The key is to hold such stocks for the long term as time works its magic on high-quality businesses. Selling them hastily to lock in short-term profits will unnecessarily disrupt this wealth-building process.
There are certain characteristics that are especially worth looking for when you’re trying to pick a stock that you’ll feel good about holding in your portfolio for many years. The business should boast a strong competitive edge that will help it fend off competition, have a long track record of growing its revenue and net income, and generate large amounts of free cash flow so that it can Don’t rely on the kindness of banks. or the bond market.
These ingredients will not only give you more peace of mind during your investment journey, they are also important in helping you add to your wealth. Three attractive growth stocks possess those qualities. You may want to include any or all of them in your portfolio for long-term holding.
The Atlanta-based company has made steady progress in increasing its revenue and profitability. Its revenue rose from $7.1 billion in 2021 to $8 billion in 2023 while operating income rose from $3.4 billion to $3.7 billion over the same period. Net income (after adjusting for one-off items) rose from $1.6 billion to $2.5 billion. Intercontinental Exchange’s free cash flow also increased from $2.7 billion in 2021 to $3.1 billion in 2023.
The first nine months of this year saw a steady increase in business. Revenue rose 20.2% year over year to $7 billion while operating income rose 16.7% to $3.2 billion. However, net income grew by only 3.1% due to higher tax expenses. Still, free-cash-flow generation remained strong, coming in at $2.6 billion compared to $2.2 billion in the year-ago period, up nearly 17%. Those results allowed management to increase the company’s quarterly dividend by 7% to $0.45 per share.
Intercontinental Exchange sees a number of tailwinds that could help drive its business further. The increasing globalization of the natural gas market and the shift towards clean energy have helped its energy division’s revenue grow at an annual rate of 9% since 2018. The growing demand for data analytics should act as another catalyst. Its fixed income unit is witnessing an increase in automation in line with the growing growth in passive investing, which is driving continued demand for desktop, feed and derivative analytics solutions. For the mortgage unit, the transition from analog to digital offers the company a great opportunity to capture more business.
Intercontinental exchange is also growing by acquisition. It completed the acquisition of Black Knight, a software, data and analytics company, in September 2023. The company also purchased Ellie Mae in 2020 and Simplifile in 2019 to help expand its capabilities and offer a wider breadth of services. These moves, along with the tailwinds discussed above, should help Intercontinental Exchange continue to post healthy growth for many more years.
upwork (NASDAQ: UPWK ) Runs a platform that matches freelancers with organizations that need their skills and talents. The San Francisco-based company is present in 180 countries, boasted about 855,000 customers on its network as of September 30, and offers more than 125 categories of work. U
The company’s financial results improved from 2021 to 2023 as business grew. Revenue increased from $367.3 million in 2021 to $518.7 million in 2023, and the business shifted from a net loss of $56.2 million to a net profit of $46.9 million over the same period. Its free cash flow more than doubled from $4.7 million in 2021 to $13.9 million in 2023.
In the first three quarters of 2024, Upwork’s revenue rose 14.4% year-over-year to $577.8 million while operating income was $51.6 million. Net income more than doubled to $68.4 million annually. The company also churned out $134.5 million in free cash flow, a nearly six-fold year-over-year increase.
There may be more growth to come for the freelancer platform. Upwork is using its artificial intelligence (AI) software, Uma, to drive new features and products for both freelancers and businesses. Uma can help freelancers create personalized proposal drafts to increase their chances of being selected for a gig. AI agents also help businesses identify the most suitable talent for their project needs.
These upgrades should encourage more businesses and freelancers to join Upwork’s platform, setting off a virtuous cycle that could help it attract even more talent. Upwork recently announced its plan to acquire Purpose, a search-as-a-service business that leverages AI. Purpose’s integration will help improve Upwork’s search, match, and recommendation performance. The acquisition, which should close by the end of this year, will also expand Uma’s capabilities for images, video and audio content.
Comfort Systems USA (NYSE: FIX) Provides mechanical, electrical and plumbing systems for buildings. With more than 170 locations and more than 18,000 staff, it has demonstrated steady, profitable growth over the years and has a quarter-of-a-century track record of generating positive free cash flow.
The Houston-based company increased its revenue from $3.1 billion to $5.2 billion from 2021 to 2023, and total revenue from $143.3 million to $323.4 million over the same period. And the engineering company’s free cash flow tripled from $157.8 million in 2021 to $544.7 million in 2023.
The company continued to post strong results during the first nine months of this year. Revenue rose 34% year over year to $5.2 billion while operating income rose 75% to $523 million. Net income was up 62.4% at $376.6 million. Free cash flow grew a healthy 43.1% to $568.2 million. And management raised the quarterly dividend to $0.35 from $0.30, extending it for the 12th consecutive year in 2024.
The business should see further growth ahead as its backlog hit $5.7 billion, up an impressive 32.4% year over year. The company also maintains a clean balance sheet with no debt, but has an $850 million senior credit facility on standby should it be needed.
Apart from organic growth, Comfort Systems is also growing through acquisitions. Earlier this year, it purchased Summit Industrial Construction, a specialty industrial mechanical contractor serving the technology, electrical and industrial sectors. Summit will contribute to Comfort Systems’ top line and should be neutral to slightly positive for earnings per share for 2024 and 2025.
Have you ever felt like you missed the boat on buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts a “Double down” stock Recommend companies they think are going to pop. If you’re worried that you’ve already missed out on an investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves:
-
Nvidia: If you invested $1,000 when we doubled in 2009, You will have $368,053!*
-
Apple: If you invested $1,000 when we doubled in 2008, You will have $43,533!*
-
Netflix: If you invested $1,000 when we doubled in 2004, You will have $484,170!*
Right now, we’re issuing “double down” alerts for three great companies, and there may not be another opportunity like this anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns to November 25, 2024
Royston Yang No positions in any of the stocks mentioned. The Motley Fool recommends Intercontinental Exchange and Upwork. Motley Fool has a Disclosure Policy.
3 Great Growth Stocks to Buy Now and Hold for the Long Term Originally published by The Motley Fool
