Investing can be a daunting task, especially when it comes to identifying stocks that are worth holding onto for the long haul. With numerous fluctuations in the market, discerning which companies have the potential for sustained growth is crucial. This article takes a closer look at three promising stocks that are well-positioned to soar over the next two decades, despite their current challenges.
### Roblox (NYSE: RBLX)
Roblox is not just another video game—it’s a dynamic game-building platform enabling users to create, share, and monetize their virtual worlds. This model fosters a continuous influx of fresh content, which keeps players engaged. In the past year, Roblox reported revenue growth, reaching $3.6 billion, which represented a robust 29% increase year-over-year. The platform paid $923 million to its community of game developers, highlighting a symbiotic relationship that drives user engagement and satisfaction.
However, the gaming industry is known for its volatility, often witnessing short-lived interest in titles as players move on to the latest releases. Roblox has managed to mitigate this risk by offering ever-evolving gameplay through user-generated content, which contributes to its consistent revenue trajectory. This unique business model has allowed Roblox to grow its revenue almost every year since its launch in 2006.
Moreover, Roblox’s technology is now being leveraged beyond gaming, with significant partnerships established with well-known brands like Walmart, Nike, and e.l.f. Beauty, who utilize the platform for marketing in their own virtual environments. While the company has yet to turn a profit—much to the concern of some investors—the upcoming transition towards profitability is anticipated within the next few years, fostering optimism among long-term investors.
### Applied Digital (NASDAQ: APLD)
While its roots lie in the cryptocurrency sector, Applied Digital is pivoting towards a booming opportunity in artificial intelligence (AI) data centers. As global demand for AI capabilities skyrockets, so does the need for physical infrastructure to support these operations. The company has recently secured a significant 15-year agreement with CoreWeave to lease an AI data center which is expected to generate approximately $11 billion in total revenue.
The unique challenge posed by the rapid expansion of data centers is that they require a vast amount of electricity and must be efficiently cooled. Applied Digital is well-equipped to tackle these issues, particularly with its focus on sustainable energy solutions and facility design. Analysts project that the company will reach profitability by 2028, coinciding with a broader industry trend where investments in data centers are expected to spike to nearly $7 trillion by 2030.
Despite not being profitable yet, Applied Digital’s exposure to the burgeoning AI market presents a compelling long-term growth opportunity, especially as businesses increasingly rely on data-driven insights.
### Chewy (NYSE: CHWY)
Chewy may not be the flashiest name on the market, but it embodies steady growth in the online pet supply sector. As brick-and-mortar retail experiences a migration towards e-commerce, Chewy is well-positioned to benefit from this trend. Its recent second-quarter earnings showed revenues of $3.1 billion, reflecting an 8.6% year-over-year growth, along with a notable increase in per-share earnings.
Despite a recent dip post-earnings release, Chewy continues to expand its customer base, reporting a 4.5% rise in active customers and a corresponding increase in the average amount spent. More importantly, Chewy’s subscription service—an autoship option for pet food—now constitutes over 78% of its total revenue, demonstrating the company’s adaptability to evolving consumer preferences.
While some investors may perceive Chewy as a slow-growth stock, its sustainability is reinforced by shifting demographics. Younger pet owners are increasingly gravitating towards online shopping and subscription services, which aligns perfectly with Chewy’s business model.
### Conclusion
For long-term investors looking to navigate the complexities of the stock market, Roblox, Applied Digital, and Chewy represent three stocks with promising horizons. Each company excels within its respective niche and addresses specific market needs, establishing a solid foundation for growth over the next two decades.
However, potential investors should also consider the inherent risks associated with these stocks. Roblox’s ongoing losses, Applied Digital’s market volatility, and Chewy’s recent earnings slump could raise concerns. Yet, the underlying opportunities each company presents make them intriguing prospects for those willing to hold for the long haul.
Investing in the stock market requires a degree of faith in a company’s journey toward profitability and success. As these three stocks continue to develop and push their respective industries forward, they may just reward patient investors in ways that could be transformative over the next twenty years.
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