Three Stocks with Promising Prospects for a Two-Decade Investment Period
It's common for investors to experience a blend of joy and apprehension when a stock they own experiences a notable price hike. The joy originates from the substantial unrealized profit they've accumulated, while the apprehension stems from the fear of losing these gains should the stock's value revert back to its previous level. This fear often leads investors to steer clear of highly-valued stocks, as they believe the upward momentum might not be sustainable.
However, this fear might be unjustified as high-performing stocks often possess characteristics that enable them to continue thriving. These high-growth stocks typically have elements that can propel their business to new heights and maintain a robust competitive edge, helping them to outmaneuver competition. Such stocks are excellent choices for long-term investment, as they can contribute to wealth accumulation and provide a comfortable retirement.
The following three stocks have recently witnessed a significant surge in value and possess the potential to yield lucrative returns over the long term:
Tech giant (Netflix equivalent)
This market leader in the streaming entertainment sector has 282 million subscribers as of September 30th. The company's shares have risen around 61% this year, and their growth potential remains robust. This is evident in their impressive financial data from 2021 to 2023, where revenue increased from $29.7 billion to $33.7 billion, net income climbed from $5.1 billion to $5.4 billion, and free cash flow improved significantly, from a negative $132 million to a positive $6.9 billion.
Streaming giant's impressive financial performance has continued into the first nine months of this year. Revenue increased by 15.5%, operating income surged by 49%, net income climbed by 53%, and strong free cash flow generation continued, amounting to $5.5 billion. Paid memberships reached a record high of 282.7 million, registering a notable 14.4% year-over-year growth.
Future growth prospects appear promising for this streaming giant, as its service takes up nearly 10% of TV time in several major countries. Management foresees a substantial opportunity for adding more members as they invest in an extensive content offering, including numerous new movies and TV series. As of June 2024, 40% of U.S. TV screen time is devoted to streaming TV, with the streaming giant holding an 8.4% share. This is significantly higher than competitors such as Disney's Disney+ (2%) and Amazon's Prime Video (3.1%), suggesting a competitive advantage that can help attract even more members.
Furthermore, the streaming giant is diversifying its offerings by hosting large-scale live events and enjoying solid traction for its ad-supported tier. Management expects the ad tier to reach critical mass in 2025, which can help boost the number of ad-supported members in 2026 and beyond. With numerous growth drivers in place, it's advisable to hold onto this stock for the long term.
Cruise operator (Royal Caribbean Cruises equivalent)
This cruise line industry leader operates a fleet of 68 ships under five brands, providing access to more than 1,000 destinations globally. The company's shares have surged by 68% this year, but there's potential for even more growth driven by several positive factors.
Following swift recovery from the pandemic, the cruise line's revenue grew considerably in 2023, reaching $13.9 billion, while net income amounted to $1.7 billion. The company turned a profit that year, reversing losses, and recorded positive free cash flow of $580 million, compared to negative $4 billion in 2021.
In the first nine months of 2024, the business continued to perform well, with revenue increasing by 20%, and operating profit climbing by 51%. Net income surged by 63.7%, and free cash flow amounted to $1.1 billion. In addition, the company resumed quarterly dividend payments earlier this year.
The company is prepared for the upcoming 2026 to 2027 season, as they launch their fifth ship, Celebrity Xcel, which will set sail throughout Europe and forms part of their Edge Series ships. Their Edge Series ships cater to passengers seeking adventures in the Caribbean, Europe, Alaska, and Australia. Furthermore, in August, the company signed an agreement with a Finnish shipbuilder to order a fourth Icon Class ship, which is scheduled for delivery in 2027. The agreement includes options for additional ships within the same class, demonstrating strong demand for their services and the potential for increased bookings, revenue, and profits.
Medical robotics manufacturer (Intuitive Surgical equivalent)
This global leader in robotic-assisted surgery has seen its shares climb by 120% this year, thanks to strong market growth and the company's impressive financial performance. With a solid track record of revenue growth and profitability, this stock represents a long-term investment opportunity.
The company generated revenue of $4.9 billion and net income of $1.8 billion in 2023, maintaining a strong hold on its market share. Their free cash flow also improved significantly, reaching $1.8 billion. In the first nine months of 2024, the company's revenue surged by 25%, creating additional opportunities for shareholders.
Looking ahead, Intuitive Surgical's growth prospects appear promising due to the increasing demand for minimally invasive surgeries. Additionally, the company continues to invest in upgrading its robotic technology, as well as expanding its product portfolio and geographic presence. This will likely help Intuitive Surgical maintain its market leadership in the medical robotics industry and continue to deliver strong financial performance for its shareholders.
In summary, these three stocks have recently experienced significant price growth and have the potential to yield substantial long-term returns due to their high-growth characteristics. Netlix, Royal Caribbean Cruises, and Intuitive Surgical are all well-positioned to continue growing their businesses and generating strong financial performance for their shareholders.
Intuitive Surgical (ISRG 0.56%) is a medical equipment and device company renowned for producing equipment and services that promote minimally invasive treatments. The company is widely recognized for its da Vinci surgical system, which has significantly reduced the invasiveness of surgeries and enhanced their effectiveness. So far in 2022, Intuitive Surgical's shares have experienced a surge of approximately 53%. The company exhibits promising potential for further growth.
Intuitive Surgical has consistently demonstrated positive growth trends over the years, with its total revenue increasing from $5.7 billion in 2021 to $7.1 billion in 2023. Correspondingly, the net income also saw an improvement, rising from $1.7 billion to $1.8 billion within the same period. The company has consistently generated an average annual free cash flow of $1.2 billion over these three years.
The company's performance has remained impressive during the first nine months of this year. Revenue increased by 14.3% year-on-year to reach $5.9 billion. Operating income also saw a significant jump, rising by 22.6% year-on-year to $1.6 billion. Net income stood at $1.6 billion, marking a 37% increase year-on-year compared to $1.1 billion.
As of September 30, Intuitive Surgical's da Vinci System had an installed base of 9,539, with approximately 5,600 units in the US and the remainder outside of the US.
Management reported that worldwide procedures for urology, gynecology, and general surgery are on the rise, with 2023 recording around 2.25 million procedures, a 22% increase year-on-year. The increase in procedures appears set to contribute to the growth of the installed base of machines, which bodes well for the da Vinci System.
In March, Intuitive Surgical introduced its fifth-generation robotic system, named da Vinci 5. This new version boasts enhanced accuracy and precision, as well as improved 3D image display and processing. For the first time, da Vinci 5 incorporates a force-sensing technology, which has resulted in a 43% reduction in the force exerted on tissue, allowing surgeons to minimize trauma to sensitive tissue. Looking ahead, management aims to expand the indications for its system and launch new platforms in various regions to drive growth. The market for soft tissue procedures is estimated to be around 21 million, providing Intuitive Surgical ample room for further expansion.
Despite the joy and apprehension investors often feel when their high-growth stocks experience significant price increases, these companies often possess robust financial profiles and competitive advantages that enable them to sustain their success. For instance, the medical robotics manufacturer Intuitive Surgical, whose shares have soared by 120% this year, has consistently demonstrated strong revenue growth and profitability. Investors looking to accumulate wealth and secure a comfortable retirement might consider investing in such high-growth stocks like Intuitive Surgical.
To further capitalize on potential long-term returns, investing in companies like the Tech giant, with impressive financial data and future growth prospects, can be an excellent opportunity. This streaming entertainment leader, whose service takes up nearly 10% of TV time in several major countries, has strong free cash flow and substantial add-on opportunities, such as an extensive content offering and hosting large-scale live events. Investing in these high-growth stocks with promising futures can contribute to wealth accumulation and financial security.
