In This Article:
Growth stocks are a great way to build lasting wealth, but it's important to choose wisely. Buying shares of promising companies that are tapping into a huge market for their products can lead you to long-term winners.
You don't have to chase hot tech stocks to grow your money. Focusing on the brands and experiences where young people are spending more time could be a lucrative opportunity for long-term investors. Here are two interactive entertainment companies that have great return prospects over the next decade.
1. Roblox
Roblox (NYSE: RBLX) is enjoying strong momentum as 2025 gets going. It offers a 3D interactive platform with millions of games and other experiences that is delivering excellent financial results. The stock is up 44% over the last year, but the business is just getting started on its long-term growth strategy.
Roblox has over 85 million daily active users, up 19% year-over-year in the fourth quarter. These players spent over 18 billion hours on the platform last quarter. Higher engagement leads to growing sales of its virtual currency (Robux), which is how Roblox monetizes its user base. Developers are rewarded for their content with payouts, which incentivizes more content that drives more growth for the platform.
Daily active users have been growing around 20% year-over-year for the last two years, indicating a huge opportunity ahead. One growth catalyst that can win over more people to the platform is better graphics fidelity and new technology, including the integration of artificial intelligence (AI) for content creation and in-game experiences.
Importantly, Roblox is already showing the potential to be a very profitable business. It generated $641 million of free cash flow last year on $3.6 billion of revenue. Its trailing-12-month revenue represents just 2% of the video game industry.
Management believes it can capture about 10% of annual spending on video games. If it executes, that could lead to annual top-line growth of 20% over the next several years, which could fuel market-beating returns over the next decade.
2. Take-Two Interactive
Take-Two Interactive (NASDAQ: TTWO) is a leading video game maker, best known for the Grand Theft Auto series, which has sold over 440 million copies over the last few decades. The stock is up 38% over the last year, as investors start to look for more growth ahead of new releases.
The sixth installment in the GTA series is scheduled to launch later this year. The company is also launching new iterations in the Borderlands and Mafia series. Management is calling this upcoming slate "transformative" for its business and long-term growth.