If you're investing for the long haul, you should consider businesses that have attractive growth prospects. The more attractive those prospects are, the easier it will be for the business to grow and increase in value. And a higher valuation means a stronger share price and better returns for your portfolio.
A couple of stocks that can be ideal for long-term investors to hold -- not just for years but decades -- are Intuitive Surgical (ISRG 0.59%) and Google parent Alphabet (GOOG 9.96%) (GOOGL 10.22%).
1. Intuitive Surgical
Still in the early stages of its growth, Intuitive Surgical could be a huge healthcare company in the future. The company is known for its da Vinci surgical systems, which use robotic-assisted devices that can make surgeries more precise and efficient.
According to data from Grand View Research, the industry for surgical robots was worth $4.4 billion in 2022. But by 2030, that number could rise to more than $18 billion as it expands at a compound annual rate of 18%.
The pandemic has slowed down the business as shutdowns disrupted hospital operations, but Intuitive Surgical has still been able to maintain a growth rate of over 10% in the past three years.
ISRG Revenue (Quarterly YoY Growth) data by YCharts
What's even more encouraging is that the business is highly profitable with Intuitive's gross profit margin typically around 66% of revenue. That ensures that as adoption rate of the company's devices increases -- and so does the number of da Vinci procedures -- much of that incremental revenue will flow through to Intuitive's bottom line and strengthen its earnings.
One of the drawbacks of the healthcare stock today is that Intuitive trades at a hefty 86 times its trailing earnings. But in the future, that multiple should improve as the company's business gets bigger. Although it's trading near its 52-week high, Intuitive Surgical could still make for a great buy today.
2. Alphabet
Alphabet is already one of the largest companies in the world today with a market valuation of $1.6 trillion. Still, the opportunities remain promising for YouTube and Google Search, its two highly prized assets. They are often the default option for people when it comes to watching videos online or doing online searches.
While the ad market isn't strong right now and Alphabet only generated revenue growth of 3% for the period ending March 31, that will change as the economy strengthens.
In the longer run, with the help of artificial intelligence, there can be even more opportunities for Google and YouTube to provide better recommendations and search results for their users. While there may well be budding competition from the likes of Microsoft or from streaming and social media apps including TikTok, Alphabet can be expected to adapt and evolve to stay at the forefront.
It has YouTube TV, which, although it's more expensive than a streaming package, does offer one thing many streaming services are missing: live sports. And the company recently launched YouTube Shorts, which are short videos that could compete with TikTok.
YouTube and Google are dominant forces today and that's not likely to change in the future. Over the years they have developed strong brands and Alphabet has demonstrated a willingness to adapt and change those businesses as necessary to ensure users don't have a reason to leave.
And its users haven't been going anywhere -- YouTube has 2.6 billion monthly active users, which is up from 1.6 billion back in 2017. Google, meanwhile, continues to be the default when it comes to search, with a market share of close to 90% for desktop searches.
Alphabet's strong moat and industry presence makes this a great business to buy and hold for decades. And it trades at just over 27 times earnings, which is relatively cheap given that investors are paying a multiple of 33 for the average tech stock.
