It's not too tough these days to find growth stocks worth buying. Things change, however, when you're looking for growth stocks to buy and hold forever. Such companies must not only always be capable of firing on all cylinders, but must also be able to adapt as needed to maintain their growth into the indefinite future. Not every organization has that capacity.
A handful of them do, though. Here's a closer look at three of them, any of which would make a fine "forever" holding for almost any growth-seeking investor.
1. Amazon
It's such a commonly suggested stock pick that it's almost become a cliche. There's still good reason, though -- Amazon (AMZN 3.43%) is a great growth stock for nearly any portfolio.
You know the company as an e-commerce behemoth. Indeed, Amazon arguably pioneered online shopping as we know it today. Insider Intelligence says the organization accounts for over one-third of the United States' entire e-commerce market, leaving second-biggest Walmart in a distant second place at only around 7%.
Still, according to data from the Census Bureau, e-commerce still only makes up roughly 15% of the nation's total retail sales. While much of that spending simply can't be done online, a big chunk of the other 85% is up for grabs by a company with an existing reach with consumers.
Amazon's fourth-quarter product sales improved nearly 9% year over year despite the somewhat lethargic economy. Nationwide retail spending only improved by about one-third of that amount during the fourth quarter of last year. Perhaps more important, Amazon's e-commerce profit margins are finally starting to widen here and abroad.
Data source: Amazon. Chart by author. Figures are in billions.
At the same time, while the company's cloud computing arm Amazon Web Services (AWS) may only contribute 16% of Amazon's total top line, AWS accounts for two-thirds of the organization's operating income. This cash-driving business is growing like crazy too, with Q4's and last year's sales both up 13%. Given GMI Research's expectation for worldwide cloud computing market growth of 19% per year through 2030 (and we'll never not need the cloud), look for AWS's strong profit profile to drive oversized earnings growth for the company as a whole.
2. Taiwan Semiconductor Manufacturing
There's a good chance you've never even heard of Taiwan Semiconductor Manufacturing (TSM 1.26%), better known as TSMC. But there's little chance you're not using at least some of its handiwork on a regular basis.
As the name suggests, Taiwan Semiconductor manufactures computer chips. It makes few components of its own, though. Rather, TSMC is a contract manufacturer, meaning it makes semiconductors, processors, and chips designed by more familiar technology outfits like Nvidia, Advanced Micro Devices, and Broadcom. Apple (AAPL -0.35%) is also a partner, and is even supporting TSMC's efforts to establish a manufacturing facility in Arizona.
Why don't these tech giants build and operate their own chip foundries? Money, mostly. It's often cheaper and easier to punt this work to manufacturers that are better equipped to manage the complex process involved in producing semiconductors at scale.
Yes, this means TSMC's fate is tethered to the overall chip market's strength. That's why last year's top line slumped to the tune of 4.5%; economic lethargy crimped demand for chips.
But take a step back and look at the bigger picture. The world's not going to be using less technology going forward. If anything we'll need more of it. In fact, tech market research outfit Precedence Research believes the global semiconductor market will grow at an annualized pace of more than 12% per year through 2032.
The demand for chips, processors, and semiconductors is likely to continue growing. Moreover, the fiscal math of making large quantities of semiconductors and other computer chips is still likely to favor the use of contract manufacturers over in-house manufacturing.
The kicker: TSMC is already the dominant name in the business, manufacturing roughly half of the world's chips. It's more than big enough to defend its turf.
3. Apple
Like Amazon, Apple is a rather predictable, commonly suggested pick. But don't let that dissuade you from owning it. It's also one of the world's biggest companies as measured by market cap, and is the world's biggest in terms of sales and profits. It deserves its notoriety.
Sure, Apple's iPhone isn't the breadwinning growth driver it used to be. The device's total revenue fell just a bit last year, in fact. Unit sales of the popular smartphone also peaked in 2021, and since then have slightly dwindled. Given that the iPhone accounts for about half of the company's revenue, it's increasingly difficult to see Apple as a name worth owning at all, let alone a growth name.
However, the organization is evolving. The development of its services arm is one of these evolutions.
See, users' apps and digital content subscriptions make the most of these premium-priced devices, and Apple has gotten very, very good at inducing this spending. iPhone owners spend as much as seven times more on apps and digital content than Android users do, according to data gathered by research outfit Asymco's analyst Horace Dediu.
There's also a less obvious benefit in getting iPhone owners to use their devices as much as they do. Given how seamless it is to transfer these products and services to a new device in the future, current iPhone owners have an incentive to purchase another iPhone when it comes time for an upgrade. In this vein, U.K.-based firm Bionic believes 92.6% of current iPhone owners intend to buy another one in the future. That incredible level of loyalty is second only to Netflix's.
And Apple's evolution isn't just about more services and their beneficial impact on iPhone sales. The company is subtly setting the stage for several new profit centers -- perhaps without even knowing exactly how these new ventures might be monetized. Apple is reinventing its onboard virtual assistant Siri, for instance, now that the rise of powerful artificial intelligence has made such tools far more useful than they've been in the past.
The company's also still developing autonomous vehicles, and it just recently debuted a powerful virtual/augmented reality headset called the Vision Pro. Although the Vision Pro's pricing and app ecosystem aren't yet quite what they need to be, that will likely change over time. That matters, because this market is still in its infancy. Precedence Research believes the worldwide AR/VR market is set to grow from last year's $47.6 billion to $372 billion in 2032.
You get the idea. Apple is already an incredible brand name with staying power, and it's got lots of new growth levers it can pull in the future.
