Putting together a portfolio of well-chosen growth stocks can help you multiply your savings over a lifetime. The key is to look for companies that are demonstrating strong growth in a massive industry. This will increase your chances of finding those elusive winners that can deliver life-changing returns.
To assist you in your search, here are two stocks that should deliver outstanding returns over the long term.
1. Shopify
Shopify (SHOP +0.12%) is a leading provider of e-commerce services for merchants. The stock has been a phenomenal performer, up 4,700% since going public in 2015. It is tapping into a massive global retail market valued at $32 trillion and growing, according to Statista.
NASDAQ: SHOP
Key Data Points
Shopify makes it relatively easy for any business to set up an online store, accept payments, and ship orders worldwide. Shopify's revenue has tripled over the last four years and grew 31% year-over-year in the most recent quarter.
While Shopify has millions of merchants in more than 175 countries, the company can grow for a long time. Its gross merchandise volume, or the value of all transactions completed with a Shopify merchant, was $292 billion last year -- less than 1% of global retail sales.
Shopify is starting to integrate artificial intelligence (AI) into its offering, making it easier for businesses to automate tasks. Management sees "transformative" potential for AI to increase business productivity. As the company invests in new AI tools, it could provide a significant value added service that can appeal to business owners and benefit Shopify's business.
The stock has tripled since bottoming out in 2022. The valuation looks expensive at 18 times sales, so the shares may need to settle for a while before moving higher, but Shopify has enough opportunities ahead to grow the value of your investment.
2. Toast
Toast (TOST 0.90%) is the Shopify for restaurants, providing software tools for managing orders, payments, and marketing. Toast started in 2011 and now has 134,000 locations using its platform. The stock doubled in 2024, which could be the start of a long bull run.
NYSE: TOST
Key Data Points
The restaurant industry is massive, with total sales estimated to reach $1.1 trillion last year, according to the National Restaurant Association. More restaurant owners are starting to invest in digital products, and this is fueling strong growth for Toast.
Toast's annual recurring revenue grew 34% year-over-year in the fourth quarter. This was driven by a 26% increase in locations using its platform. The 28,000 locations that signed up were a record number of new additions in a single quarter, signaling tremendous momentum for the company.
Over the next decade, management believes that it can serve significantly more locations. Toast continues to add more tools to the platform and is seeing strong growth in international markets.
Management also is expanding into new markets, such as beverage retail and hotels. It has deals with Marriott and Choice Hotels, indicating a strong competitive position for Toast.
The stock has a market cap of about $22 billion right now and trades at a reasonable price-to-sales multiple of 4.8. After doubling last year, immediate gains might be limited, but the stock should deliver market-beating returns over the next decade.
