Growth stocks are one of the best ways for you to grow your portfolio and build a comfortable nest egg for retirement. However, you need to choose such stocks carefully to ensure that you pick gems and not duds.
Certain characteristics should stand out to help you make your investment decision: a solid competitive moat and a strong business model or brand, a track record of steady growth in revenue and free cash flow, and catalysts that can help the business to continue growing for the foreseeable future.
With these attributes in mind, here are three promising growth stocks that you can buy and own for the long term.
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Airbnb
Airbnb (ABNB -0.25%) operates a travel platform that matches hosts to guests who are seeking accommodation. The company boasts more than 5 million hosts who have welcomed more than 2 billion guests in almost every country around the world.
Airbnb's financials show an impressive trend of rising revenue and net income, as shown in the table below. Note that for 2023, Airbnb booked a significant tax benefit that inflated the company's net income. Free cash flow has also increased steadily over the past three years.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue (in billions) | $8.399 | $9.917 | $11.102 |
| Operating income (in billions) | $1.802 | $1.518 | $2.553 |
| Net income (in billions) | $1.893 | $4.792 | $2.648 |
| Free cash flow (in billions) | $3.430 | $3.884 | $4.518 |
Data source: Airbnb.
Airbnb continued to report solid results for the first quarter of 2025. Revenue rose 6.1% year over year to $2.3 billion while operating income soared 166% to $101 million. Net income stood at $264 million, up more than 71%. The business also churned out free cash flow of $1.9 billion for the quarter, and its annualized free cash flow is on track to surpass 2024's level.
Operating metrics were also encouraging. Nights and experiences booked rose 8% year over year to 143.1 million, with gross booking value increasing by 7% year over year to $24.5 billion.
There's evidence that Airbnb can capture even more business with the launch of Airbnb Services and Airbnb Experiences back in May this year. Airbnb Services adds an additional layer of services to make a stay more memorable, with guests able to choose from 10 categories of services such as spa treatments, manicures and pedicures, or prepared meals in 260 cities. These services are an add-on to the Airbnb booking and allow a customer to personalize their stay.
Airbnb Experiences, which launched in 650 cities, allows locals to bring guests around a city to make the experience more personal and authentic. These additional options will serve not just to increase Airbnb's revenue streams, but will also make its service more endearing to potential customers and help to boost nights booked and gross booking value even further.
Phreesia
Phreesia (PHR -1.66%) serves the healthcare industry by offering patient-driven digital solutions and serves healthcare providers and life sciences companies.
The company's software and payment solutions have seen increasing take-up over the years, resulting in revenue and gross profit rising steadily as shown in the table below. Gross profit margin has also been on an uptrend, reflecting healthy operational scale achieved by the business. Moreover, Phreesia also achieved positive free cash flow for its latest fiscal year.
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue (in millions) | $280.910 | $356.299 | $419.813 |
| Gross profit (in millions) | $221.966 | $295.274 | $353.586 |
| Gross profit margin | 79% | 82.9% | 84.2% |
| Free cash flow (in millions) | ($111.594) | ($51.669) | $17.001 |
Data source: Phreesia. Fiscal years end Jan. 31.
For the first quarter of its fiscal 2026, revenue continued its uptrend, rising by 14.5% year over year to $115.9 million. Gross profit increased by 16.1% to $99.3 million, and gross profit margin increased further from 84.5% to 85.6%. The business also churned out a positive free cash flow of $7.5 million for the quarter, reversing the prior year's free cash outflow of $6.2 million.
Phreesia's average number of healthcare clients rose 9% year over year to 4,411 during the quarter, demonstrating continued traction in the business.
Management is confident that Phreesia can continue to grow amid attractive industry tailwinds. U.S. national healthcare expenditure tops $4.9 trillion, and the projected out-of-pocket spending on medical bills is estimated to hit $749 billion by 2032. The company's software will aid patient payments, thereby reducing delayed payments and bad debts for healthcare providers.
The drive toward more personalized patient care is another catalyst for Phreesia as the company helps to manage the entire patient life cycle from finding a doctor to making appointments and payments. Management believes that the business has a current total addressable market of around $10 billion, providing ample opportunities for future business growth.
Arista Networks
Arista Networks (ANET 0.37%) operates a platform providing networking services for artificial intelligence (AI) and data center environments. Demand for Arista's services is soaring, as evidenced by the steady rise in the company's revenue and net income. Not only did net income more than double from 2022 to 2024, but free cash flow also ballooned in tandem, as shown in the table below.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue (in billions) | $4.381 | $5.860 | $7.003 |
| Operating income (in billions) | $1.527 | $2.257 | $2.945 |
| Net income (in billions) | $1.352 | $2.087 | $2.852 |
| Free cash flow (in millions) | $448 | $1,999 | $3,676 |
Data source: Arista Networks.
Arista Networks displayed strong growth momentum for the first quarter of 2025. Revenue climbed 28% year over year to $2 billion while operating income surged 30% to $858.8 million. Net income stood at $813.8 million, 27.6% higher than a year ago. Free cash flow also grew, rising 21.6% year over year to $613.3 million.
The board of directors authorized an additional $1.5 billion share repurchase program, signaling confidence in the company's future.
Innovations could continue to power growth at Arista Networks. The company introduced capabilities to maximize AI cluster performance and efficiency, delivering an added boost for its customers. AI is also helping with troubleshooting by inferring users' issues and then solving them, thus helping to complete jobs in time and increasing the reliability of its platform.
Meanwhile, Arista also acquired the VeloCloud@SD-WAN portfolio from Broadcom. This portfolio of solutions provides more choice and better performance for its customers and complements the company's existing routers. With surging demand for digitalization and rapid adoption of cloud services, Arista Networks looks poised for more growth in the coming years.
