It's not easy for investors to claim they will own a stock forever. But this is exactly what you should do if you wish to compound your wealth over years or decades. By holding on to superior growth stocks over the long term, you can witness the phenomenal growth of your investment portfolio that will enable you to retire comfortably. The key, of course, is in identifying suitable stocks that can help you achieve this goal.
Characteristics you should watch for include a sturdy business model accompanied by a market-leading position within its industry, a track record of consistent growth, and catalysts that can help to propel the business forward. A combination of such attributes should qualify the stock for long-term ownership, but as an investor, you should periodically check on the business to ensure that it still possesses these traits.
Here are three growth stocks you can think of buying and holding forever.
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Celsius
Celsius (CELH -4.41%) is an energy-drink company that has been around for 20 years but has only recently seen phenomenal growth. The business produces and sells four core product lines and has climbed to the No. 3 energy-drink position in the U.S.
Revenue leapt more than fourfold from $314.3 million in 2021 to $1.3 billion in 2023. During this period, operating income went from negative $4.1 million to positive $266.4 million, while net income shot up from just $3.9 million to $226.8 million. Operating cash flow turned positive in 2022, and Celsius went from negative free cash flow of close to $100 million in 2021 to positive free cash flow of $123 million in 2023.
It's an impressive recorde that has continued in the first half of 2024. Revenue climbed 29.3% year over year to $757.7 million, with operating income surging by 61.7% year over year to 177.4 million. Net income soared 82% year over year to $131.5 million. Celsius also saw its free-cash-flow generation more than quadruple year over year from $38.4 million to $160.6 million, giving the business more financial firepower for further expansion.
During its latest quarter, Celsius gained 35% more retail shelf space and saw the average stock-keeping units rise from 15 to 20, thereby fortifying its presence in retail channels. Sales to Amazon also leapt 41% year over year, and the company introduced three new flavors for the summer.
Momentum is picking up for Celsius as it expands internationally, with sales commencing in Canada, the U.K., and Ireland in the first half of this year. The company is slated to begin selling its beverages in Australia, New Zealand, and France in the second half of 2024.
In line with the company's aim of broadening its product portfolio, Celsius released two new flavors under its Celsius Essentials product line in early October, increasing the total number of flavors to eight. The company also reported that the energy-drinks market continues to grow through 2022 to 2024 even as total beverage sales fell year over year.
This continued growth should bode well for the company's plans to increase both sales and profits in the long term.
Roper Technologies
Roper Technologies (ROP -0.63%) is a software company that designs and develops application and network software for a variety of sectors. The business also has a track record of redeploying capital into acquisitions that help to grow the business through an analytical and disciplined process. The business has seen steady increases in revenue and earnings over the past several years. Revenue went from $4.8 billion in 2021 to $6.2 billion in 2023, while net income (from continuing operations) increased from $805 million to $1.4 billion over the same period. The business also generates copious amounts of operating cash flow to the tune of $1.5 billion on average over the past three years. Capital expenditure is light at less than $100 million per year, allowing Roper Technologies to generate consistent free cash flow. For 2023 alone, the company's free-cash-flow margin topped 30%. This consistency has allowed the company to pay out an increasing quarterly dividend since 2009, with the quarterly dividend leaping almost tenfold over the past 15 years from $0.07 to the current $0.75.
Roper Technologies continued to demonstrate healthy growth for the first nine months of 2024. Revenue increased by 13% year over year to $5.2 billion, while operating income climbed 14.8% year over year to $1.5 billion. Net income stood at $1.1 billion, up 9% year over year, and the business continued to churn out positive free cash flow of $1.6 billion for the period. Management also upgraded its guidance and expects full-year revenue to grow by 13% year over year, with organic-revenue growth of around 6%.
The business was active in acquisitions during 2024 as well. January saw the acquisition of Procare Solutions, a leading provider of cloud-based software for the management of early childhood education centers, for around $1.75 billion. Roper Technologies followed this up with a second acquisition in August of Transact Campus for $1.5 billion. Transact Campus provides innovative campus technology and payment processing, and will be absorbed into one of the company's business units, CBORD, that provides campus-commerce solutions for higher education institutions. Management expects this transaction to deliver long-term, high-single-digit, organic-revenue growth. With a great acquisition track record and healthy organic-revenue growth, Roper Technologies is poised to report higher revenue and earnings in the years to come.
Parsons
Parsons Corporation (PSN -0.75%) provides technology-driven solutions to the defense, intelligence, and critical-infrastructure sectors. The company has seen impressive growth in both its top and bottom lines and looks well-positioned to continue. From 2021 to 2023, revenue went from $3.7 billion to $5.4 billion, while net income more than doubled from $64.1 million to $161.1 million. Free-cash-flow generation also increased in tandem, going from $184.4 million in 2021 to $367.3 million in 2023.
The company saw its revenue, profits, and free cash flow continue to climb for the first three quarters of this year on the back of organic and acquisitive growth. Revenue rose 26.7% year over year to $3.2 billion with operating income surging 67% year over year to $213.3 million.
Parsons incurred a net loss of $38.2 million because of the extinguishment of debt. But if this item is excluded, the company should enjoy significant higher-net income on a year-over-year basis. Free cash flow remained strong at $79.1 million for the first nine months of 2024, reversing the free-cash outflow of $4 million in the previous corresponding period.
Like Roper, Parsons also tends to grow through acquisitions. July saw Parsons purchase BlackSignal Technologies, a digital-signal processing and cybersecurity provider, for $200 million. The acquisition will not only help to expand Parsons' customer base but also help to add new capabilities in the counterspace radio-frequency vertical.
More recently, the company scooped up BCC Engineering, a transportation-engineering company headquartered in Florida, for $230 million. This acquisition should help to strengthen Parsons' position in the infrastructure arena; both acquisitions are of high-growth companies with more than 10% projected, year-over-year revenue growth. During last year's Investor Day event, management identified a total addressable market of around $150 billion across six verticals that ensures Parsons can enjoy continued growth in the years ahead.
