2 Soaring Stocks to Buy and Hold for 10 Years

With a bull market in full swing, plenty of companies have seen their share prices increase significantly over the past year. However, some of those market-beating stocks have plenty of upside left. That means they remain attractive, especially for investors focused on the long game. Let’s look at two examples: Meta Platforms (NASDAQ: META) and Spotify Technology (NYSE: SPOT). These two tech leaders have been flying high lately, but it’s not too late to get in on the party.

1. Meta Platforms

Facebook parent company Meta Platforms started the year with a bang. The company knocked it out of the park with its fourth-quarter earnings report and then announced it was initiating a quarterly dividend — music to investors’ ears. One major driving force behind Meta’s results was a rebound in the advertising market.

Ad revenue in the fourth quarter rose by almost 24% year over year to $38.7 billion after making little progress between late 2022 and mid 2023. Total revenues came in at $40.1 billion, an increase of 25% year over year. But Meta Platforms has also been implementing key moves that have helped it fine-tune the advertising business.

That’s just as important for the company’s future. Meta ramped up the use of artificial intelligence (AI) across its suite of products to help make them more efficient for businesses. It introduced Advantage+, an AI-powered tool to allow companies to automate ad campaigns, in late 2022. More recently, Meta Platforms started rolling out generative AI features to help companies create variations of pictures or backgrounds to figure out which ones work best with their ads.

Generative AI should become an important growth driver for Meta Platforms beyond its advertising business. The tech giant is also slowly building other revenue sources, including business messaging on WhatsApp. Meta Platforms ended the year with 3.98 billion monthly active users (MAUs), an increase of 6% year over year. It benefits from the network effect within several of its platforms.

Facebook is a great example. Those who want to connect with friends and family members can’t find a social media website with a larger ecosystem. The more people join in, the more attractive it becomes. So, Meta should keep most of its user base while finding new ways to monetize it over the long run, translating to solid revenue and earnings growth. Meta Platforms is far from done delivering market-beating returns.

2. Spotify Technology

Spotify Technology is the world’s leading music streaming platform. That’s quite an accomplishment considering the company’s competition. Spotify is up against Apple, Amazon, and Alphabet (among others), three true tech giants. Their significant resources and existing ecosystems could allow them to operate their music streaming businesses at a loss while acquiring customers to drive pure-play competitors like Spotify out of town.

But that hasn’t happened. As of the third quarter, Spotify had a 31.7% share of the music streaming business (by subscription), almost as much as Apple, Amazon, and Alphabet combined. In the fourth quarter, Spotify had 602 million MAUs, an increase of 23% year over year. It ended the period with 236 million premium subscribers, up 15% year over year. Spotify’s revenue of 3.7 billion euros came in 16% higher than the year-ago period.

Spotify isn’t consistently profitable yet, but it has been steadily improving. For instance, it turned an operating loss of 231 million euros in Q4 2022 into an operating loss of 75 million euros this time around. Spotify’s financial results should continue to move in the right direction as it boosts its user base. MAUs and premium subscribers grew by double-digit percentages in all regions in the fourth quarter.

Then there is Spotify’s podcast business, which has made tremendous progress over the past few years. It represents another significant opportunity for the company to increase its advertising revenue. Lastly, Spotify said raising prices in some key markets is part of its strategy. It did so in the U.S. last year. Spotify also displays network effects. It has a vast library of content and a large network of podcast creators who attract more users, making the platform more valuable to other creators and users.

This has helped Spotify survive — and even thrive — in this competitive market, but Spotify hasn’t peaked. Though shares have more than doubled over the past 12 months, they remain attractive for investors looking beyond the next five years.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Prosper Junior Bakiny has positions in Amazon and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, and Spotify Technology. The Motley Fool has a disclosure policy.

2 Soaring Stocks to Buy and Hold for 10 Years was originally published by The Motley Fool