We recently published a list of 10 Best Growth Stocks to Invest in for the Next 10 Years. In this article, we are going to take a look at where Roblox Corporation (NYSE:RBLX) stands against other best growth stocks to invest in for the next 10 years.
On March 8, Ben Snider, Goldman Sachs senior equity strategist, joined CNBC to discuss the state of the economy today. Snider noted that the key struggle has been the market struggle to assess the forward trajectory of the economy. The market entered this year with optimism for the growth trajectory. However, over the past few weeks, we have seen a very sharp downturn. There is good news to extract from the scenario. Snider explained that if we look at where the market is priced today, it seems much more reasonable. Therefore the base case remains the same the economy is in good shape and is growing. He also noted that a confirmation of the growth came in with the jobs report, moreover, earnings are still growing, meaning that the equity market should be moving higher too.
However, the key question that remains unanswered is what sectors investors should look forward to. Most of the sectors have been volatile. Therefore, as per Snider, the best approach would be not to go all in for a single sector. He likes healthcare, which has been one of the best-performing sectors in the market so far. This is because despite the performance the sector is still trading at the lowest valuations compared to the market. Snider mentioned that this may be a good buying period as historical data tells us that when an investor buys the S&P 500 down 5%, it generates a positive return on investment over the next 5 months 85% of the time.
Moreover, Goldman Sachs has anticipated moderate yet resilient global growth in 2025, driven by the strong performance of the United States. The firm expects the US economy to be a primary driver of global growth, supported by a robust labor market, consistent consumer spending, solid credit conditions, sufficient liquidity, and increased capital spending related to AI. In addition, regarding the tariff situation, Goldman Sachs believes that the “Fed Put” will come into play and ease monetary policy, however, terminal rates are expected to be higher than previously anticipated.
Our Methodology
To curate the list of the 10 best growth stocks to invest in for the next 10 years, we looked at various online rankings. Using these rankings we aggregated a list of best growth stocks for the next 10 years. Next, we checked the sales growth of each stock from Seeking Alpha and added only those companies that have grown more than 15% over the past 5 years. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders, sourced from Insider Monkey’s Q4 2024 database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A person taking lessons through Roblox Education, expanding their knowledge and skills.
Roblox Corporation (NYSE:RBLX)
5-Year Sales Growth: 47.93%
Number of Hedge Fund Holders: 61
Roblox Corporation (NYSE:RBLX) is an American video game developer that operates an online platform and game creation system that allows users to program and play games created by other users. Benchmark analyst Mike Hickey maintained a Buy rating on the stock while upgrading the price target from $60 to $71. Hickey is optimistic about the company’s long-term growth strategy and believes that the growth of bookings could potentially exceed the growth of user and hour engagement in fiscal year 2025. This would be driven by the company’s ongoing efforts to increase monetization, such as investments in its virtual economy, app performance, and AI-powered discovery and safety.
Moreover, SaltLight Capital, an investment management company in its Q3 2024 investor letter noted that Roblox Corporation (NYSE:RBLX) has set a goal to capture 10% of the gaming content revenue market, estimating the total pool at around $180 billion. SaltLight believes that achieving this target will be challenging. However, it will be positive for the business because the company has invested heavily in re-engineering its game platform to be high fidelity, performant, and widely available across platforms for the past three years. Roblox Corporation (NYSE:RBLX) is the best growth stock to invest in for the next 10 years.
SaltLight Capital stated the following regarding Roblox Corporation (NYSE:RBLX) in its Q3 2024 investor letter:
“Roblox Corporation (NYSE:RBLX) has firmly established itself as the dominant player in user-generated gaming within Western markets. Meanwhile, Tencent has developed a similar ecosystem in China with its WeChat Mini-games platform. Owning both gives us a unique vantage point to assess the evolving landscape of user-generated gaming platforms globally.
At its recent investor day, Roblox set an ambitious target of reaching 10% of gaming content revenue, of which it estimates the total pool is around $180bn (for context, in the last twelve months, it made $4bn in bookings).
We think this will be a challenging target, but it will be positive for the business directionally. The reason is that Roblox has spent the last three years heavily investing in re-engineering its game platform to be high fidelity, performant and widely available across platforms. They also share economics with their creators to the point now that the absolute numbers in highly engaged games are enough to support a small game studio. The result is that the quality of games has materially improved, attracting additional engagement – particularly from older users…” (Click here to read the full text)
Overall, RBLX ranks 7th on our list of best growth stocks to invest in for the next 10 years. While we acknowledge the potential of RBLX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RBLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.