In this article, we discuss the 5 best young stocks to buy and hold for 20 years. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Young Stocks to Buy and Hold for 20 Years.
5. Zendesk, Inc. (NYSE:ZEN)
Number of Hedge Fund Holders: 45
Total Value of Hedge Fund Holdings: $1.48 Billion
Ranking 5th in our list of 10 best young stocks to buy and hold for 20 years is Zendesk, Inc. (NYSE:ZEN). The California-based customer service software company was founded in 2007 and offers 30 languages to over 170,000 customers. In one of its latest acquisitions, the company purchased startup messaging platform Smooch. The acquisition allowed Zendesk, Inc. to create multiple conversational apps and web pages.
Zendesk, Inc. (NYSE:ZEN) posted its revenue of $298 million in the first quarter of 2021, a 26% increase year-over-year. The 52-week price range of Zendesk, Inc. (NYSE:ZEN) is $81.00-166.60. Shares of ZEN jumped 79% over the last twelve months. On April 23, Wolfe Research initiated Coverage on Zendesk, Inc. with an Outperform rating and announced a price target of $180.
There were 45 hedge funds that reported owning stakes in Zendesk, Inc. (NYSE:ZEN) at the end of the first quarter, down from 58 funds a quarter earlier. The total value of these stakes at the end of Q1 is $1.48 billion.
Wasatch Ultra Growth Fund mentioned Zendesk, Inc. (NYSE:ZEN) in its Q4 2020 investor letter:
“Zendesk, Inc. (ZEN) was also a top contributor. The company provides business software using the software-as-a-service (SaaS) model. Zendesk has experienced strong demand throughout the Covid19 pandemic from customers in e-commerce, as well as from other businesses with employees working from home. Additionally, demand from clients in the travel and hospitality industries has picked up as global economies have begun to reopen. Adjusted earnings per share rose 42% in the company’s most recent quarter on revenue growth of 24% compared to the same quarter a year ago. An improved sales outlook from Zendesk’s management also helped lift the stock.”
4. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 46
Total Value of Hedge Fund Holdings: $3.38 Billion
Roblox Corporation (NYSE:RBLX) ranks 4th on the list of 10 best young stocks to buy and hold for 20 years. The California-based video game developer was founded in 2004 and has over 40 million games. Roblox Corporation (NYSE:RBLX) is the newest publicly trading stock on our list of best young stocks. The company held its IPO in March 2021 where the company was able to raise a market capitalization of $38.26 billion. Roblox continues to expand with the growing demand for the video game industry. In 2020, the company acquired simulation-based cognitive assessment company Imbellus. The acquisition will strengthen the prospective talent from a variety of backgrounds from both companies and expand the gaming experience for Roblox Corporation.
Roblox Corporation (NYSE:RBLX) posted its total revenue of $387 million in the first quarter of 2021, an increase from $310 million in the first quarter of 2020. The 52-week price range of Roblox Corporation (NYSE:RBLX) is $60.50-103.87. Shares of RBLX jumped 15% over the last three months. On June 1, Truist Securities maintained a Buy rating on Roblox Corporation and raised the price target to $103.
There were 46 hedge funds that reported owning stakes in Roblox Corporation (NYSE:RBLX) at the end of the first quarter. The total value of these stakes at the end of Q1 is $3.38 billion.
3. General Electric Company (NYSE:GE)
Number of Hedge Fund Holders: 68
Total Value of Hedge Fund Holdings: $6.16 Billion
Ranking 3rd in our list of 10 best young stocks to buy and hold for 20 years is multinational conglomerate General Electric Company (NYSE:GE). Boston-based General Electric Company (NYSE:GE) offers various services through aviation, healthcare, power, renewable energy, etc. On May 19, Barclays maintained an Overweight rating on General Electric Company and raised the price target to $16.
General Electric Company (NYSE:GE) posted its revenue of $17 billion in the first quarter of 2021, a 12% decrease from $19.5 billion in the same period of 2020. GE shares currently trade for $13.00 and offer a dividend yield of 0.30%. The 52-week price range of General Electric Company (NYSE:GE) is $5.93-14.42. Shares of GE jumped 78% over the last twelve months.
There were 68 hedge funds that reported owning stakes in General Electric Company (NYSE:GE) at the end of the first quarter, down from 69 funds a quarter earlier. The total value of these stakes at the end of Q1 is $6.16 billion
Vulcan Value Partners mentioned General Electric Company (NYSE:GE) in its Q1 2021 investor letter. Here is what the fund said:
“General Electric is outperforming our expectations for 2021 as the economic recovery is occurring faster than expected. We are particularly pleased with its free cash flow generation. We are happy to own it in our portfolio.”
2. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 71
Total Value of Hedge Fund Holdings: $12. 9 Billion
Ranking 2nd on the 10 best young stocks to buy and hold for 20 years is Snowflake Inc. (NYSE:SNOW). The cloud computing-based company offers data cloud to notable users such as Capital One Financial Corporation (NYSE:COF), Nike, Inc. (NYSE:NKE), and GEICO, among others. Other companies using Snowflake’s platform are Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT). Snowflake’s technology has been used by Amazon.com, Inc. (NASDAQ:AMZN) for its S3 since 2014, while Microsoft Corporation’s (NASDAQ:MSFT) Azure has been utilizing it since 2018.
Snowflake Inc. (NYSE:SNOW) posted its revenue of $228.9 million in the first quarter of 2021, up 110% year-over-year. The 52-week price range of Snowflake Inc. (NYSE:SNOW) is $184.71-429.00. Shares of SNOW jumped 12% over the last three months. On June 14, Deutsche Bank maintained a Buy rating on Snowflake Inc and raised a price target to $265.
There were 71 hedge funds that reported owning stakes in Snowflake Inc. (NYSE:SNOW) at the end of the first quarter, up from 54 funds a quarter earlier. The total value of these stakes at the end of Q1 is $12.9 billion.
RiverPark Funds mentioned Snowflake Inc. (NYSE:SNOW) in its Q1 2021 investor letter. Here is what the fund said:
“We also established a position in Snowflake during the quarter. Snowflake offers cloud-based data storage and analytics, generally termed “data warehouse-as-a-service.” The data warehousing market—created by the massive, growing amount of user, customer, and account data and the need to search and analyze it—has historically stored its data on physical servers located on-premises. The cloud data platform market—storing data off-premises on cloud servers—is a relatively new $70 billion+ market. Significantly, incremental warehouse data capacity and renewals are expected to be driven by and to the cloud, with more than 75% of databases in the cloud by 2022.
Snowflake requires absolutely no infrastructure management from its users, is fully scalable for each customer, runs on Amazon, Microsoft, or Google cloud platforms, and most critically, Snowflake helps companies analyze their data. The company also has a unique, customer-aligned billing model based on usage. All of which has led to Snowflake being among the leaders of this highly fragmented market, posting 124% revenue growth last year. SNOW’s growth comes from the combination of more customers—which grew 73% last year—and customers buying more services—the company boasts an amazing 150%+ net customer retention. The company’s growing scale has also led to increasing gross margin and operating leverage, up 1,100 basis points and 8,200 basis points, respectively, over the past two years. The company has guided to FCF break-even this year, and with the company’s capital expenditure-light model—Snowflake uses the public cloud for hosting—we expect FCF to grow much faster than revenue growth, which we forecast to grow comfortably more than 50% per year for the next several years. Additionally, we have great confidence in the SNOW management team, which previously had an enormously successful run guiding one of our other core Cloud software holdings ServiceNow.”
1. Square, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 92
Total Value of Hedge Fund Holdings: $9.20 Billion
Topping the list of 10 best young stocks to buy and hold for 20 years is Square, Inc. (NYSE:SQ). Square, Inc. operates as one of the biggest financial services and digital paying companies in the United States with over 30 million active users. The company continues to grow with increasing demand in the digital world. Earlier this year, the company announced plans of purchasing the entertainment platform TIDAL. The acquisition allows the Square platform to tap musicians and artists that desire to make a career.
Square, Inc. (NYSE:SQ) posted its revenue of $5.06 billion in the first quarter of 2021, up 266% year-over-year. The 52-week price range of Square, Inc. (NYSE:SQ) is $97.92-283.19. Shares of SQ jumped 141% over the last twelve months. On May 10, BMO Capital maintained a Market Perform rating on Square, Inc. and raised a price target to $269.
There were 92 hedge funds that reported owning stakes in Square, Inc. (NYSE:SQ) at the end of the first quarter, up from 89 funds a quarter earlier. The total value of these stakes at the end of Q1 is $9.20 billion
RiverPark Funds mentioned Square, Inc. (NYSE:SQ) in its Q1 2021 investor letter. Here is what the fund said:
“We established a position in leading Financial Technology provider Square during the quarter. Through one integrated system, SQ is a hybrid of two businesses: its Seller Business (charging small and medium-sized businesses about 3% for transaction payment processing, plus other services such as instant funds access, and software for everything from customer engagement to payroll), and its Cash App (originally for person-to-person cash transfers and now a growing digital financial services provider for consumers).
The combined business has grown gross profit at a 37% CAGR over the past five years to $2.7 billion (due to pass through costs, gross profit is more reflective of top-line growth) and we believe that the company has an enormous long-term runway, as it has less than a 2% share of a more than $160 billion market. It is our view that the company’s Cash App (which has grown
from nothing in 2015 to $1.2 billion gross profit last year) has a particularly large opportunity with its powerful ecosystem of digital financial services including digital wallets, direct deposits, stock trading, bitcoin trading, and business and tax services, which are all relatively new. The vast majority of Cash App’s more than 36 million users are younger and, importantly, are willing to replace their bank and other financial services accounts with the app.
We estimate that the company can grow its gross profit more than 30% and EBITDA more than 50% annually for the foreseeable future, and while most of the company’s current profit is from its Seller Business, we believe most of Square’s future value will be from its Cash App business.”
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