In the world of investing, a long-term growth strategy that ignores short-term volatilities remains the most widely recommended. The value one can achieve over years and decades remains unmatched by those that seek short-term gains through retail investing. The risk through this investment philosophy remains manageable, with bets placed on stable and steady growth trajectories and investment in the highest growth stocks often gives handsome returns.
When looking to go big with long-term growth stocks, the fundamental goal is identifying businesses that are capable of meeting the demand of a substantially sized market. We determine this on the basis of a number of indicators. Market and competitive position, financial strength, fundamental performance, and the robustness of its business model, each point out which company is worth investing in for the long term. In this article, we present the 5 highest-growth stocks that meet the aforementioned standards and are capable of delivering substantial value growth over the years and decades to follow.
Marvell Technology
We begin our list of highest growth stocks with the semiconductor giant, Marvell Technology, Inc. (NASDAQ: MRVL). Marvell holds immense long-term potential for growth, given its strategic positioning in some of the most crucial markets of the future. As opposed to being a consumer-oriented semiconductor company with general offerings, Marvell boasts application-specific expertise in some of the most rapidly growing markets.
In the past, the company held 62% exposure to consumer markets, but in its shift towards enterprise digitization and infrastructure, this exposure has been reduced to 20%. The company is now seeing dynamic revenue and earnings growth in its core business segments. These include data center systems, carrier infrastructure and technology, industrials and automotive, and finally enterprise networking. Given Marvell’s expertise in some of the most dominant and high-growth industries, its stellar financial performance is no surprise.
Revenue figures across all five segments had seen surging growth in its most recent quarterly release. Enterprise networking in particular grew by a whopping 64% on a year-on-year basis. Additionally, automotive, cloud technology, and 5G collectively reflected 40% of total sales. Given these stellar growth figures and MRVL’s strategic positioning in some of the most exciting tech domains, the stock is truly one of the future big names.
Fair Isaac Corporation
The second stock on our list of highest growth stocks is that of the analytical software champion, Fair Isaac Corp. (NYSE: FICO). The company’s products are highly demanded across organizations, given the value they offer to client firms. Its B2B scoring solutions and services are one of its core growth drivers, giving FICO a significant edge in the financial markets. Banks, mortgage lenders, and credit card issuers are just some of the categories of clients that benefit from these applications.
Similarly, its analytical software also enhances FICO’s long-term growth potential. Its uniquely developed mathematical algorithms and predictive analytics enable enterprise-wide optimization and subsequent expansion. These solutions packages automate critical processes that ensure efficiency and thus improve supply-chain and other operational factors. Given the shift towards remote working and e-commerce, FICO benefits heavily from secular tailwinds.
Since 2019, the company has been crushing analyst expectations. In the second quarter of 2022, a consensus EPS estimate of $3.73 had been set. FICO had instead gone on to deliver an impressive $4.68 per share.
The company has significantly strengthened its fundamentals in the last 12 months. Despite this, FICO is trading 12% below its price of a year ago. For a stock with such strong prospects, this opportunity is ideal for long-term investors to accumulate this promising stock.
Domino’s Pizza Inc
Up next, we present the world’s most famous pizza company, Domino’s Pizza Inc., (NYSE: DPZ). Domino’s is currently going through a rough patch with a number of challenges chipping away at its earnings. The company is faced with staffing shortages, reduced business hours, and other supply chain complications. However, these were somewhat mitigated by menu price inflation, higher check transactions, and an increased average spending per transaction.
Despite immediate challenges, the stock’s long-term outlook remains rock-solid making it ideal among other highest-growth stocks. The core driver of this forward-looking rise is the company’s dominant market position, and especially its international business segment. At present Domino’s reports almost 19,000 stores in 90 different markets. With its ambitions to drastically increase its international presence through additional stores, revenue could see a dramatic surge in the upcoming years and decades. Furthermore, DPZ holds a highly robust business model which makes it a safe investment for times of economic uncertainty. Contrary to the widely accepted belief, Domino’s does not primarily earn money by selling pizza. The business model revolves around selling stores and pizza ingredients to store operators. Through a franchise system structured in this manner, growth is sustainable, with low-risk exposure.
Moreover, once the macroeconomic headwinds subside, we can easily expect Domino’s growth rocket to take off without obstruction. The easing of global supply chains along with the stabilization of inflation levels is an inevitability. Only time will tell when this comes to pass. Recently, the sanctions on Russian oil did see some form of relaxation, which spells good news for business giants such as Domino’s.
Industrias Bachoco, S.A.B
The fourth stock we put forward among the highest growth stocks is the giant, Mexico-based poultry producer, Industrias Bachoco, S.A.B., (NYSE: IBA). Instead of a complex and intriguing business model, IBA rests on a simple concept. The company produces feed for chickens, that it raises, markets, and sells. With this simple business approach, IBA is one of the leading producers of chicken products in Mexico, whilst also catering to the US market.
Recent inflationary pressures have proven tough for many industries. Poultry, however, enjoyed the price hike the circumstances brought to its products. In the Mexican context, the demand for chicken remains solid to price surges, due to it being the cheapest source of protein in the market. IBA in particular, being one of the largest players in the game, stood highly well-positioned to gain from these pressures. And gain it did. IBA enjoyed some of the highest profit margins it had earned in years.
Recently, the company announced the acquisition of RYC Alimentos into their wider business structure. RYC is a processor of beef, pork, and chicken, which reports annual revenue of over $150 million. This acquisition is crucial to the financial sustainability of the company and significantly boosts its long-term growth potential. As a result of the deal, IBA gains access to RYC’s entire network of meat processing facilities and stores. This significantly optimizes IBA’s value chain, and hence promises synergistic benefits of a substantial scale.
IBA is a safe stock to invest in that faces tremendous future opportunities. There is hardly a better pick for long-term growth investors who are looking for the highest growth stocks.
Graphic Packaging Holding Company
Finally, we turn to the fiber-based packaging solutions company, Graphic Packaging Holding Company (NYSE: GPK). As a packager for frozen foods and beverages, GPK was one of the few stocks that took off, as a result of the Covid-19 pandemic. Since then, it has more than doubled its price from $10 to $22 per share. Despite the Covid situation under control, the GPK growth trajectory continues uninterrupted.
With inflation on the rise, the company has transferred the cost burden to its consumers, without seeing demand being impacted as a result. Analysts have described the resulting phenomenon as a “shifting of the baseline”, which benefits GPK.
Moreover, the market is structured in an oligopolistic manner, which severely strengthens the company’s market position. The barriers to entry remain extremely high and costly to overcome. Alternatively, GPK has set up a supply chain network and the relevant infrastructure, making it one of the largest beneficiaries of its industry.
This robust market position, as well as broader tailwinds, are clearly reflected in GPK’s financial performance. In its recent quarterly reports, the company reported an incredible 36% revenue growth on a year-on-year basis. Operating income during this time had climbed by a whopping 87%, indicating how the company’s margins have risen in the present inflationary environment.
GPK is a great long-term buy for the highest growth stocks, given its robust market position, as well as its high-growth business model.
Conclusion
Picking the right long-term growth stocks is a highly consequential decision, which could change the lives of many, who make the right choices. As market volatility continues to bring panic to many market participants, those with a solid long-term strategy are not swayed and have their sights set on the future. The stocks presented in this article are all highly promising from a forward-looking standpoint, and could very well drive a surging future net worth for investors.
