One of the great things about equity markets is that we can be virtually certain that, over long periods, such as a decade, major indexes will produce competitive returns compared to other asset classes. But what if we want to do even better than whatever these indexes deliver?
Investing in the right stocks can help anyone achieve that. Let's consider two candidates that might outperform the mighty S&P 500 (^GSPC 1.10%) over the next 10 years: SoFi Technologies (SOFI 4.10%) and Fiverr (FVRR 4.25%).
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1. SoFi Technologies
SoFi Technologies, a fintech specialist, has performed well over the past year. The online bank is achieving excellent financial results while expanding its reach, with membership numbers continuing to trend higher.
Over the next 10 years, SoFi could benefit from several tailwinds that will help propel its stock price even higher. First, it should succeed in attracting even more members, especially among younger generations. SoFi is an entirely online bank, a notable selling point among those who grew up with the mentality that there's an app for almost any service they need.
NASDAQ: SOFI
Key Data Points
Second, SoFi should eventually expand its ecosystem to include even more services. That's what it has historically done, and with great success. Some new initiatives for the company include international money transfers and a return to cryptocurrency trading.
Third, SoFi can also grow its revenue by cross-selling additional products to its existing members.
All those potential growth avenues make a strong case for SoFi's long-term prospects. That's not to say there won't be risks. A recession could significantly harm its important lending business, for instance.
Even with those caveats, the stock is worth serious consideration for investors to hold through 2035.
2. Fiverr
Fiverr hasn't been performing as well of late. However, it could benefit from the growth of the gig economy over the next 10 years.
The company operates a platform that connects freelancers seeking work with businesses looking for talented individuals. It's more convenient for both. Freelancers spend less time on marketing and client acquisition, since clients come to them on the platform, while companies can quickly onboard a contractor.
NYSE: FVRR
Key Data Points
Despite Fiverr's revenue growth declining since the early days of the pandemic, it has successfully turned a profit. The company is now benefiting from an increase in artificial intelligence (AI)-related services on the platform, which could be an important growth avenue for the foreseeable future. Every business is now seeking to adopt AI technology, and for smaller companies that can't afford expensive teams of PhDs in the discipline, hiring freelancers on Fiverr is a decent option.
Fiverr's consistent profits and growth prospects, driven by the rising gig economy and soaring demand for AI services, could help it rebound and perform well over the next decade.
