Buying shares of competitively positioned businesses is the simplest way for most people to build wealth. Anyone can identify long-term winners in the stock market because more often than not, the best growth stocks are usually the services or brands that people use every day. Regular use of a product is a surefire signal that the business behind it has a powerful advantage in the marketplace that should allow it to prosper over time.
The following growth stocks have soared over the last few years, which is a good signal of where these businesses are headed in the next decade.
Image source: Getty Images.
1. Shopify
Millions of businesses pay Shopify (SHOP +2.59%) subscription fees to set up and manage online stores. The company has delivered tremendous returns for shareholders over the last 10 years, but the total transaction value of all Shopify merchants is only about 12% of the multi-trillion-dollar e-commerce market. This is why I would still consider buying the stock, despite it rising 475% over the last three years.
Shopify offers an affordable option for merchants who want to compete and grow their business in a large e-commerce market. But what I love about Shopify is that it only succeeds if the merchants that use the platform are also succeeding. Subscriptions only make up 24% of Shopify's revenue. Most of its revenue comes from various services like payments, shipping, and capital lending. The more transactions merchants are completing as they grow their business, the more revenue heads Shopify's way.
Shopify is clearly helping its customers grow their businesses. The company reported 31% year-over-year revenue growth in the second quarter. Analysts expect the company's top line to increase by 27% in 2025 and 22% in 2026, according to Yahoo! Finance. The revenue from merchant solutions (payments, shipping, etc.) has grown faster than subscriptions historically, which shows that the company is creating a tighter relationship with customers. This is a competitive advantage.
NASDAQ: SHOP
Key Data Points
Moreover, Shopify is still finding new opportunities to grow. Business-to-business (B2B) commerce is booming. Shopify reported a 101% year-over-year increase in gross merchandise volume in B2B last quarter. This shows the increasing technological capabilities of Shopify's platform, which positions it to handle the complex operational needs of large enterprises. This could significantly expand its addressable market over the long term.
Management noted on the last earnings report that the growth it is experiencing today is a result of investments it made years ago. Shopify is an exceptionally well-managed business. The investments it is making now in artificial intelligence-driven business automation and B2B opportunities could deliver strong growth for years to come.
2. Dutch Bros
Dutch Bros (BROS +1.65%) is a fast-growing specialty beverage chain with enormous growth potential. It is successfully expanding and posting better sales performance than Starbucks, which indicates a powerful brand in the making. The stock has returned 65% over the last three years, with the recent pullback representing an excellent buying opportunity for new investors.
While Starbucks has struggled with declining same-store sales lately, Dutch Bros is firing on all cylinders. Revenue grew 28% year over year last quarter, supported by a healthy 7.8% increase in company-operated same-shop sales, which indicates solid traffic trends.
NYSE: BROS
Key Data Points
One reason I wouldn't hesitate to buy the stock is the company's culture. Dutch Bros' growth can be directly attributed to its friendly service. Importantly, this fun-loving atmosphere is resonating with younger customers. Dutch Bros has become a popular destination for Gen Z, which could make this business one of the next great consumer brands.
The success of Dutch Bros is an example of how a business can deliver great returns to shareholders by putting customers first. In fact, management calls its people-first culture a competitive advantage. Its recent financial results certainly back that up.
Dutch Bros consistently scores high in job satisfaction. These are qualities that traditional valuation metrics like price-to-sales or price-to-earnings are not going to capture. Immeasurable qualities make it more than likely that the stock will surprise to the upside over the long term.
Dutch Bros has just over 1,000 shops right now, but it is well on track to hit its target of 2,029 shops open by 2029. Over the long term, management is planning 7,000 shops in the U.S., providing a very long growth runway. The stock is currently trading 37% off its recent high, making now a great time to consider adding this winner to your nest egg.
