In a balanced portfolio, blue-chip stocks provide steady returns with the comfort of a low beta. On the other hand, growth stocks create big wealth. Today’s blue-chip companies started their journey as promising growth stocks and became millionaires on the way. This column focuses on growth stocks to buy and hold until the end of the decade for multibagger returns.
I have said in the past and will emphasize again that identifying a potential value creator is not a big challenge. The real challenge is to buy and hold through the thick and thin. Tesla (NASDAQ:TSLA) listed in 2009 at a market valuation of $1.5 billion. The journey to current valuation of $550 billion has been through phases of deep corrections and extreme bearish views. If business developments are positive, cutting out the noise and holding with patience makes sense.
Let’s talk about seven growth stocks to buy and hold for massive value creation.
DraftKings (DKNG)
DraftKings (NASDAQ:DKNG), an iGaming and online sports betting (OSB) company, is a potential millionaire-maker. The gaming company has a big addressable market and ample headroom for growth in the coming years.
To put things into perspective, the iGaming and OSB market in the U.S. is expected to swell from $20 billion in 2023 to $30 billion by 2028. This is just for existing states, and as more states legalize gaming, the market size will swell. I also expect DraftKings to expand beyond the U.S. in the coming years. The European online sports betting market is expected to swell to $55.5 billion by 2032.
While DraftKings was growing at a stellar pace, profitability was a concern. This concern has been addressed, and the gaming company expects to deliver an adjusted EBITDA of $500 million for the year. Further, EBITDA is expected to swell to $1.4 billion in 2026 and $2.1 billion by 2028. With healthy revenue growth and profitability, DKNG stock will likely be a massive value creator.
EHang Holdings (EH)
The flying car industry is at a nascent stage, but estimates point to sustained growth in the next few decades. Therefore, some of the early movers can create immense value if their business execution is in the right direction. To put things into perspective, the flying car market is expected to be worth $1 trillion by 2040. EHang Holdings (NASDAQ:EH) is among the most promising eVTOL stocks to buy and hold.
EHang has already commercialized eVTOL in China. Further, the flying car company received certification from the Civil Aviation Administration of China for mass production of EH216-S pilotless eVTOL aircraft. This sets the stage for scaling up operations in the coming years.
Another important point to note is that EHang is making aggressive efforts toward international expansion. The company has already completed its first passenger-carrying demo flight in the UAE. Some other markets where demo flights have been conducted include Spain, Costa Rica and Japan. Therefore, I expect orders for the company’s eVTOL to swell, translating into stellar growth.
Li Auto (LI)
The EV industry is facing headwinds in the near term, such as slow GDP growth, intense competition and relatively slow adoption of EVs. However, the long-term outlook remains positive, and it’s a good time to accumulate potential value creators.
Li Auto (NASDAQ:LI) will likely be among the major industry players by the end of the decade. With LI stock trading at a forward P/E of 16.7, it’s the best time to accumulate.
I like that Li Auto has not gone overboard in terms of expansion. The EV company continues to focus on China exclusively, delivering good results. As of May, Li had retail stores, and growth will be supported as the network continues to expand.
A cash buffer of $13.7 billion will support aggressive network expansion and investment in product development. Another reason to like Li is the company’s continued efforts to remain ahead of the technological curve. The company is targeting the launch of level 3 self-driving technology by 2025.
MakeMyTrip (MMYT)
India will likely be among the fastest growing countries in the world over the next decade. Several interesting sectors can create massive value. With a rising middle class, India’s travel and tourism sector is expected to boom. Estimates suggest that Indian travellers’ total expenditure will surge to $410 billion by 2030. This will position India as the fourth-largest travel market.
MakeMyTrip (NASDAQ:MMYT), an online travel booking company, is, therefore, an interest bet for multibagger returns. With the industry recovering after the pandemic, MMYT stock has surged by 175% in the last 12 months. I would look at corrections to accumulate with a long-term investment horizon.
In terms of fundamentals, MakeMyTrip achieved the highest ever gross annual booking for the financial year 2024. Revenue growth will likely remain healthy. At the same time, there has been a significant improvement at the operating level. In FY21, the travel booking company reported an operating loss of $18 million. For FY24, operating profit was $124.2 million. Margin expansion will likely sustain on the back of operating leverage.
Riot Platforms (RIOT)
Bitcoin (BTC-USD) has been consolidating around $70,000 levels. This is a good opportunity to accumulate quality crypto stocks before the next big move. Among Bitcoin miners, Riot Platforms (NASDAQ:RIOT) looks massively undervalued at a forward P/E of 16.5. With ambitious growth plans and strong fundamentals, RIOT stock is worth considering.
As of Q1 2024, Riot’s balance sheet was zero-debt. The Bitcoin miner reported a cash buffer (including digital assets) of $1.3 billion. Therefore, Riot has high financial flexibility for aggressive expansion.
Recently, Riot proposed to acquire Bitfarms (NASDAQ:BITF) at $2.3 per share. While the proposal was rejected, Riot is clearly looking at acquisitions to establish itself as the largest Bitcoin miner.
Regarding organic growth, Riot ended Q1 with a hash rate capacity of 12.4EH/s. The company is targeting to boost capacity to 31.4EH/s by the end of the year. Further, the long-term target is to achieve a capacity of 100EH/s by 2027. Therefore, revenue and EBITDA growth will likely be robust in the coming years.
Pinterest (PINS)
After a big rally in the first half of 2021, Pinterest’s (NYSE:PINS) stock was corrected sharply. The key reasons were tight monetary policies and lower growth estimates in a post-pandemic world. However, PINS stock has been revived, with an upside of 81% in the last 12 months. The proxy e-commerce player remains attractively valued and has the potential for significant upside in the long term.
For Q1 2024, Pinterest reported revenue growth of 23% on a year-on-year basis to $740 million. Further, global active users increased by 12% to 518 million. The company reported operating cash flow of $356 million, which implies an annualized OCF of $1.5 billion. This is a key reason for being bullish on PINS stock, and I expect cash flows to swell further.
To elaborate on the reason, Pinterest reported a global average revenue per user of $1.46 for Q1 2024. In the U.S. and Canada, the ARPU was $6.05. However, the ARPU was $0.86 and $0.11 for Europe and the rest of the world, respectively. I see ample scope for ARPU upside from emerging markets in the next five years. Even with a stable user base, this will translate into a cash flow upside.
Cronos (CRON)
Let’s end the discussion on growth stocks to buy and hold with a penny stock with immense potential. Cronos (NASDAQ:CRON) stock is possibly the best way to bet on the cannabis sector growth.
I like that Cronos has gone slow in expansion and preserved cash. The cannabis company ended Q1 2024 with a solid cash buffer of $855 million. With regulatory headwinds gradually declining, Cronos is among the best positioned companies from a financial perspective to go aggressive, including organic and possible acquisition-driven growth initiatives.
On the organic growth front, Cronos has a strong presence in Canada and Israel. In the last few quarters, the company has entered new geographies, including Australia, Germany and the United Kingdom. This is likely to support accelerated revenue growth.
Cronos will likely enter the United States with the impending reclassification of cannabis as a Schedule III drug. Additionally, there is a big addressable market for medicinal cannabis in multiple European countries. Also, the company’s entry into Germany comes at the right time with cannabis legalization.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
