Pretty much every portfolio needs exposure to growth. But your portfolio's growth strategy doesn't need to rely on the roulette wheel of speculative assets like cryptocurrencies or penny stocks.
Instead, it's a good idea to go with a couple of must-buy, time-tested businesses that aren't about to have their share prices crash overnight. If you're short on ideas, check out these two stocks as both are likely to keep expanding sustainably over time.
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1. Align Technology
Align Technology (ALGN 0.76%) has a simple yet consistently successful business model that makes it a must-own stock. It develops the Invisalign series of transparent tooth straighteners that people all over the world use instead of older (and significantly less comfortable) tooth straightening devices like braces.
It also makes imaging systems that dental staff use to fit patients for their straighteners, not to mention a suite of software systems to manage scheduling and follow-ups with patients.
Thanks to its aggressive online marketing strategy and broad awareness among dental professionals, its annual revenue has jumped by 466% since 2013, topping $3.7 billion, and its net income also rose by 462% to reach $362 million.
While the economic disruptions of the pandemic have been a major headwind in recent times, its target market of people needing tooth straightening will continue to grow as long as there is population growth. That means it could easily continue to penetrate its market for years to come, especially in areas where management is keen to compete and where population growth is expected to be rapid, such as the Middle East and North Africa (MENA).
In the last five years, Align spent an average of $281 million per year on share buybacks. Management plans to continue repurchasing its shares moving forward, with the board authorizing an additional $1 billion in buybacks. Between that and its long-term growth ramp, investors are likely to benefit for quite some time.
Just be aware that this stock faces some valuation risks. Its price-to-earnings (P/E) multiple is 74, which is quite high even for a growth stock.
2. NextEra Energy
NextEra Energy (NEE 2.45%) is a must-own stock because it's going to be one of the leading businesses implementing the transition from fossil fuels to cleaner energy sources in the U.S.
In case you couldn't tell from the context, NextEra is a power company, and its claim to fame is its large and growing collection of renewables and energy storage assets. While it operates everything from coal, oil, and nuclear power plants to wind farms and fields of solar panels, it's the latter two categories of electricity-generating hardware that are likely to see the most growth over the next 20 years or so. And that's very likely to supercharge the stock.
In particular, management thinks that the package of green development incentives contained in the new Inflation Reduction Act (IRA) will lower its cost of initiating and operating photovoltaic (solar panels) sources by 11%, and new wind-based electricity sources by 9%.
It's reasonable to expect the company's 2022 net income of $4.1 billion to continue growing, perhaps at a faster rate than before as a result of the new legislation. For reference, its annual net income expanded year over year at an average pace of 12.7% since 2013, though much like Align Technology, the last three years have seen significantly less growth.
What's more, one of NextEra's subsidiaries, NextEra Energy Resources, is planning on doubling its renewable energy capacity over the next few years, such that by 2026 it could have more than 69 gigawatts of output in total. If it succeeds, that'd leave it with the most installed energy generation capacity of any company in the U.S., even when including non-renewables.
Given NextEra's long history of profitably onboarding new sources of energy, it's likely to succeed. Shareholders along for the ride are likely to benefit, to say the least.
