has what it takes to bounce back and be an explosive winner at current prices. 

For businesses, hiring remote workers on a contract basis allows for the reduction of expenses, including payroll taxes, office space, employee health insurance, and other benefits. It's this dynamic in particular that points to Fiverr having a very favorable long-term growth outlook, but that hasn't stopped the stock from getting crushed over the last year. 

After the company posted rapid sales growth across 2020 and the height of pandemic-related, social-distancing conditions, sales increased at a significantly slower clip in 2021. That said, Fiverr still posted 42% year-over-year sales growth in Q3, and its gross margin came in at an impressive 83.3%. 

With the company valued at approximately 14.5 times this year's expected sales, Fiverr International admittedly has a growth-dependent valuation. However, the market has overreacted to the recent slowdown, and the company's market cap of roughly $4.3 billion leaves room for explosive upside. The stock stands as one of my top picks for 2022, and I expect that it will go on to be a huge winner for long-term investors. 

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Keith Noonan owns Fiverr International. The Motley Fool owns and recommends Fiverr International, Microsoft, Netflix, and Unity Software Inc. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.