A solid strategy for investing is to buy shares of growth-oriented businesses and hanging on to them for the long haul. While the temptation may be there to chase short-term trends and memes, the real potential to score some 10-baggers is through some solid growth stocks.
Three growing businesses that look unstoppable, not just in 2022 but for the very long term, are Bristol-Myers Squibb (NYSE: BMY), Ginkgo Bioworks (NYSE: DNA), and Veeva Systems (NYSE: VEEV). Here's why you should consider these stocks for your portfolio right now.
Image source: Getty Images.
1. Bristol-Myers Squibb
Bristol-Myers is a growth machine that continually finds new ways to expand over the years. Its revenue has skyrocketed from $20.8 billion in 2017 to just under $46.4 billion this past year, rising by 123% during that time. Two of its top products, oral cancer drug Revlimid and blood clot medication Eliquis, generated $12.8 billion and $10.8 billion revenue in 2021, respectively.
Acquisitions have been a key part of the company's growth, and one of the biggest ones that Bristol-Myers has made in recent years was its purchase of cancer and immunology drugmaker Celgene for a whopping $74 billion in 2019. In 2020, it also acquired cardiovascular disease company MyoKardia for over $13 billion.
To be able to pull these kinds of moves off, Bristol-Myers has to be a moneymaking giant, and it certainly is; its free cash flow last year was more than $15.2 billion, up from $13.3 billion the year before. And the company projects that by 2024 its free cash flow will potentially top $50 billion, suggesting that it will continue to have no problem generating a boatload of cash to fund potentially more investments and acquisitions.
That's a big reason why this company looks unstoppable today: The money just keeps pouring in. And this will ensure that Bristol-Myers won't run out of opportunities to pursue in the future.
2. Ginkgo Bioworks
Another business I don't see slowing down over the years is biotech company Ginkgo Bioworks. This stock went public through a special purpose acquisition company (SPAC) just last year, and analysts are bullish it could double in value.
The company says it can program DNA cells the way that programs can code computers. Ginkgo says by doing so, it can help its customers make new and better products by modifying DNA code. The company sees opportunities in many industries and says that the addressable market for bioengineered products could be between $2 trillion and $4 trillion. Among the industries it sees the most potential growth in are healthcare as well as food and agriculture.
That potentially is still years away from being realized, but Ginkgo has plenty of growth opportunities for expanding its business over the next decade. Revenue for the nine-month period (ended Sept. 30, 2021) totaled $165.3 million, soaring more than 270% from the previous year. Although the company is still incurring losses, that's to be expected with such a young, growing business.
For investors willing to take on a bit more risk than they would with Bristol-Myers, Ginkgo could be one of the best investments to buy and hold today.
3. Veeva Systems
Tech is always a popular option for growth-oriented investors. Combine that with the long-term stability of healthcare, and you get a company like Veeva Systems that is helping to digitize the industry -- specifically, life sciences. The company provides its customers with cloud software and analytics products, making it easy for them to manage data and their customer relationships. And what's attractive about the business model is that subscriptions make up the bulk of it.
In fiscal 2022 (which ended Jan. 31), Veeva reported $1.85 billion in revenue, which grew 26% year over year. And of that tally, subscription revenue totaled $1.48 billion, representing more than 80% of the top line while professional services and other made up the rest. Its strong gross margins of more than 70% allowed the business to net $427 million in profit, which was 23% of revenue. For the current fiscal year, Veeva continues to expect its revenue to climb higher, to between $2.16 billion and $2.17 billion, which would translate into growth of 17%.
Digitization and more companies utilizing the cloud isn't a trend that's likely to go away. According to Grand View Research, the digital transformation market (which is much broader than just healthcare) will be worth more than $3.8 trillion by 2030, growing at a compound annual growth rate of 23.1% until then. Healthcare will undoubtedly play a key role in that, and that's a big reason why Veeva shows so much promise as a long-term investment.
10 stocks we like better than Bristol Myers Squibb
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Bristol Myers Squibb wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of March 3, 2022
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bristol Myers Squibb and Veeva Systems. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
