Predicting the future in the stock market might seem like a fool's errand, especially when just next month seems unpredictable.
However, the qualities that create success in the stock market tend to be lasting as companies with sustainable competitive advantages are usually the ones that outperform over the long term.
Finding those companies isn't easy, of course, but two companies that seem poised to be among the top growth stocks in 2030 are Airbnb (ABNB -0.43%) and Trade Desk (TTD -1.31%).
Image source: Getty Images.
1. An expanding travel marketplace
Airbnb today is the leading short-term rental marketplace in the world. With more than 6 million listings on its platform, the company has more rooms than any single hotel chain, and it continues to expand as it attracts new hosts to the platform.
However, even at its size, Airbnb still has a lot of opportunities for expansion into adjacent markets.
Management teased some ideas in its recent earnings call as CEO Brian Chesky said:
We're expanding beyond the core. You know, we have some pretty big ideas for where to take Airbnb next. And this year, we're going to build the foundation for future products and services that will provide incremental growth for many years to come.
That could include offering a host services marketplace with services like cleaning, photography, home furnishings, or design. Airbnb recently partnered with several property managers to launch Airbnb-friendly apartments that allow tenants to rent their place on Airbnb when they're out of town. Moves like that could help pave the way for the company to capture more business from longer-term rentals as the company can offer a wide selection of furnished apartments for travelers looking for somewhere to stay for a few months while they look for a more permanent place to live, for example.
Airbnb also has the potential to move into events, renting out space for weddings, parties, or other gatherings, allowing hosts to use their spaces for more than just accommodations.
The company said it was competing in a multitrillion-dollar addressable market when it went public at the end of 2020, and it finished 2022 with $63.2 billion in gross booking value, showing there's still a lot more room for growth. Additionally, the company continues to ramp up profit margins.
Airbnb's future is still wide open, and the company is likely to be even stronger in seven years. Trading at a reasonable valuation today, this is a stock that won't disappoint you in 2030.
2. Trade Desk
Trade Desk has established itself as the leader of its own niche in adtech as the top demand-side platform (DSP).
In a challenging time in digital advertising, Trade Desk is still delivering strong revenue growth with the top line up 24% in the fourth quarter and 32% for the full year, a sign it's gaining market share in its industry, even though it's larger than its competitors.
Trade Desk's track record is nearly impeccable. The company has recorded a customer retention rate of at least 95% every quarter for eight years in a row, and Trade Desk appears to be leading the replacement platform for third-party cookies, which are expected to be banned by Google Chrome starting next year.
That platform, known as Unified ID 2.0, allows brands to track users through scrambled identifiers like email addresses so they can serve relevant ads to the user. The company has signed up ad titans Walt Disney and Procter & Gamble for the new protocol, showing that UID 2.0 could be a significant revenue driver for the company, especially if it becomes the new standard in the industry.
Trade Desk also generates high margins thanks to the nature of its self-serve cloud-based demand-side platform, making it unusually profitable for a growth stock.
Finally, the company should also benefit from the proliferation of new media like connected TV, which comes with higher advertising rates, giving Trade Desk company a new growth opportunity. Other forms of media, such as virtual reality, should also spring up over the coming years, supporting the company's growth into the 2030s.
Like travel, the advertising industry is expected to steadily expand, especially as more ad spending shifts to digital channels, and Trade Desk will be ready to take advantage.
