Want to Get Richer? 2 Top Growth Stocks to Buy and Hold

Warren Buffett once said that his favorite stock holding period is forever. Despite that advice, many investors tend to buy and sell quickly. In fact, the average holding period for shares on the New York Stock Exchange has trended downward over the last several decades, and it dropped below six months in June 2020.

So what? History tells us that whether the market is up or down in any given year is essentially a coin toss. In other words, if you're dipping in and out of stocks, you're not investing -- you're gambling. And there's nothing wrong with gambling, but if you're looking to build life-changing wealth, you're better off taking a buy-and-hold approach. A long-term mindset helps you avoid short-term volatility and it gives your investment theses time to play out.

Two stocks that could benefit an investor using a buy-and-hold approach are Tesla (TSLA 12.06%) and Zscaler (ZS 0.30%). Each has great potential to make you richer in the long run. Here's what you should know.

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1. Tesla

CEO Elon Musk has often said manufacturing efficiency would be Tesla's long-term advantage, and the company is making good on that notion. Its theoretical annual production capacity now exceeds 1 million electric vehicles (EVs), and despite headwinds created by chip shortages, Tesla delivered over 936,000 vehicles in 2021, up 87% from the prior year.

More importantly, as production capacity has scaled in both the U.S. and China, Tesla's cost per vehicle has fallen, dropping 55% between 2017 and the first quarter of 2021. That efficiency is due in part to Tesla's 2170 battery cell, a technology that Musk has called "the highest energy density cell in the world, and also the cheapest." To that end, Tesla pays an estimated $187 per kilowatt-hour (kWh) for its battery packs -- the most expensive part of an EV. That's 24% lower than the industry average and 10% lower than the next-closest competitor.

Additionally, through November 2021, Tesla held 13.7% market share in terms of EV sales, easily besting the second-place EV manufacturer BYD, which captured 9% market share. Collectively, the company's improving efficiency and its dominant position have translated into impressive financial results on both the top and bottom lines.

Data source: YCharts. TTM = trailing 12 months. CAGR = compound annual growth rate.

Despite Tesla's past success, I think the company's best days are yet to come. Production of the Tesla Semi (a semi-tractor trailer) is slated to start in 2022, and the trucking industry is ripe for disruption. The company also plans to integrate its new 4680 battery cell into vehicles this year, a technology that should reinforce its current cost advantages. Specifically, management believes the 4680 battery cell will cut the cost per kWh by 56% and boost EV range by 54%.

Further down the road, Tesla aims to launch an autonomous ride-hailing service, a market that ARK Invest analysts value at $1.2 trillion by 2030. While Tesla's full self-driving software is still in the works, Musk has hinted that the company would have a fully autonomous $25,000 EV in late 2023 or 2024. But even if Tesla misses that target, the company still appears to have a big head start in the race to build a self-driving car. That's why I plan to hold this stock forever.

2. Zscaler

Zscaler specializes in cybersecurity. Its cloud platform, the Zero Trust Exchange, is spread across 150 data centers, creating a global network that is fast, safe, and reliable. This distributed architecture, known as a secure access service edge (SASE), allows clients to access corporate resources from any device or location, while also eliminating the IT burden of buying and managing on-site hardware. In short, Zscaler is the new corporate network.

Specifically, Zscaler Private Access (ZPA) safeguards internally managed resources, like software hosted in a private data center; and Zscaler Internet Access (ZIA) offers the same protection for externally managed resources, such as applications hosted in the public cloud. More recently, the company expanded its offering with Zscaler Digital Experience (ZDX), an infrastructure performance monitoring solution, and Zscaler Cloud Protection (ZCP), a suite of tools that allows clients to secure cloud workloads.

Collectively, those products fuel digital transformation, keeping corporate networks secure no matter whether the information is stored on-site or in the cloud, nor whether it's accessed by employees in the office or those working remotely. To that end, research firm Gartner believes 60% of enterprises will have plans in place to adopt SASE networks by 2025, up from just 10% in 2020.

More importantly, Gartner has recognized Zscaler as the industry leader for 10 consecutive years, and that advantage has been a powerful growth driver for this cybersecurity company.

Data source: YCharts. TTM = trailing 12 months. CAGR = compound annual growth rate. Note: Q1 2022 ended Oct. 31, 2021.

Going forward, Zscaler has plenty of room to grow its business. The company currently serves 5,600 clients, comprising 26 million paid seats. But management puts the near-term opportunity at 335 million seats, which brings the company's addressable market to $72 billion. However, Zscaler could extend its services to smaller businesses (fewer than 2,000 employees), which would push its opportunity above 600 million seats.

More broadly, as the best-in-class network security solution, the company should see strong demand in the coming years as more enterprises seek to protect their sensitive data. That's why this growth stock looks like a smart buy for long-term investors.