Inflation rose 8.6% in May, marking its fastest growth rate since December 1981. Unfortunately, rising prices are nothing new. Inflation has now exceeded the Federal Reserve's 2% target for 15 consecutive months. As a result, the S&P 500 is down 18.7% from its high, and many economists see a recession on the horizon.
On the bright side, the market has seen worse downturns in the past, and it has always recovered. From that perspective, now is actually a good time to be a buyer of stocks rather than a seller, and businesses that have become an industry gold standard are often a smart place to put your money. Their stocks may continue to fall as the sell-off drags on, but they should rebound quickly on the tail end of the downturn.
Here are two gold-standard growth stocks to buy and hold forever.
1. Zscaler
Zscaler (ZS +0.05%) is the gold standard in network security. Its cloud platform, known as a security service edge, leans on artificial intelligence (AI) to inspect network traffic, block threats, and safely connect employees with corporate resources and the open internet. The company also provides solutions such as cloud workload protection and digital experience monitoring, and its cloud-native architecture eliminates the need for costly on-premise appliances.
NASDAQ: ZS
Key Data Points
Better yet, Zscaler operates the largest security cloud in the world. It handles 240 billion requests and stops 150 million threats on a daily basis, and all that data theoretically makes its AI engine uniquely effective in securing its clients' network infrastructure. Building on that, research company Gartner has recognized Zscaler as an industry leader for 11 consecutive years.
Financially, the company is growing at a brisk pace. Revenue soared 61% to $970 million over the past year, and free cash flow climbed 45% to $184 million. More importantly, Zscaler is well-positioned to maintain or even accelerate its momentum.
In recent years, cloud computing has made traditional network security solutions all but obsolete. Sensitive data and applications now live in the cloud, so it's nonsensical to route traffic through a private data center for threat inspection, then forward that traffic on to the internet. Instead, it makes much more sense -- and it's more effective -- to enforce security policies on the internet itself. That's what Zscaler does.
With that in mind, the ongoing adoption of cloud services should be a continuous tailwind for the company. Moreover, given its status as the gold standard in network security, Zscaler should continue to capitalize on its $72 billion addressable market. That's why this stock is worth buying today and holding forever.
2. Zoom Video Communications
Zoom Video Communications (ZM 0.48%) is the gold standard in video communications. Its cornerstone product, Zoom Meetings, became a household name during the pandemic by enabling employees and students to work and learn remotely. And it still ranks as the leading videoconferencing application today, according to the latest G2 Grid report. In fact, Zoom Meetings ranks as the fifth-most-popular enterprise application of any kind.
NASDAQ: ZM
Key Data Points
However, the company aims to disrupt the communications industry more broadly. Its cloud platform unifies video, voice, and chat, as well as event management and contact center solutions. That means businesses can provide all of that functionality from a single vendor while eliminating the cost and complexity of on-site hardware.
Zoom has seen its top line decelerate substantially since posting triple-digit growth in the early days of the pandemic, and that has many investors feeling bearish. However, the company is still growing at a steady clip. In the past year, its enterprise customer count rose 26% to 198,900, and the average customer spent 23% as its land-and-expand growth strategy continued to pay off. In turn, revenue climbed 29% to $4.2 billion, and earnings jumped 42% to $4.12 per diluted share.
More importantly, investors have good reason to believe Zoom can maintain that growth trajectory for years to come. Workforces are becoming more mobile in the wake of the pandemic. In fact, Ark Invest believes 832 million knowledge workers will work remotely at least part-time by 2026, up 70% from 2021. That should drive demand for productivity and collaboration tools like Zoom Meetings and Zoom Phone.
With that in mind, management puts its addressable market at $91 billion by 2025, leaving a long runway for future growth. And with shares trading at 8.8 times sales -- much cheaper than their three-year average of 41.4 times sales -- now looks like a great time to buy this growth stock.
