Recent market volatility notwithstanding, equities generally deliver solid returns over long periods, like a decade. The key is to purchase shares of robust companies, occasionally adding more, and to stick with your holdings through the highest market peaks and the most severe downturns.
Despite not-so-great performances in recent years, Merck (MRK 0.09%) and Fiverr International (FVRR 3.97%) are stocks that could deliver competitive returns to patient investors in the next 10 years. Let's discover why.
NYSE: MRK
Key Data Points
1. Merck
Merck is a leading drugmaker that develops medicines across several areas. Oncology is the company's most important field. It markets Keytruda, a cancer drug that topped the list of the world's best-selling drugs last year. Keytruda will run out of patent exclusivity in the U.S. in 2028, but Merck is developing a subcutaneous version of the cancer therapy that will extend its patent life well into the 2030s.
Merck has a strong vaccine business, thanks to the human papillomavirus (HPV) products Gardasil and Gardasil 9. It's also a leader in the animal health business.
However, its shares underperformed the market last year because Keytruda, its biggest moneymaker, could face increased competition from medicines currently in development. Even with these challenges, the better-established Keytruda should still generate strong sales. Moreover, Merck will seek to diversify its base of revenue. It has already done so thanks to products like Winrevair, a medicine for pulmonary arterial hypertension that earned approval last year.
The company will, no doubt, launch other brand-new products. Merck recently signed an agreement to develop a weight loss medicine with China-based Hansoh Pharma. This might be a long shot, considering how crowded the anti-obesity market could become soon, but Merck is always looking for its next blockbuster. With several dozen programs in development and the cash needed to sign licensing agreements with smaller drugmakers, it should be able to eventually move past its Keytruda-related challenges and generate strong revenue and earnings.
Lastly, Merck is a solid dividend stock and has increased its payouts by 80% in the past decade. The current forward yield of 3.6% is well above the S&P 500's average of 1.3%. With dividends reinvested, the stock's performance in the next 10 years should be excellent.
NYSE: FVRR
Key Data Points
2. Fiverr International
Fiverr provides a platform that helps connect freelancers with the individuals and institutions who need their services. Unsurprisingly, the company's business was highly popular in the early pandemic years, but things have cooled down significantly since. Its shares dropped like a rock three years ago.
However, things are looking up, and 2024 was kind to the company. Revenue for the year came in at $391.5 million, 8.3% higher than 2023. Though top-line growth rates aren't as high as they once were, they have rebounded somewhat as well.
FVRR Operating Revenue (Quarterly YoY Growth) data by YCharts.
Furthermore, Fiverr diligently cut costs and expenses and has now managed green on the bottom line for two consecutive years. In 2024, net earnings per share came in at $0.48, compared to $0.09 in the previous fiscal year. Profitable growth is the way to go these days, and that's what Fiverr is delivering.
The company still has significant growth prospects, too. The gig economy is in full swing, with more people seeking to be their own boss. Fiverr's platform benefits all sides of the equation: It's cheaper and faster for companies to hire freelancers, while contractors can easily advertise their skills on the website and attract customers.
Fiverr sees an addressable market of $247 billion, so it's barely scratched the surface. Even with stiff competition, it should make plenty of headway in this market and consistently grow revenue and earnings in the next decade. Fiverr is well-positioned to deliver strong returns.
