10 Best Growth Stocks for the Next 10 Years

Published on June 3, 2021 at 10:20 am by Siraj Sarwar in Hedge Funds, News

In this article, we reviewed the 10 best growth stocks for the next 10 years with at least 30% revenue growth according to billionaire Ken Fisher’s stock portfolio.

Billionaire Ken Fisher, who said in a YouTube video that 2020 could be the last year of the current bull-run, has been betting big on growth stocks in 2021. Despite the fact that growth stocks underperformed as compared to value stocks since November last year, stronger revenue growth prospects hint that the downtrend is temporary. It’s also true that several companies that saw massive revenue growth last year could fail to sustain that trend in a post-pandemic situation. However, pure growth stocks that have the potential to sustain 30% or more revenue growth are highly likely to regain investors’ attention.

With $159 billion in assets under management, Fisher Asset Management held $141 billion in a 13F portfolio, with a massive exposure towards the fastest growing sectors and companies. Information technology stocks represent 26% of portfolio weighting while communications and consumer discretionary stocks weighted around 13% and 10.8% of the overall portfolio. At the end of the first quarter, Fisher Asset Management held a position in 973 stocks, with a top ten holding concentration of around 30%. Billionaire Ken Fisher doesn’t believe in putting all eggs in one basket. He likes to make a well-diversified portfolio according to market trends. His Q1 portfolio includes several big tech names including Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL) and Alibaba Group Holding Limited (NYSE: BABA)

Fisher’s hedge fund’s stake in the financial sector, which accounted for over 30% of the portfolio in 2019, trimmed to only 19% at the end of the first quarter of 2021. Ken Fisher is one of the most intelligent investors with the ability to predict the market cycles and sector leadership rotation. His strategy of slashing exposure towards the financial sector helped in saving billions of dollars in losses during the pandemic year. The financial sector was among the worst performers in 2020.

On the other hand, his strategy of injecting billions of dollars of funds into tech stocks like Facebook, Inc. (NASDAQ: FB), Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL) and Alibaba Group Holding Limited (NYSE: BABA) helped in generating big gains during the pandemic year. Moreover, his strategy of buying the dip in energy stocks contributed strongly to the overall performance in the past two quarters, thanks to the oil price stabilization and economic recovery. The communications sector, which represents a major chunk of growth stocks, is among Ken Fisher’s favorite areas of investments. He added significantly to stocks from the communications sector in the past couple of years.

10 Best Growth Stocks for the Next 10 Years

Ken Fisher of Fisher Asset Management

While Ken Fisher’s reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Let’s start digging into the 10 best growth stocks for the next 10 years. We picked these stocks from Ken Fisher’s Q1 portfolio. Each stock in this list has a revenue growth of over 30%.

Best Growth Stocks for the Next 10 Years

10. Advanced Micro Devices, Inc. (NASDAQ: AMD)

The chipmaker Advanced Micro Devices, Inc. (NASDAQ: AMD) is a member of billionaire Ken Fisher’s portfolio since the beginning of last year. Despite an 11% year-to-date share price decline, AMD stock is still up 50% in the last twelve months. However, its share price is likely to bounce back in the days ahead amid robust revenue growth trends. The company posted 92% year-over-year revenue growth in the latest quarter. The stock ranks 10th in our list of best growth stocks for the next 10 years according to billionaire Ken Fisher.

Artisan Partners Limited Partnership, a high value-added investment management firm, mentioned a few stocks including Advanced Micro Devices in the investor letter. Here is what Artisan Partners Limited Partnership stated:

“We also exited our positions in Advanced Micro Devices. Our investment campaign in Advanced Micro Devices (AMD) began in the second half of 2018, and we have seen a new management team reinvigorate the company’s product portfolio of microprocessors for PCs and servers, graphics processors, and video game consoles. These new, higher-margin products have helped the company partially close its margin gap with peers and capture share from market leader Intel. While we believe there is meaningful runway for further share gains and margin expansion, AMD has appreciated far beyond our mid-cap market cap mandate, and we exited our position.”

Like Facebook, Inc. (NASDAQ: FB), Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL) and Alibaba Group Holding Limited (NYSE: BABA), Advanced Micro Devices, Inc. (NASDAQ: AMD) is one of the best stocks to buy according to billionaire Ken Fisher.

9. Facebook, Inc. (NASDAQ: FB)

The social media giant Facebook, Inc. (NASDAQ: FB) is one of the fastest-growing companies considering its 47% year-over-year revenue growth in the latest quarter, thanks to a growth in ads revenues. The company expects to extend the revenue growth momentum ahead amid economic reopening which will further fuel ads revenue. Moreover, shares of the social media giant rallied 20% since the beginning of this year amid strong revenue growth trends. The billionaire investor Ken Fisher lifted his position in Facebook, Inc. (NASDAQ: FB) by 2% to 4.75 million shares. The stock ranks 9th in our list of best growth stocks for the next 10 years according to billionaire Ken Fisher.

Distillate Capital, an investment management firm, highlighted a few stocks including Facebook, Inc. (NASDAQ: FB) in the investor letter. Here is what Distillate Capital stated:

“Facebook has come in and out of the portfolio before and did so this quarter on the back of substantial improvement in projected free cash flows such that its valuation now meets the criteria for inclusion.”

8. Freeport-McMoRan Inc. (NYSE: FCX)

The share price of Freeport-McMoRan Inc. (NYSE: FCX) saw a stunning 360% rally in the past twelve months, driven by improving commodity prices and robust revenue growth. In addition to share price growth, the strong financial backing has also been helping the company to return cash to investors in the form of dividends. In the March quarter, the company generated 74% year-over-year revenue growth.

Freeport-McMoRan Inc. (NYSE: FCX) has experienced an increase in hedge fund interest in recent months. It was in 68 hedge funds’ portfolios at the end of March compared to 61 positions in the previous quarter.

7. The Home Depot, Inc. (NYSE: HD)

Billionaire Ken Fisher raised his stake in The Home Depot, Inc. (NYSE: HD) during the first quarter by 2% to just over 7 million shares, accounting for 1.55% of the overall portfolio. The company has been experiencing robust growth in revenue and other financial ratios, supported by economic activities and higher consumer spending. The stock ranks 7th in our list of best growth stocks for the next 10 years according to billionaire Ken Fisher.

Meanwhile, investors are pouring funds into HD stock amid its financial performance and improving outlook, resulting in a share price gain of 20% since the beginning of this year. Besides share price gains, The Home Depot offers a dividend yield of around 2%. Like Facebook, Inc. (NASDAQ: FB), Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL) and Alibaba Group Holding Limited (NYSE: BABA), The Home Depot, Inc. (NYSE: HD) is one of the best stocks to buy according to billionaire Ken Fisher.

Ensemble Capital, an investment management firm, mentioned a few stocks including The Home Depot in the investor letter. Here is what Ensemble Capital stated about returns from HD stock:

“Notable contributors to the Fund’s returns this quarter (included) Home Depot. Home Depot (8.9% weight in the Fund) continued to benefit from a red-hot housing and home improvement market, delivering record financial performance in 2020. As a high return on invested capital business, any step-up in growth results in considerable shareholder value creation. While 2021 comparable sales may not yield impressive headline results, we believe there are several secular tailwinds supporting continued housing investment, including millennials entering prime household formation/peak earnings years, relatively low-interest rates, and government policies.”

6. ASML Holding N.V. (NASDAQ: ASML)

The manufacturer and developer of advanced semiconductor equipment ASML Holding N.V. (NASDAQ: ASML) is among the growth stocks that are outshining value stocks in 2021, driven by almost 100% year-over-year revenue growth in the latest quarter. Shares of ASML Holding grew 38% so far in 2021, extending twelve-month gains to 111%. Ken Fisher first initiated a position in ASML Holdings in 2009 and raised his position by 2% to 3.96 million shares in the latest quarter. Like Facebook, Inc. (NASDAQ: FB), Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL) and Alibaba Group Holding Limited (NYSE: BABA), ASML is one of the best stocks to buy in Ken Fisher’s portfolio. The stock ranks 6th in our list of best growth stocks for the next 10 years according to billionaire Ken Fisher.

ASML Holding N.V. has experienced an increase in hedge fund interest lately. ASML Holding N.V. was in 35 hedge funds’ portfolios at the end of the March quarter of 2021 compared to 30 positions in the prior quarter.

5. PayPal Holdings (NASDAQ: PYPL)

The payment technology company PayPal Holdings (NASDAQ: PYPL) was the top-performing stock during the pandemic year due to lockdowns and consumers’ focus towards online platforms. While online trends declined following vaccine rollout and economic reopening, PayPal’s extensive user base and product innovations helping it to sustain the gains. The company generated 30% revenue growth in the latest quarter and its share price rallied 11% year to date. Moreover, the company’s strategy of supporting cryptocurrencies is projected to add billions of dollars in profits. Fisher Asset Management held a stake worth $2.6 billion in PayPal Holdings.

PayPal Holdings was in 143 hedge funds’ portfolios at the end of the first quarter of 2021 compared to 147 positions in the previous quarter. The all-time high for this statistic is 150.

4. Alibaba Group Holding Limited (NYSE: BABA)

The Chinese largest e-commerce platform Alibaba Group Holding Limited (NYSE: BABA) is a member of Fisher Asset Management’s portfolio since the second quarter of 2015. At the end of the first quarter of 2021, Alibaba weighted for 2.22% of the overall Ken Fisher portfolio. Shares of Alibaba remained under pressure over the past two quarters due to regulatory issues. Besides that, Alibaba generated robust revenue growth in the previous quarter. This is clearly reflecting from its March quarter revenue growth of 81% from the year-ago period.

Polen Capital, an investment management firm, highlighted a few stocks including Alibaba Group Holding in an investor letter. Here is what Polen Capital stated:

“In the case of Alibaba, two significant news events impacted the company’s shares in the last few months of 2020. First, the Chinese government intervened to halt–for an undetermined period of time–Ant Group’s IPO. Alibaba owns 33% of Ant Group, and Ant Group’s “Alipay” application facilitates financing and payments around the Alibaba ecosystem. Second, rumors of Chinese regulatory oversight in the internet space were solidified at the end of 2020 when China’s State Administration for Market Regulation announced an investigation under the nation’s AntiMonopoly Law. In combination, these events contributed to a selloff in BABA shares that resulted in a roughly 30% decline from highs in late October 2020.

We view Alibaba as arguably one of the most dominant businesses in the world.

We believe the company is also playing an integral role in China’s ambitions to reorient its economy from one that is export-driven to one that is domestically consumption-driven. Alibaba’s marketplaces—TaoBao and Tmall—in combination with its logistics capabilities may well provide the most efficient way to purchase and receive goods in many of China’s lower-tier cities. Important to the investment case, Alibaba’s core commerce business continues to compound at high rates while enjoying low total addressable market penetration and multiple competitive advantages, not the least of which consist of two-sided network effects between merchants and consumers. At approximately 19x next twelve month’s earnings, we think Alibaba will provide a favorable investment outcome even if it must pay fines or modify some business practices. We continue to expect earnings growth in excess of 20% over the next three to five years. Even if earnings growth were to fall to 15%, we think it would still result in a favorable outcome at the price at which we added to the position.”

3. Alphabet Inc. (NASDAQ: GOOGL)

The share price of Alphabet Inc. (NASDAQ: GOOGL) saw significant gains this year amid prospects for higher ad revenue due to the resumption of tourism and travel activities. In the first quarter, its revenue grew 34% year over year, with expectations for a further boost in the second half of the year.

Artisan Partners, a high value-added investment management firm, expressed confidence in Alphabet’s future prospects. Here is what Artisan Partners stated:

“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”

2. Amazon.com, Inc. (NASDAQ: AMZN)

The world’s largest e-commerce platform Amazon.com, Inc. (NASDAQ: AMZN) is among billionaire Ken Fisher’s favorite stocks. His hedge fund held a $5.61 billion worth of stake in Amazon.com at the end of the first quarter, accounting for 3.96% of the overall portfolio. The shares of Amazon have been under pressure since the beginning of this year due to investors’ concerns over the post-pandemic trends. However, the company still manages to sustain the upward trend, with year-over-year first-quarter revenue growth of 43%.

In the first quarter investor letter, Polen Capital highlighted the confidence in Amazon. Here is what Hayden Capital stated:

“We purchased Amazon in February 2021, which accounts for 5% of the Portfolio’s weighting. For most of the last decade, Amazon did not meet our guardrails. We also did not have enough visibility into future free cash flow margins to indicate that the company would sustainably meet our guardrails and, relatedly, if valuation supported the double-digit annualized returns we seek. We now believe we have that visibility.

In 2008, almost all of Amazon’s revenue and operating profits came from its e-commerce business. Amazon Prime and Amazon Web Services (AWS) were new and relatively small back then. The company had roughly 5% operating profit margins overall, entirely from the e-commerce business. In 2009, the company began harvesting its retail business profits to accelerate investment in its distribution and logistics infrastructure globally and very heavily build out and scale AWS data centers. The company’s return on equity began to decline at that time and turned negative for three full years from mid-2012 to mid-2015 (margins and free cash flow declined similarly). So, beginning in 2010 and continuing to mid-2018, Amazon’s business was outside our guardrails. We chose to stick to our guardrails and not own Amazon.

Amazon’s profit drivers have changed quite dramatically over the years. Starting in the back half of 2018, Amazon came back above our hurdles. Revenue generation overcame ongoing heavy investments in areas such as delivery infrastructure, data center infrastructure, and shipping.

Our research suggests that today, after considering cost allocation, Amazon’s underlying profit drivers from higher-margin AWS and Advertising could grow much faster than its low-margin e-commerce business (excluding Prime), its historical driver of revenues and operating profits.

Amazon Prime, AWS, and Advertising together account for only about 20% of revenue today, but we believe over 150% of operating profits. Looking forward, growth higher-margin businesses means Amazon’s total margins and profit dollars could rise quite dramatically.

It is important to note that Amazon proved to be an exception to our guardrails. Based on our experience, very few companies that remain outside our guardrails for an extended period operate from a position of competitive strength but rather, from a position of competitive pressure. Today, we feel we have better visibility into the future earnings growth and margins from AWS and Advertising and believe these could drive 30%+ annual earnings growth for the next five years. Even with significant P/E multiple compression, we would still expect double-digit investment returns.”

1. Apple Inc. (NASDAQ: AAPL)

The technology company Apple Inc. (NASDAQ: AAPL) is Fisher Asset Management’s largest stock holding, accounting for 5.40% of the overall portfolio. Following a stunning rally last year, Apple stock price has been struggling to trade in the green this year. Nevertheless, strong revenue growth will back its share price in the days ahead. The company generated 53% year-over-year revenue growth in the March quarter.

Distillate Capital, an investment management firm, believes Apple stock is undervalued based on a free cash flow basis. Here is what Distillate Capital stated:

“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”

You can also take a peek at 10 Best Cyclical Stocks to Buy Now and Top 10 High Growth Stocks To Buy in 2021.

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Disclosure: No position. 10 Best Growth Stocks for the Next 10 Years is originally published on Insider Monkey.

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10 Best Growth Stocks for the Next 10 Years

Published on June 3, 2021 at 10:20 am by Siraj Sarwar in Hedge Funds, News

Best Growth Stocks for the Next 10 Years