Investing is often viewed as a way to get rich quick, but the most prudent investors know that steady, long-term growth is the path to sustainable wealth. For investors with patience and discipline, buying shares in companies with enduring competitive advantages and room for expansion can lead to market-beating returns over decades, not just years.
This article highlights four stocks spanning cybersecurity, restaurants, law-enforcement technology, and advertising that appear poised for steady, long-term growth that could make buy-and-hold investors rich in the coming years and decades.
1. CrowdStrike: The Cybersecurity Firm With Seemingly Unlimited Cross-Sell Potential
As cyberthreats become increasingly frequent and severe worldwide, no company seems better positioned to capitalize on long-term growth in cybersecurity spending than CrowdStrike Holdings Inc. (NASDAQ: CRWD). The cloud-based cybersecurity platform developer has pioneered an innovative software-as-a-service (SaaS) model that promotes recurring revenue through subscription-based services.
CrowdStrike’s key product is the Falcon platform, which integrates over 20 distinct software modules under one hood to protect endpoints across customers’ systems. Unlike most competitors, Falcon is agent-based, meaning each module talks to the others to share real-time data. This allows the platform to operate intelligently, adapting protections based on emerging threats across Falcon’s entire customer ecosystem.
A Sticky Platform Generating Rising Recurring Revenues
The Falcon platform’s intelligent-agent architecture makes it incredibly sticky for customers. Once implemented, removing Falcon would leave endpoints exposed. Thus, CrowdStrike retains clients at a 98% rate, giving it an expanding base to cross-sell additional modules.
As clients add endpoints through growth or acquisition, their subscription fees rise mechanically. On top of endpoint expansion, CrowdStrike has seemingly unlimited room to cross-sell clients additional Falcon modules. Though 63% of clients utilized five-plus modules as of Q2 2023, just 24% deployed seven or more of Falcon’s 20-plus options.
Management expects cross-sell rates to continue rising over the next five-to-seven years. If so, CrowdStrike’s already-impressive growth is set to accelerate further. Trailing twelve-month annual recurring revenue (ARR) hit $2.93 billion in Q2, but management sees a clear path to $10 billion ARR within the coming years as cross-sells increase.
With cyberattacks growing constantly, CrowdStrike’s intelligent platform appears poised to capitalize on surging cybersecurity spending over both the near term and coming decades. For long-term investors, buying this innovative disruptor now could generate remarkable wealth years down the road.
2. Portillo’s: Slow-and-Steady Restaurant Stock With 20 Years of Expansion Ahead
After a high-flying cybersecurity stock like CrowdStrike, a restaurant chain like Portillo’s INC (NASDAQ: PTLO) seems positively boring in comparison. Nevertheless, this beloved Chicago Institution has all the hallmarks of a slow-and-steady market beater for patient investors over the next 10 to 20 years.
What Portillo’s lacks in hypergrowth potential, it makes up for in consistency and resilience. The 62-year-old chain boasts enviable customer loyalty thanks to its unchanging menu anchored on Chicago-style hot dogs, Italian beef sandwiches and chocolate cake. These iconic menu items drive tremendous foot traffic and keep customers coming back year after year, regardless of economic conditions.
Room for 600 Locations Over the Next 20 Years
Incredibly, over its more than 60 years in business, Portillo’s has expanded to just 79 locations thus far focused in Illinois, Arizona, Florida and California. Management sees space for over 600 total restaurants nationwide, providing an exceptionally long growth runway.
The economics also support growth. Portillo’s locations generate best-in-class average unit volumes (AUV) of $9 to $10 million and restaurant-level margins above 20% even as new stores ramp up. As long as unit economics remain robust as Portillo’s expands, revenue and profits should continue rising for decades.
Over the next 20 years, management expects to grow locations at an annual rate of 12-15%, leading to high-teens revenue CAGR. For context, 600 locations would give Portillo’s comparable footprint and scale to established national chains like Cracker Barrel and Texas Roadhouse today.
With recession-resilient performance, strong unit economics, longstanding customer loyalty, and vast untapped expansion potential, Portillo’s checks all the boxes for a buy-and-hold-forever stock. Shares may not explode overnight. But over 10+ years, Portillo’s slow-and-steady strategy could generate substantial wealth.
3. Axon Enterprise: Armorer to U.S. Police Forces With Vast Growth Runways
Over 26 of 50 major city police departments rely on Axon Enterprise Inc. (NASDAQ: AXON) for Tasers, body cameras and cloud-based digital evidence management. However, with over 18,000 U.S. police agencies yet untouched, Axon’s growth story is still in the early chapters.
As police weapon and camera spending moves increasingly from analog to digital, the SaaS-based Axon is positioned better than any competitor to dominate the market long-term. Once forces adopt Axon hardware, the recurring software and data subscriptions make switching away costly and operationally challenging.
Sticky Platform Set for Multi-Year Growth Tailwinds
This stickiness has allowed Axon to consistently deliver 30%+ yearly revenue growth recently. Axon’s domestic penetration is far from saturated, evidenced by half its largest Q3 2023 deals coming from federal agencies, a vast $10 billion market. Overseas, Axon revenue expanded 52% in Q3 as adoption gains steam.
And Axon is just getting started expanding beyond core police customers. Its cloud-based evidence management software has natural applications across courthouses and the broader judicial system. As Axon extends its tech throughout the legal system, its addressable market could expand dramatically.
After years of hypergrowth already, multiple secular tailwinds should propel rising revenues and profits at Axon for years if not decades more. While more economical in the short term, any police department not yet using Axon’s SaaS platform risks technological obsolescence over time, handing Axon an effective long-term monopoly.
For investors comfortable holding for 10+ years, buying and holding Axon stock could generate substantial wealth as revenues and cash flows continue rising for the foreseeable future off the company’s sticky user base.
4. Trade Desk: The picks-and-shovels adtech play on post-cookie targeting
The seismic shift from cookies toward more privacy-centric ad targeting models has upended the digital advertising landscape. But one adtech leader well-positioned to ride this wave wherever it leads is The Trade Desk Inc. (NASDAQ: TTD).
Trade Desk operates a demand-side programmatic advertising platform that allows brands and agencies to efficiently purchase digital ads across channels and devices while optimizing ad spend returns. It doesn’t sell user data or own walled gardens; rather, Trade Desk seeks to provide open infrastructure equipping clients to thrive regardless the protocol.
This agnosticism allowed Trade Desk to triple revenue since 2019 despite the turbulence hitting digital advertising. And The Trade Desk’s early support helping develop post-cookie targeting standards like Unified ID 2.0 stands to benefit long-term if they achieve broad adoption.
Strong Tailwinds for Continued Hypergrowth
Even after tripling over four years to $1.8 billion in trailing-twelve-month revenue, Trade Desk operates in a sector exceeding $700 billion yearly, signaling vast potential growth ahead. Early decays in digital ad efficiency as cookies phase out could incentivize accelerated adoption of Trade Desk’s premium programmatic marketplace.
And Trade Desk continues rolling out innovations allowing advertisers to optimize ad spending impact, including integrations with Walmart enabling closed-loop attribution linking ads directly to in-store sales. As measuring and optimizing ad ROI keeps improving, so does the value proposition to channel more ad dollars through Trade Desk’s platform.
For investors comfortable with some volatility, Trade Desk’s first-mover momentum in next-gen ad targeting make it a long-term winner as advertisers migrate spend to the most efficient software. Buying on dips could generate substantial wealth over 5-10 year holding periods.
The Bottom Line
Get-rich-quick investing typically ends in tears. But buying great companies early in their growth cycles and holding for 5-10+ years as they steadily expand can compound wealth slowly but surely over the long run.
All four stocks profiled above have structural competitive advantages, vast untapped market opportunities, and durable growth tailwinds that potentially stretch for years or decades yet ahead.
None offer overnight 10X moonshots; rather, these names seem poised for steady 20-30% revenue and earnings growth annually for the foreseeable future based on their firm market positions. However, maintained for 10-20 years, that compounds principal dramatically.
For investors thinking long-term, buying shares in leading firms with open-ended growth runways like CrowdStrike, Portillo’s, Axon Enterprise and Trade Desk could generate substantial riches over years and decades ahead.