Finding stocks to buy and hold forever isn’t always an easy task. It’s not necessary that an investor with good stock-picking skills makes money in the markets. The patience to hold quality stocks is a big factor that separates investors with robust returns and average returns.
Of course, investors need to conduct a quarterly and annual assessment of business developments. Potential portfolio readjustments can be made on that basis. However, there is some conviction that I have for multibagger returns from these stocks to buy and hold forever.
It’s also worth mentioning here that 2022 has been a bad year for the notion that there are any stocks to buy and hold forever. Most of the stocks discussed have witnessed a deep correction during the year.
Still, if there was a good time to create a portfolio of growth stocks, it’s now. Valuations are attractive and the downside seems capped.
Let’s therefore talk about seven growth stocks to buy and hold.
|DETNF||Aker BP ASA||$29.36|
Rivian Automotive (RIVN)
Among electric vehicle stocks, Rivian Automotive (NASDAQ:RIVN) is worth considering for the long term. After having corrected by 75% for year-to-date 2022, RIVN stock looks undervalued.
Rivian recently said that the company will not be pursuing the deal with Mercedes to build electric vans for businesses in Europe. Rivian intends to focus on the consumer and existing commercial business.
I view this positively as Rivian conserves cash in a challenging economic environment. The company expects the current cash buffer of $13.8 billion to fund operations through 2025.
In terms of positives, Rivian already has a pre-order of 114,000 R1 vehicles. In the commercial business, the company has a backlog of 100,000 electric delivery vans from Amazon (NASDAQ:AMZN). This provides clear revenue visibility.
Once supply chain headwinds ease and economic conditions improve, it’s likely that Rivian will expand beyond North America. This will be another catalyst for growth in an industry with positive tailwinds beyond this decade.
Albemarle Corporation (ALB)
Albemarle (NYSE:ALB) is another quality growth stock that’s worth keeping in the core portfolio.
Amidst challenging market conditions, ALB stock has remained sideways in the last 12 months. At a forward price-earnings ratio of 12, the stock seems seriously undervalued.
With the anticipated growth in electric vehicle adoption, lithium is likely to be an attractive investment theme. Albemarle is possibly the best pick among lithium stocks.
Talking about the growth momentum, Albemarle reported revenue growth of 152% on a year-on-year basis for Q3 2022. For the full year, the company has guided for 280% to 300% growth in adjusted EBITDA. Growth has been triggered by higher realized lithium prices coupled with growth in lithium conversion capacity.
Last year, the company had a lithium conversion capacity of 85ktpa. Capacity is expected to be ramped-up to 200ktpa by the end of the year. Albemarle has guided for a lithium conversion capacity of 450 to 500ktpa by 2030. Sustained growth in capacity will ensure healthy revenue growth and cash flow upside.
Pinterest (NYSE:PINS) is an e-commerce play that’s undervalued. Pinterest is focused on making the platform shopping friendly and that’s likely to deliver long-term results.
In terms of key metrics, there are two positives. First, monthly active users have stabilized on a year-on-year basis. Further, average revenue per user has increased in the U.S. in the last two quarters.
ARPU is significantly low for the rest of the world (excluding the U.S. and Europe). With advertisements launched in several Latin American markets, global ARPU is likely to trend higher.
Pinterest reported cash and equivalents of $1.6 billion as of Q3 2022. For the first nine months of 2022, the company also reported an operating cash flow of $411 million. With strong financial flexibility, Pinterest has already been investing aggressively on platform development. In the last few quarters, research and development expense has been around 24% of revenue.
Overall, Pinterest has the potential to be a cash flow machine as global ARPU trends higher. PINS stock can therefore be a value creator.
Leonardo DRS (DRS)
Given the current geopolitical scenario globally, it’s important to hold a few defense stocks in the portfolio. Leonardo DRS (NASDAQ:DRS) is worth considering among growth stocks from the defense sector.
As an overview, the company is a provider of defense products and technologies. This includes tactical radars, advance sensing, network computing and other electronic products. Formed after the merger of Leonardo DRS and Rada Electronic, the company seems to be at a growth inflection point.
For 2021, the combined entity reported revenue and EBITDA of $2.7 billion and $300 million respectively. With a net-debt-to-adjusted EBITDA of 0.6, financial flexibility is high to pursue aggressive growth. As the order backlog swells, Leonardo expects revenue growth at a high single-digit CAGR over the long term.
It’s also worth noting that 87% of the company’s contracts are from the U.S. government. There is ample scope for growth in Europe where defense spending is likely to be robust in the coming years.
It’s expected that China will remain a leader in the adoption of electric vehicles. Among various Chinese EV stocks, Nio (NYSE:NIO) looks attractive after a deep correction.
Nio has continued to report healthy deliveries growth. Amidst challenging conditions, Nio reported 29.3% growth in vehicle deliveries for Q3 on a year-on-year basis. Vehicle margin was relatively subdued due to inflationary pressure. However, beyond the supply chain and economic headwinds, the long-term growth outlook remains positive.
One reason to be bullish on Nio is the fact that the company plans to launch five new models by the summer of 2023. This will help the acceleration of deliveries growth. Nio also expects its core business to break even by Q4 2023. This is another impending positive catalyst for NIO stock.
International expansion is another reason to be bullish. The company has announced entry into four new European markets. Further, the plans are to increase its presence to 25 countries by 2025. With a strong cash buffer, Nio is positioned for an aggressive international push.
Tilray Brands (TLRY)
There might be questions asked on why Tilray Brands (NASDAQ:TLRY) is among the stocks to buy and hold forever. Well, one perspective is that the growth stock is seriously undervalued. From current levels, the downside is capped. On the other hand, the upside potential is significant considering a cannabis legalization scenario.
Another reason to be bullish on Tilray is slow but steady business development. As an example, the company expects to be free cash flow positive in key business units in the current financial year.
Tilray is also making the right moves for entry into the U.S. Tilray has acquired two brewing companies. This is helpful in setting up a strategic infrastructure before a potential legalization-driven growth.
I also like the fact that Tilray has a good presence in medicinal cannabis. The company is a leader in the medicinal cannabis segment in Germany. In November, President Biden signed the medical marijuana research bill. This is likely to benefit Tilray as it makes inroads into evidence-backed medicinal cannabis.
Aker BP ASA (DETNF)
The year has been among the best in the recent past for oil and gas exploration companies. With geopolitical tensions and production cuts, it’s likely that oil will remain around $80 per barrel. Aker BP ASA (OTCMKTS:DETNF) is a hidden gem growth stock to buy and hold.
Aker BP is involved in the exploration of oil and gas with a focus on the Norwegian Continental Shelf. The company has six assets with a low break-even being a key attraction.
For Q3 2022, Aker BP reported production of 412 million barrels of oil per day. On a year-on-year basis, production growth was almost 100% with first oil from Johan Sverdrup. The key point to note is that the company reported revenue and EBITDA of $4.8 and $4.5 billion respectively. Further, free cash flow for the quarter was $1.9 billion.
Clearly, Aker BP is a cash flow machine with low production costs. Once Johan Sverdrup Phase two production commences, cash flows will swell further. This is likely to translate into sustained dividend growth. With high financial flexibility, Aker AP is also positioned to pursue asset acquisitions and invest in exploration.
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.
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